In 2020, Ukrposhta will continue to deliver pensions and subsidies – the Cabinet has approved a new tariff

The government has set a new tariff for the pensions and allowances payment and delivery service. The decision was accepted at the meeting of the Cabinet of Ministers of Ukraine on 4 December. Thus, starting from 1 January 2020, the service cost for cities will be 1.15% of the amount of the corresponding payment and for villages and urban settlements - 2.3%. These budgetary allocations are provided for in the State Budget of Ukraine for 2020.

The new fixed tariffs will allow Ukrposhta to improve gradually its financial standing and to maintain a many-thousand-offices postal network and, thereby, to provide all necessary modern services throughout the country with sufficient frequency. This governmental decision opens opportunities for a foreign capital attraction and the company’s infrastructure and logistics development.

“It is hard not to notice how Ukrposhta is changing. For the time passed, the team has succeeded a lot in steady growth of revenues, computerization of offices, implementation of new digital solutions, significant improvement of the quality of services and recognition at the international level. At the same time, the company is committed to performing its socially important function - the delivery of pensions and cash payments to every citizen in the remotest corners of our country. However, we shall not forget that Ukrposhta is a large infrastructure company that competes in the postal and logistics services market, where conditions must be equal for all players. I am sure that all Ukrainians soon will profit from the positive changes based on the adoption of economically feasible pension delivery tariffs, together with the introduction of travelling postal offices and adoption of the relevant law for a postal accounts validation”, said the Minister of Infrastructure of Ukraine, Vladyslav Krykliy.

It should be noted that the current pension delivery tariffs have not been changed since 2004. Within this time, the rate for minimum wage increase was three times higher in Ukraine compared to the same one for the pensions. As far as the major part of the company's expenses are the employee’s salaries and it is fully depends on the minimum wage, the percentage payment for delivery services from the Pension Fund did not cover this gap. Especially, after the year 2017, when the leap was most noticeable and eventually caused significant losses for the company.

“We’ve been working for over two years to make this day come true. Unfortunately, the previous government never heard us and wasted a lot of our time that could be used for developing of the company. Fortunately, the current CMU is able to hear and to act. Finally, Ukrposhta will be able to move from the day-to-day "budget gaps closing" to strategic development for 5-10 years period. This means that the network will not be reduced, moreover, we will be able to increase the frequency of delivery and more than 15 million Ukrainians in rural areas will have access to modern financial and postal services. In addition, attracting of foreign investment will be possible, and employees will have better working conditions and full confidence in their "tomorrow". I am grateful to the Prime Minister, Minister of Infrastructure and the entire government for their support and congratulate our entire 70,000-people-strong Ukrposhta team. The level of expectations from Ukrposhta is now much higher. But I am convinced that working for the development of the company is much more enjoyable than simply fighting for its existence”, said Ukrposhta CEO Igor Smelyansky.

“Over 4 million Ukrainians, including over 800,000 people with disabilities, receive pensions and cash payments through the country's national postal operator. We cannot compromise the availability of this service to them. Therefore, together with the Ukrposhta management and the Ministry of Infrastructure, we found a solution acceptable to all parties so that citizens could continue to receive pensions and subsidies through the postman and the Ukrposhta network”, added Social Policy Minister Ms. Yulia Sokolovska.

***

It is worth mentioning that the current tariffs for services, related to pensions and allowances payment and delivery realized by postal offices, were approved by the State Committee of Communication and Informatization of Ukraine Directive, No. 166, dated 22 July 2004, registered with the Ministry of Justice of Ukraine on August 05, 2004 under the No. 976/9575. The current tariffs amount to 0.79% in the cities and 1.56% in villages and urban settlements. It also should be noted, that Ukrposhta team repeatedly brought up for discussion the issue of the tariffs unprofitability. In July 2018, and then again in July 2019, Ukrposhta CEO Igor Smelyansky informed the Groysman government that the company would not deliver pensions unless the tariff was revised. In 2019, a temporary solution was found to continue providing these services. For 2020, this issue has not been resolved by the previous government.

 

As previously reported, Ukrposhta provides its services in 100% of the territory of Ukraine, with 11,000 stationary and travelling offices and more than 30,000 mail delivery persons. Ukrposhta's income has increased from UAH 4 billion to almost USD 8 billion over the last 3 years, production staff salaries have more than doubled; all post offices in settlements with more than 2000 residents (these are over 1650 settlements) have been computerized. In addition, the procurement system in Ukrposhta is recognized as one of the best in the country, which has saved more than UAH 600 million and upgrade vehicles more substantially than in the previous 10 years. Today daily Ukrposhta sends as many express parcels as in 2016 annually. In June 2019, the company was recognized by the international community as the world's best Post in two nominations, including for export development and corporate responsibility.