Ways to Overcome Poverty and Income Inequality in the Context of New Global Challenges: the Most Important Conclusions for Ukraine

Ramskyi, Andrii Article Ways to Overcome Poverty and Income Inequality in the Context of New Global Challenges: the Most Important Conclusions for Ukraine Comparative Economic Research. Central and Eastern Europe Provided in Cooperation with: Institute of Economics, University of Łódź Suggested Citation: Ramskyi, Andrii (2021) : Ways to Overcome Poverty and Income Inequality in the Context of New Global Challenges: the Most Important Conclusions for Ukraine, Comparative Economic Research. Central and Eastern Europe, ISSN 2082-6737, Łodz University Press, Łodz, Vol. 24, Iss. 3, pp. 53-73, https://doi.org/10.18778/1508-2008.24.21 This Version is available at: https://hdl.handle.net/10419/259277 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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Central and Eastern Europe Volume 24, Number 3, 2021 https://doi.org/10.18778/1508-2008.24.21 Ways to Overcome Poverty and Income Inequality in the Context of New Global Challenges: the Most Important Conclusions for Ukraine Andrii Ramskyi https://orcid.org/0000-0001-7368-697X Doctor of Economics, Professor, Borys Grinchenko Kyiv University Department of Finance and Economics Kyiv, Ukraine e-mail: [email protected] Abstract The article examines the risks of deepening poverty and income inequality that arise from global challenges of population aging, job losses due to shrinking sales markets, trade wars, long‑term quarantine and compliance with the safe distancing of people as part of restrictive measures against the spread of COVID–19, the nature of employment (re‑ mote work, temporary reduction of labor migration), and other norms in the fight against the dangerous contagious disease. Given the facts that the prevention of spreading and localization of dangerous diseases, their treatment, and the rehabilitation of patients af‑ fect all segments of the population, have negative effects on all areas of people’s lives and also add to the increase of socio‑economic risks, including poverty and inequality, the study of this issue is extremely relevant. The financial implications of these challenges for many households lead to falling real incomes, and an increase in costs and debts, and their non‑repayment, which generally cause sudden poverty and increasing inequality of in‑ come and property. Purpose of the article: To investigate the risks of poverty, including sudden poverty, the inequality of household incomes amid the fight against the COVID–19 pandemic, and it identifies ways to overcome them. Methods: A review of the scientific literature, a presentation of statistical data, and statistical research. Findings & Value added: As a result of research, a list of new risks of poverty and in‑ come inequality is outlined, and preliminary assessments of the consequences of the COVID–19 for households are summarized; signs of short‑term loss are generalized; the solvency of households as a possible precondition for sudden poverty is evalu‑ ated; cross‑country comparisons of poverty risk are made; the scheme of state aid , 54 Andrii Ramskyi to improve living standards of people during the outbreak of new dangerous diseases in the EU and Ukraine is generalized; ways to overcome poverty and income inequal‑ ity are substantiated to restore the resilience of financially vulnerable households and ensuring the development of human capital. Keywords: household finances, financial stability, struggle with poverty, inequality, labor migration, unemployment, COVID–19 pandemic, economic consequences of globalization, state support of households JEL: J61, E24, I320, F650 Introduction Overcoming poverty inall its forms isone ofthe main directions ofachieving the Sus‑ tainable Development Goals. Between 1990and2019, the world made significant pro‑ gress inensuring people’s well‑being and reducing extreme poverty. Inthe EU countries, the share ofpeople atrisk ofpoverty and social exclusion decreased by2.8 percentage points between 2013and2018. In2018 itwas 21.8% (Eurostat 2020). The share ofpeo‑ ple whose daily consumption was less than 5.05 US dollars was reduced to1.8%. Recent events show that, along with the fight against poverty and social inequality, the problem ofreducing the risks ofsudden poverty arising from global processes must beaddressed, including the formation offinancial stability ofhouseholds tomaintain solvency intimes ofcrises and the sustainability ofpublic finances, support ofciti‑ zens, and realization ofother social functions ofthe state. Until recently, the most important global challenges have included population ag‑ ing and growing demographic imbalances, trade wars, the rapid growth ofthe envi‑ ronmental crisis (with the intensification ofrelated global problems – health care inthe face ofgrowing environmental pressures and global climate change; healthcare crises; the COVID–19 pandemic; instability ofworld food security), the scarcity ofnatural re‑ sources, including water resources, the deformation ofmarket structures, and the cri‑ sis ofcapital investment efficiency inexisting technological processes, production au‑ tomation and digital technologies, international financial instability, and the problems offictitious capital growth, among others (Sidenko 2014; Shang‑Jin 2019; UN ESCAP 2019). These socio‑economic and environmental problems pose risks tomany countries around the world toachieve sustainable development and increase their competitiveness. They also exacerbate the problems ofpoverty and inequality inhousehold incomes. UN experts have found that poverty has anegative impact onpeople’s health and life expectancy (due tothe lack ofquality drinking water, adequate medical services, and adequate nutrition) and limits educational opportunities for their children. The poverty ofolder people lays the groundwork for poverty for future generations. Insufficient in‑ vestment ineducation and healthcare atthe level oflow‑income households will nega‑ 55 Ways to Overcome Poverty and Income Inequality in the Context of New Global Challenges… tively affect labor productivity, reduce the rate ofhuman capital development, affect other factors