INFLATION AND ITS IMPACT ON EMPLOYEES' REAL INCOMES

Abstract

The purpose of the paper is threefold: firstly, to analyse the impact of inflation on real incomes of employees in Ukraine; secondly, to identify the main trends and factors that determine this impact; and thirdly, to assess possible ways to minimise the negative effects of inflation on the welfare of the population. Methodology. The present study is grounded in the analysis of statistical data obtained from official sources, including the State Statistics Service of Ukraine, the National Bank of Ukraine and the Ministry of Finance of Ukraine. The comparative analysis method was used to assess the trends, and econometric modelling based on multivariate linear regression was used to quantify the relationship between inflation and real incomes of employees. Moreover, a comprehensive review of the extant scientific literature and government policies aimed at mitigating the deleterious impact of inflation was conducted. The study employs a systematic approach that encompasses economic, social, and political dimensions of the issue, enabling the formulation of cogent conclusions and the development of recommendations for enhancing the well-being of the population. The survey results indicated that inflation in Ukraine has a substantial impact on the real incomes of employees, particularly in the context of inadequate wage indexation. Econometric analysis confirmed the existence of a strong inverse relationship between the inflation rate and the purchasing power of the population. The findings of this study indicate that the implementation of effective anti-inflationary policies and the establishment of social protection mechanisms can serve as effective countermeasures to mitigate the adverse consequences of inflation on the overall welfare of the populace. Practical implications. In order to mitigate the adverse consequences of inflation on the real incomes of employees, it is imperative to enhance the mechanisms for indexing wages in accordance with inflation, fortify government social protection programmes for the most vulnerable segments of the population, utilise monetary and fiscal policy instruments to regulate inflation, and foster labour productivity and economic competitiveness. Value / Оriginality. The significance and originality of the article are predicated on the exhaustive analysis of the impact of inflation on real incomes of employees in Ukraine, utilising econometric modelling to quantify this relationship. The study combines macroeconomic and social approaches, taking into account the current challenges and specifics of the Ukrainian economy, and offers practical recommendations for mitigating the negative effects of inflation.