Reproducibility package for Minimum Wage In Ukraine: Estimating The Impacts Of Alternative Reform Options

This paper presents an analysis of the impacts of a Government’s of Ukraine proposal for setting a minimum wage floor equal to 40 percent of the previous year's average wage once the war and martial law are over, and rising by two percentage points annually until reaching 50 percent of the previous year's average wage. The analysis is forward-looking, forecasting how the proposed reform would affect employment, earnings, and social contributions. The analysis draws on a 10 percent random sample of 2023 worker level data from the Pension Fund of Ukraine, covering all jobs with pension contributions in the private sector and non-military public sector. We find that nearly one-quarter of jobs had reported earnings at or below the official minimum wage and another 13 percent just above the minimum wage. Women and young workers were disproportionately represented among low-wage earners, and wholesale and retail trade was the dominant low-wage sector. Simulation results indicate that by the end of the five-year transition period the minimum wage would be 45 percent above the level it would have reached if adjusted only for wage inflation. Projected job losses remain modest (0.51%–1.03%), while total earnings increase by up to 3.24%. The effect on social contributions and taxes would be the same as the effect on earnings as in Ukraine they are a fixed percentage of earnings. A counterfactual simulation using observed 2023 data confirms these findings. In both scenarios, wage gains for low-wage workers outweigh employment losses, consistent with the labor shortages currently reported across the Ukrainian economy. The paper concludes with recommendations on minimum wage-setting procedures, including the need for robust institutional frameworks, meaningful social dialogue, and improved technical oversight.