MILLENNIUM DEVELOPMENT GOALS ... - UNDP in Ukraine

Inequality as an Obstacleto Achieving the MDGsSince Ukraine achieved independence in 1991,its previously egalitarian society has been characterizedby very high levels of inequality, whichrelates to incomes, access to basic social services(information, communications, education, healthcare, social services, etc), health status, life expectancy,living conditions and quality of life andthe access to labour market.The modern interpretation of inequality assumesexclusion along not only economic but also social,political and ethno-cultural lines. Differentgroups of the population can suffer from particulartypes of inequality as a result of violations oftheir rights; however, the most critical is a combinationof several types of inequality. Extremelynegative and threatening phenomena, such asexclusion of population groups from public life(social exclusion), polarization and marginalization,occur as a result of the cumulative impactsof different types of inequality.Within the context of the MDGs, the most obviousform of inequality relates to Goal 1: ReducePoverty, namely, income inequality, which is reflectedby the existence of poor and rich groupsin the population. Income inequality deepens inequalityin relation to access to key social services(quality health care, education and housing) andresources (financial, particularly credit, land, etc)and to the exercise of fundamental rights in general(rights to health, life and security). At the sametime, income inequality itself is a consequence ofother types of inequality. In particular, childrenfrom poor families, who do not have sufficient accessto quality education, more often live belowthe poverty line. Meanwhile, a significant numberof those with higher education do not work intheir area of specialization or work in unskilledjobs. From 1999, a stable direct correlation hasbeen observed between education and incomelevels. This includes inequality in life expectancyowing to an inability to maintain a healthy lifestyle,lack of access to quality health care servicesand lack of a clean environment. Consequently,children from poor families have a higher risk ofpremature death or illness and fewer opportunitiesto realize their potential.High inequality and poverty levels cause socialtension and conflicts and increases in crime. Theconsequences of these, particularly under conditionsof political instability, are an increase ineconomic risks and decreased attractiveness ofthe country’s investment environment. This inevitablyslows down economic growth. On theother hand, inequality is an indicator not only ofcriminalization but also of corruption. Economicinequality is a barrier to democratic reforms.Income inequality often causes macroeconomicinstability. Significant inequality in the populationis a factor of poverty, and requires a large-scalesecondary redistribution of income through socialtransfers which, other things being equal, could affectthe budget deficit and also inflation (which affectsthe income of poor groups of the populationmore strongly, exacerbating inequality).Economic buoyancy caused significant – andquite positive – structural changes in terms of inequalitywithin the population: wage income hasincreased notably (from 20.9 percent in 1999 to41.6 percent in 2008), as has income from entrepreneurialactivities (from 2.4 percent to 7.9 percent).At the same time, income from unregisteredeconomic activities, which reached 42.6 percentat transition, (more than wages, pensions and incomefrom private subsidiary plots combined), iscurrently at only 17.9 percent. The importance ofincome from private subsidiary plots has not onlysignificantly decreased but also now counters inequality,since these remain a source of incomepredominantly for the poor population. The incomesof the poor have approached those of theaverage population. However, the economic crisisof 2008 to 2009 had an impact on these structuralchanges.Inequality in the context of Goal 2: EnsureQuality Lifelong Education deserves special attention.Quality education can be a major cushionagainst shocks and, at the same time, is an extremelyimportant factor in economic inequality.At present, socio-economic status is closely relatedto educational level in Ukraine: among peoplewho have completed higher education, 11 percentare poor, 35 percent have an average incomeand 7.5 percent are rich; among those who havecompleted only general secondary education (i.e.without systematic professional training), 29 per-22MILLENNIUM DEVELOPMENT GOALS. UKRAINE – 2010