Solovieva Karina
Post graduate student, Simon Kuznets Kharkiv National University of
Economics, Kharkiv, Ukraine
SOCIO
– ECONOMIC INDICATORS AS A TOOL TO IDENTIFY THE LEVEL OF THE STATE’S DEVELOPMENT
The most
important element in the security of the government is economic security, which
means sustainable economic development and the state of protection against
internal and external threats [6]. In modern unstable market conditions raises the
need to study the specific state of domestic economic, which will ensure
economic growth, effective satisfaction of needs, state control over the
movement and use of national resources, and the protection of people.
As emphasized in
the huge number of scientific works [1,5,6] the object of economic security is an economic
system, taken as a whole, and its consistent elements: natural resources,
production and non – production funds, property, financial resources, human
resources, economic structure, family and personality.
On the one hand,
the economic security of the state is characterized by the level of development
of productive forces and economic relations, the presence of mineral resources,
developed infrastructure as well as patterns of integration into the system of
world economic relations. But on the other hand, during the process of economic
transformation: transition from a planned economy to a market economy (for post
USSR countries), international integration, economic globalization, new micro –
and macroeconomic models (which are used in highly developed countries) it was
discovered that all efforts on the development and implementation of economic
policy depend on the human factor. Therefore, social security and security of
the personality are considered by us as the main aim of national and economic
securities.
At the same time
all investment in social security are key to success for domestic economy,
social, cultural and economic progress. In modern conditions a lot of attention
is paid to the issue of security of a personality. It means that the
government’s desire to increase material wealth should serve the interests of individuals;
economic reforms should be aimed at the welfare of the people.
Otherwise, many
authors describe the main components of economic security starting with
security of the individual and social security. Among other components: the
level of unemployment, food security, industrial safety, protection of
business, energy safety, financial security, investment security, demographic
security, intellectual security,
innovation and informative security, culture, environmental safety, the level
of “shadow economy”, economic crimes
and corruption.[6]
The discussion of
relationship between economic and social security has been hampered by the lack
of a simple, coherent measure that allows to compare economic and social security over time and across Ukrainians of
different circumstances [2].
To know the level
of economic security of the country we need to use the indicators of it, which
include the most important parameters of every economic security component.
Having analyzed them, we can sum up all facts and results, which will show us
the level of social security in the context of economic security.
We can highlight
groups of common European indicators of economic security: GDP growth, the
budget deficit, incorporation into the world economy, the level and quality of life of the majority
of the population, the criminalization of the economy, the state of technical
base of agriculture, expenditures on research and development, competitiveness
of domestic products, imported dependence, the openness of economy, domestic and
external debt of the state, brain drain, the main vectors of tax system, political
stability or instability, the rate of inflation, unemployment rate. So the pace
of economic growth cannot be explained only by causes purely of an economic
nature. Economic development is defined mainly by social factors.
Among the indicators
mentioned above social problem take specific place. They are as follows: the
ratio of incomes between the richest and the poorest families, women’s wages as
percent of men’s earnings, crime rates, suicide rates, and the prevalence of
drug and alcohol abuse.
The concept of
social security is multifaceted. In a broad sense, it’s the one of the main
components of economic security, and in the narrow sense it’s defined as the
constant in the law availability to a sufficient number of social guarantees
and benefits for the normal life of the population. In this case, social
guarantees and benefits are not only the social, humanitarian, demographic
components, but also the possibility to grow up for the state economy. The main
idea of this concept is that the solvency of the population leads to the solvency
of the state and to the increasing of country’s economic security level.
Social priorities
of Ukraine and its regions are social stability, improving living standards,
the formation of a modern middle class lifestyle inherent in economically
developed countries, the establishment of an effective system of social
protection.
Criteria of
social security of regions of Ukraine at the present stage are to increase life
expectancy of the population and increasing the level of income.
Determination of
the degree of social security of regions of Ukraine is based on the assessment
and analysis of several groups of different origin threats. The first group
consists of regional threats having an economic origin:
· regional differentiation of incomes as a result of low wages, social
polarization of society into the rich and the poor in the absence of sufficient
number of members of the middle class, the decline in consumption of important
food items below minimum standards;
· situation on the regional labor markets because of unemployment, reduce
demand for labor, the loss of a stable socio – professional status of many
social groups;
· deterioration and narrowing of the range of services (cultural, medical,
educational);
· threats, which are associated with the issue of financing of regional
programs.
