Modern tendency in formation of household incomes

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The article analyzes a modern tendency in formation of household incomes in Ukraine. It also describes problematic moments in this theme; in particular formation of household incomes in Ukraine is characterized by such tendencies as low share of salary and incomes from property, high share of social helps in household incomes in comparison with foreign experience. The article tells about another tendency of household incomes form money transfers from migrants. There are some individual recommendations how to improve sources of formation household incomes in Ukraine.
Key words: household incomes, formation of household incomesProblem statement. Households have the highest priority in formation and using of financial resource. We can explain this fact because of the lack of appropriate quantity of financial resources in the households that do not provide extended reproduction and in the future will have a negative impact on development of all spheres and parts of financial system, especially state finance.
Analysis of recent studies. Principles of formation of household incomes and their tendencies are researched by such scientists as Bieliaieva О.О., Londara S.L., Osypova І.І., Kizyma T.O., Kholod N.M., Yurii S.I. and others. The current trends in the formation of household incomes still require more attention despite of the fundamental contribution to the development of scientific research of household incomes.
The aim of research is to define main tendency in formation of household incomes and ways how to improve sources of formation of household income in Ukraine.
Results. Household is a unique social and economic creation, as well as the foundation of life activity of any society. All aspects of human life (biological, social, economic) are concentrated on household. Household is defined as the socio-economic formation which is a primary element in the organization of social life according to political and economic matter. Objectively developing households have impact on growth of economic system through their needs [1, p. 56].
Households satisfy their own needs by means of income. There is no single view on the basic nature of household finance in scientific literature. Okunieva L.P. thinks that household finances are economic and monetary relation to formation and using money funds with aim to supply material and social conditions of life for members of households and their reproduction [2, с. 307]. There is another idea of Londar S.L. who supposes that household finance is controlled by cash flow through micro system of monetary funds that provide functioning and people development as individuals, their economic activity with the purpose of apartment acquisition, health maintenance, receiving education, getting pension and guarantee of other aspects of life activities in determined legal environment by means of special methods, mode and instrument [3, p.77].
It should be said that household finance shows its matter in function such as distributive, control, regulative and investment. The last one is particularly significant in a developing country. The bottom line of investment function is household that can be one of vital financial source in national economy, where the quarter of national savings form comes from citizens’ savings. However, in our practice individual participation in investment process is characterized by low level and small quantity of temporary available public funds because of low level incomes. This fact is impact on insignificant disposition to save money and great non-confidence to saving institute (investment companies, private pension fund, and insurance companies), low level of development saving institute [4, p.310].
The characteristic feature of Ukrainian households is creation of monetary funds as reserves for bad times. These monetary funds which de facto may be seen as funds of financial resource, however de jure these are not funds of financial resource in classic meaning. This is money that hidden in “jar and under the beds”. This money is not accumulated by financial institute and is not invested in security. The great part of free funds in a country is not used as investment resource and this fact is a pitfall in development of social and economic state system [5, p. 245].
There are lots of classifications of sources of formation of household income. One of these states that sources formed the budget from households’ revenues in the market-oriented economy are divided into four groups. The first part is the source of family incomes with working origin, the second part are incomes from properties and ownership, the third part ‒ from social funds such as money payment and free services and the fourth ‒ chance income [6, p. 267].
When describing modern tendency in formation of household incomes, dynamics element and structure of public incomes in Ukraine should be analyzed for the last three years. This tendency is showed in table 1. The first tendency in formation of household incomes, as we see from table 1, is growth through analyzed period. However, household income increased in 2012 compare to 2011 increased by 15.09 % and in 2013 the rate of growth has fallen three times and was equal to 4.9%.
Table 1
Dynamics elements and structure of household incomes in Ukraine in 2011-2013 [7]

таблиця 1
Minimum wage was raised five times in 2012 and only two times in 2013 (Fig.1).
Figure1. Dynamics of minimum wage in Ukraine in 2011-2013, UAH [7]
Another tendency that wage in the structure of the household for the analyzed period was dominated (41-42%), share of salary is too low in comparison with foreign index. In developed countries, share salary in household incomes is between 55 to 60% (in the USA this index is equal 73%).
The third tendency in formation of household incomes is a big share of social helps. This index is between 37-38% during the analyzed time period. To compare this one with the same in countries which were the part of the USSR, so it is lower than in Ukraine. For instance, in Belarus, the share of social helps in total sum is about 20%, in Moldova ‒ 17%. Such big share of social payments for households in Ukraine increases costs of state budget. This fact enforces increase the revenue base (by increasing tax rates and tax payments). That is why these changes affect all corporate entities and households.
The fourth tendency in formation household incomes is low share of incomes from property, index is equal only 5%. This value is too low if compare with other country share of incomes from property in total sum is higher, for example in USA index is equal 19%. This tells us about low probability to invest money for household in stock market in Ukraine.
The fifth tendency in formation household earnings is cash income from abroad in the form of money transfers from migrants. As we can see from table 2 total sum of private money transferred from abroad has risen in 2013 if compare it with 2012 soared by 13.43 % or 1011 million dollar and was equal to 8537 million dollar (4.6% in GDP). Definitely, we can confirm that this money is a vital source of big household incomes in Ukraine and their only source of income. This indicates an active policy “of working abroad” among the Ukrainian population, because of a lack of jobs and rising unemployment in Ukraine. However, the share of remittances from migrants has decreased to 17.93%. It shows the negative moment, particularly the outflow of young qualified workforce abroad permanently.

Table 2
Dynamics of private money transferred from abroad in section source of transfer formation ($1million) [8]
таблиця 2

According to the state committee of statistics in Ukraine, the quantity of people emigrating has increased in two times because of the deep crisis in 2013. That is why analysts predict increment in 2014. More citizens will search the job abroad, so this resource will be more appreciable.
Conclusion. Analysis of dynamics elements and structure of household incomes shows that we should do such things for improvement sources of formation household incomes as enhance the role of wages in income structure through fair redistribution of new value in economy. We also need to demand functioning of valuable system of social partnerships. Increasing revenues from business could be possible due to elimination the main obstacles for small and medium business in Ukraine. It is necessary to adopt a balanced policy for social assistance and transfers. We will reach fair incomes of redistribution, but we will not form psychology of state feeder and help to legalize incomes in Ukrainian economy so that it results to income inequality.
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8. Oficijnyj sajt Nacional’nogo Banku Ukrai’ny [Official site of National bank of Ukraine] [Online resource]. — Rezhym dostupu:

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