The problem with that statement is that Ukraine is actually a much more social state than most observers give it credit. The other problem is that it is a degenerate, rump social state which became so bloated the country’s budget mostly consists of black holes and cosmic radiation. Even worse, the political system is so entrenched in this social system that it is nigh-impossible to break. Indeed, to do away with Ukraine’s social system in one fell swoop would be instant political suicide for any politician, even today’s ‘illegitimate junta’.
Whereas Russia actually introduced a pension reform in 2002 and the ongoing one, Ukraine’s attempts at pension reforms do nothing to alleviate its situation – namely that there is a lot of pensioners in Ukraine. Even more glaringly, there is a lot of privileged pensioners in Ukraine, whom the government tries to crack down on (as opposed to, say, the rank and file babushka with a 1 500 UAH pension). Furthermore, Ukraine’s pension system is based on pension taxes levied from the population, serving as an additional burden on the already tax-burdened workers and providing additional incentive not to work in the open economy. Ukraine’s IT market was over 3 billion USD in 2013, yet it is almost completely operating in the shadow economy, paying the absolute minimum taxes. In addition to pension tax, there is also the Unified Social Tax of 40% as of now, expected to be decreased: this is the money that goes to fund the decrepit social system and subsidize private- and state-owned enterprises – particularly those in ailing sectors of the economy, such as mining or heavy industry.
There is also the matter of gas prices, which were considerably lower for the population than for private enterprises, creating yet another deficit the state had to cover from the national budget. Even more so, cheap gas was resold at significantly higher prices, furthering the deficit; this was when Ukraine systematically paid more for its gas than most EU countries did.
And the problem is, again, that whoever would promise to unmake this system would face extremely low voter turnout, because a large percentage of voters are, in fact, retirees. The other facet of Ukraine’s politics is populism; or, more accurately, POPULISM. EVERY SINGLE POLITICIAN engages in spinning elaborate tales about how things will be better should he (or she, or they) win, how they will take the fight to the oligarchs, how they will divide the country’s wealth justly, and then proceed to do exactly nothing of the sort. Everyone promises pay rises, pension rises, and so on; Yanukovych and his Party of Regions promised that, but pay continued to fall, taxes rose, retirement age was upped and half the country’s gold reserves were burned to hold the dollar value at 8 UAH for several years. Even Svoboda, the right-wing nationalist party, promised to divide the wealth, stop privatization and other various things that weren’t so different from the next party’s platform (the Communist Party, for example). Even Right Sector, the big ultra-right-wing bogeyman, has the same bloody things, only laced in nationalist propaganda Uncle Adolf would be proud of.
The fact that the current government tries to do something to mitigate the damage dealt by the malfunctioning social system already speaks volumes; but for all the supposed ‘austerity’ measures Poroshenko and Yatsenyuk did not do away with the pension system, or with the social support system, or with the state subsidies system altogether. If anything, all those are retained, and the budget deficit is covered mostly by way of even more taxes. If this is austerity, you probably aim pretty low.
One would think bringing half the economy out of the shadow (including the IT powerhouse) would be more in line with socialism or social democracy, if you will. Alas, there is even less incentive for the shadow economy to go legal, thus the social system deficit must be covered somehow, thus more taxes. Thus less incentive.
I’m not sure at all how we’re gonna break this circle.