The second group consists of the
demographic origin:
· threats of regional depopulation of the age structure of the population,
outmigration.
Third group includes threats of the humanitarian
origin:
· social contradictions, which are based on linguistic, regional,
confessional differences.
The second group
involves the diagnosis of social aspects of economic security of Ukraine. It’s
expedient to use such groups of indicators as data about the quality of life and
of the tension in the labor market (employment and unemployment, the load on a
free workplace, the demand and supply of labor equal employment opportunities).
On this issue, we
can emphasize the third group of indicators, which involves different indexes.
Index of Katze –
reflecting the level of social protection of the population. In Ukraine in May
2015 it decreased to 30,1% from 35,5 % in May 2014 [10]. According to the NBU, the main reasons for the decline
of the index remained unchanged social standards against the backdrop of
continued growth in the average nominal wage. This index is the ratio of the
minimum wage and the average wage per fulltime employee. In Western Europe
governments are using this index as in indicators of the effectiveness of
poverty reduction. The recommended value by the International labor
organization is 50 %, and the European Union – 60 %. For showing the relation
between economic security and social security I would like to detail the levels
of wages in different countries.
Since 1 to 31
December 2015 the minimum wage of Ukrainians is 1318 UAH per month. At the
conclusion of the International commission created at the initiative of the
European Union in 1989, is considered a fair minimum wage, which reaches 68 %
of the average wage in the country. In developed countries they try to maintain
this ratio, and in some it even exceeds the recommended standards. For example in Poland, Turkey, Latvia,
Estonia minimum wage is 700/1000 $ per month. In Spain and Portugal is
1500/2000 $. In UK, Germany, France, Ireland, Finland is over 2500 $. As we can
see the highest level of wages is in the highly developed countries. By the
standard of the European Union, a fair minimum wage in Ukraine should be not
less than 2000 UAH.
Also it should be
noted that benefits in the USA are at quite a high level. Minimum wage in USA is
2000 $ per month. [4]
|
A type of social
benefit |
Necessary condition |
A size of a benefit |
|
1 |
2 |
3 |
|
Retirement |
Full retirement age (67years) |
Payment would be 2 607 $ a month |
|
Age 70 |
Payment would be 3 235 $ a month |
|
|
Age 62 |
Payment would be 1 824 $ a month |
|
|
Disability |
If a person had quite high salary, but he became
disabled |
Payment would be 2 360 $ a month |
|
Family |
If a person get retirement or disability benefits,
his spouse and children also may qualify for benefits |
Payment would be 2 360 $ a month |
|
Survivors |
If a person had quite high salary and he died,
certain members of his family may qualify for the following benefits: |
|
|
his child |
Payment would be 1 960 $ a month |
|
|
his spouse who is caring his child |
Payment would be 1 960 $ a month |
|
|
his spouse, if
benefits start at full retirement age |
Payment would be 2 615
$ a month |
|
|
Total family benefits
cannot be more |
4 574 $ a month |
|
|
Medicare |
Person should contact
Social Security in a case of his problem with health. |
The size of payment
would be |
Table
1 – The sizes of different benefits in the USA
Salary is the
main source of income for many Ukrainians and makes 2/3 of the whole income of
the population. It can be noted, that the negative situation on the labor
market in Ukraine directly affects the level of economic security of the
country. Tendencies in domestic economy like the increase of poverty,
uncontrolled unemployment, and low level of incomes of the population require immediate
economic transformation and adequate state intervention. Ukraine’s economy
needs the reforms which lead to qualitative changes in the employment structure
and solve the problem of massive poverty. Current practice for combating
poverty and social protection of Ukrainians is not actually an active tool for
increasing the level of economic security of the country. On the example of
developed countries, it can be noted that the place of social protection of the
population occupies a leading position in the strategy of country’s
development.
Let us pay your
attention to the index of economic security (ESI) in the USA, which was
designed to provide a meaningful, succinct measure of American’s economic
security [2]. The ESI captures three major risks to economic well
– being that Americans believe are difficult to anticipate: 1) major income
loss because of the inflation), 2) large out – of – pocket medical spending,
and 3) insufficiency of liquid financial wealth to deal with the first two
risks. The ESI strives to improve economic security among American workers and
their families.
