Minimum Living Standard: What It Is and How It Is Calculated.

Every state has its own understandable and functioning mechanisms. For example, it is important to consider what the minimum living standard is, how it is calculated in 2025, and how it affects other payments. Besides what it is, it is also important to take into account what other mechanisms it influences. 

When exploring the topic of what the minimum living standard is, it is worth recalling the minimum wage. It is essential to understand how to calculate the minimum living standard and how it changes each year. 

What is the Minimum Living Standard?

The concept of the minimum living standard is quite broad. This indicator is established by the government and represents the minimum sum. Essentially, it is the financial resources that can cover the basic needs of one citizen. The calculation is based on a monthly period. 

This indicator includes expenses for food, utilities, clothing, transportation, medical care, and other necessary services. Considering that without all of this, a person cannot fully exist, the concept of the minimum living standard plays an important role not only in the economy but also in social life and politics. 

The minimum living standard is used for:

• to calculate salaries, pensions, and social payments that the state is responsible for;
• assessing the poverty level;
• developing state social programs;
• regulating tax benefits.

In other words, it is a certain indicator from which one can base their calculations. 

How to Calculate the Minimum Living Standard? 

In Ukraine, there is a simple scheme for calculating the minimum living standard. At the core of this lies the so-called consumer basket. This is a set of goods and services that meet the basic needs of a person. This set is formed taking into account consumption norms approved by the relevant authorities. 

The entire calculation process is regulated at the legislative level. The Law of Ukraine on the Minimum Living Standard and resolutions of the Cabinet of Ministers are used for this. Also, to see the full picture of events, it is crucial to consider statistical data on prices for goods and services. That is, the minimum living standard should reflect the real cost of products, services, and everything that is primarily needed by a citizen. 

How the calculation of the minimum living standard happens: 

1. All subsequent calculations are based on the consumer basket. Therefore, this is where one must start. To calculate the cost of the basket, it is necessary to determine what is included in it.
2. After that, it is necessary to determine how much and what costs. That is, essentially conducting a price survey, determining the average cost of each product or service. 
3. After everything is summed up, one can calculate the average price for the basket. 
4. The minimum living standard is established at the legislative level and is periodically reviewed.

The consumer basket is a quite broad concept. It has its own structure. That is, the list of what is included in this basket and what will influence the overall calculations of all social payments. Therefore, this basket and its structure are very important. What can be included in it annually: 

1. First and foremost, there is food. This includes bread and bakery products, meat and fish, vegetables and fruits, dairy products, oil, sugar, salt. 
2. Non-food goods. This includes clothing and footwear, personal hygiene products, cleaning supplies. 
3. Services. This includes payment for utilities, transport expenses, medical services. 

Essentially, it is what a citizen cannot do without. 

Minimum Living Standard in 2024

In 2024, the minimum living standard in Ukraine continues to be an important socio-economic indicator. For the year 2024, the Cabinet of Ministers has approved new values of the minimum living standard, taking into account inflation, changes in the prices of goods and services, and the rise in utility tariffs.

The minimum living standard for 2025 is calculated in the same way. However, speaking of Ukraine, the minimum living standard is a rather complex concept. It is also criticized fairly often. Many citizens believe that such an indicator is quite low and it is basically impossible to live on it. Typically, the minimum living standard is criticized for: 

1. Discrepancy with the real needs of citizens.
2. Outdated consumption norms in the consumer basket.
3. Insufficient accounting for regional features.

Moreover, many experts point out the gap between the official minimum living standard and the actual household expenses, especially in times of inflation and economic crises.

How Does the Minimum Living Standard Affect Citizens' Lives?

In general, when discussing the minimum living standard, it influences many social payments. After all, this indicator determines how much can and should be paid to a certain group of citizens. 

The minimum living standard serves as the basis for calculating salaries, social payments, or pensions. In other words, it is a kind of foundation that changes constantly and reflects the actual increase in prices. For example, when the minimum living standard increases, minimum pensions and salaries rise automatically. Additionally, the amount of state assistance for low-income families depends on the difference between the minimum living standard and the family's income.

It is also necessary to mention how the minimum living standard compares with real incomes. In this case, the combination of minimum wage, minimum pension, and already this forms the concept of average salary is critical. That is also a conditional indicator. 

Prospects for Changing the Minimum Living Standard

It cannot be forgotten that there is still war in Ukraine. Thus, labeling the country as developing and with income growth is simply impossible. However, to improve the quality of life of citizens in Ukraine, a number of factors may come together. This may not happen inevitably; however, some prerequisites can still exist. What is being discussed: 

1. Updating the consumer basket. Revising consumption norms considering modern realities.
2. Regular data updates. Annual review of the indicator considering inflation.
3. Increasing minimum social standards. Raising the minimum wage and pensions.

Based on this, the minimum living standard is an important tool of social policy, but its effectiveness depends on the accuracy of calculations and regular updates. In 2024, Ukraine will have to continue reforming the calculation system for the minimum living standard so that it better reflects the actual needs of citizens and contributes to improving their quality of life.