The research
which is based on using the ESI is the basis of the government program as
indexing of wages, targeted social support, which means that social security
benefits are individual. After a person starts receiving benefits in the USA,
they will be adjusted for cost – of – living increases [2].
There are several
socio – economic tools, which are used in the USA: state regulation of
employment, improving labor remuneration, provision of the modern social security
systems in the social insurance, using targeted family benefits.
Few proposals have been revealed, which are
actually for domestic social state. First of all, government should not only
raise the wages, but increase its purchasing power. For this purpose it’s
necessary to increase it by 2 times, which will require and associated recovery
of GDP. The first step of this program is regular review of the size of nominal
wage and the conduct of its indexing. The experience of countries with
developed market economy testifies to the effectiveness of mixed system of
social security including social assistance and social insurance. The role of
such organization is support the person with the loss of a job, raising
children, in the event of sickness, disability and old age.
Different
regions of Ukraine can be effective in different social tools. In some regions
it may be targeted assistance for specific groups of the population; in other
regions it may be setting higher minimum standards due to the significant level
of differentiation of monetary incomes of the inhabitants. Maybe in some cases
we need to replace a number of benefits in cash compensation.
We
would like to reflect the indexes of human development (HDI) of some countries
[8]. As we can see from Table 2 [10], in the countries with developed social policy, the
economy is also at a high level. The HDI was created to emphasize that people
and their capabilities should be the ultimate criteria for assessing the
development of a country, not economic growth alone. The HDI can also be used
to question national policy choices, asking how two countries with the same
level of GNI per capita can end up with different human development outcomes.
These contrasts can stimulate debate about government policy priorities.
The HDI is the
measure of life expectancy, literacy, education, and standard of living for
countries worldwide
It
should be noted that the standard of living dimension is measured by gross
national income (GNI) per capita. The goalpost for minimum income is $100 (Nepal,
Nigeria, Cameroon, and Uruguay) and the maximum is $75,000 (Norway,
Netherlands, Germany, and the USA). The minimum value for GNI per capita, set
at $100, is justified by the considerable amount of unmeasured subsistence and
nonmarket production in economies close to the minimum that is not captured in
the official data. The HDI uses the logarithm of income, to reflect the
diminishing importance of income with increasing GNI. The scores for the three
HDI dimension indices are then aggregated into a composite index using
geometric mean. At the same time the HDI does not reflect on inequalities,
poverty, human security, empowerment, etc. The HDRO offers the other composite
indices as broader proxy on some of the key issues of human development,
inequality, gender disparity and human poverty.
So
we can conclude that to improve the economic rating of the country, government need
constantly observe the indices and indicators that reflect the state of social
security.
|
Rang |
Country |
The index HDI (2014) |
|
1 |
Norway |
0,955 |
|
4 |
Netherlands |
0,921 |
|
7 |
The USA |
0,917 |
|
8 |
Sweden |
0,916 |
|
9 |
Switzerland |
0,913 |
|
13 |
Germany |
0,911 |
|
15 |
Denmark |
0,901 |
|
17 |
Belgium |
0,897 |
|
18 |
Austria |
0,895 |
|
20 |
France |
0,893 |
|
21 |
Finland |
0,892 |
|
24 |
Lichtenstein |
0,883 |
|
25 |
Italy |
0,881 |
|
26 |
The UK |
0,875 |
|
30 |
Brunei |
0,855 |
|
55 |
Russia |
0,788 |
|
69 |
Kazakhstan |
0,754 |
|
78 |
Macedonia |
0,740 |
|
85 |
Ukraine |
0,732 |
|
101 |
China |
0,699 |
|
116 |
Syria |
0,648 |
|
127 |
Vietnam |
0,617 |
|
145 |
Kenya |
0,519 |
|
178 |
Guinea |
0,355 |
|
182 |
Mali |
0,344 |
Table 2 – Indexes of
human development of some countries
“The basic objective of development
is to create an enabling environment in which people can enjoy long, healthy
and creative lives.” wrote Mahbub-ul-Haq in the first Human Development Report
in 1990 [8].
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