ofeconomic development and create risks for sustainable economic growth. The unresolved nature ofthese problems was made worse bythe emergence ofanew global challenge – the spread ofthe life‑threatening COVID–19 pandemic. The aim ofthe article isto investigate the risks ofpoverty, including sudden pover‑ ty, inequality ofhousehold incomes amid the fight against the COVID–19 pandemic, aswell asto identify ways toovercome them. Achieving these goals necessitate the following tasks: – tosummarize existing approaches topoverty reduction inthe framework ofsus‑ tainable economic development; –toreveal the directions ofstate regulation ofthe labor market, employment, re‑ duction ofunemployment, conditions oflabor migration, personal income tax‑ ation, state support ofcorporations and households asprerequisites for reducing poverty and income inequality; –toidentify new risks ofpoverty and household income inequality arising from the COVID–19 pandemic; –toanalyze state aid schemes during the outbreak ofthe dangerous new disease and inthe post‑pandemic period toimprove living standards and substantiate the directions ofovercoming poverty and income inequality inUkraine. The impact ofaggravated global risks onthe financial stability ofnational econo‑ mies and, accordingly, onhouseholds actualizes modern society’s formation ofanew institutional framework for sustainable economic growth and improving the welfare ofthe population. Literature review Inthe scientific literature, the problems ofcombatting poverty and the accelerated growth ofincome inequality are widely covered. But they remain relevant due tothe emergence ofnew risks ofsocio‑economic nature. Research onpoverty and inequality iscarried out mainly inthe following areas: –developing theoretical foundations ofthese economic categories; – defining tools for state regulation ofthe labor market, changes inthe policy ofincome distribution, legal support oflabor migration and spatial mobility ofcitizens, formation ofsocial standards, personal income taxation, rules for indexation ofemployees’ incomes inconditions ofhigh inflation (Organiściak‑ ‑Krzykowska 2017; Dluhopolskyi, Zatonatska, and Lvova 2019); –state support: tax benefits for enterprises that employ people without work ex‑ perience (“first job”), people with special needs (the disabled), workers ofpre‑re‑ tirement age; direct state support ofenterprises during periods offinancial and economic crises (inparticular, for timely payment ofwages and job retention); targeted assistance tolow‑income households, households with children, youth; 56 Andrii Ramskyi – ensuring economic growth, which has apositive effect onincreasing the income ofmost households (Kuznets 1955); –providing equal access ofhouseholds with different levels ofincome and finan‑ cial opportunities toeducation and health services, which alleviates the prob‑ lems ofincome inequality; – investing inhuman development and insuring poor and vulnerable groups against emerging risks (Cruz etal.2015). The problems ofensuring the current liquidity ofhouseholds remain relevant. Solv‑ ing them will reduce the negative impact ofthe risks offinancial losses from global challenges and prevent sudden poverty. The psychological aspects ofpoverty (determining the level ofpoverty bydiffer‑ ent segments ofthe population, individual communities) were studied byGalbraith. Ithas been found that people suffer from poverty when their income, even ifsufficient tosurvive, lags far behind that ofthe community asawhole. Then they cannot have what the large community considers the minimum necessary for decency, and they cannot completely avoid, therefore, the judgment ofthe community that they are poor (Galbraith 1958). Kwiatkowski studied the behavior oflabor markets inthe EU countries during global crises. Hefound that the scale ofadjustments inthe labor market during aglobal cri‑ sis depends onseveral factors: the depth ofdemand shocks and the scale ofadjustment ofthe volume ofproduction, the degree ofopenness ofthe economy, labor productivi‑ ty, the level ofstrict employment protection legislation, the current share offixed‑term employment contracts, aswell asthe possibility ofthe state regulator’s influence onem‑ ployers adjusting employees’ wages and working hours (Kwiatkowski 2016). Hefound that solving the problem ofgender pay gaps has reduced inequality and increased household incomes (Cruz etal.2015). Kuznets studied the problems ofincome inequality inthe twentieth century. Hefound that the income ofthe upper group ofthe population (about 7% ofthe total) tended togrow faster than the incomes (compensations) ofother employees during periods ofeconomic recovery. With the slowdown ineconomic growth, the income ofthe upper group did not diminish, while 93% ofemployees (those with lower incomes than the higher group) had their wages and dividends significantly reduced (Kuznets 1955). Böhm ‑Bawerk argued that the level ofincrease inwages ofthe entrepreneurs (higher group) should beless than the growth ofproductivity because only part ofthe newly created value should betheir reward (Böhm‑Bawerk 1903). Income and wealth inequality studies have been conducted from aglobal and his‑ torical perspective (e.g., Alvaredo etal.2018). They showed that income and property inequality grew indifferent countries atdifferent rates over time. The growing inequality ofincome, wealth, and the welfare ofhouseholds indifferent OECD countries over the last decade isexplained bythe differences between countries and regions. However, the standard ofliving ofthe poorest households has deteriorat‑ 57 Ways to Overcome Poverty and Income Inequality in the Context of New Global Challenges… ed since the crisis, while that ofhigh‑income households has increased (Meeting ofthe OECD Council… 2017). This indicates that there are other reasons for the existence and deepening inequality ofincome and property ofhouseholds inmodern society, and its reduction requires the use ofnew institutional support. The lack ofeffective tools tomaintain the solvency ofhouseholds intimes ofcri‑ sis orsudden poverty leads them tomake irrational financial decisions, making them even poorer. Analysis ofthe liquidity survey showed that poor and vulnerable house‑ holds all too often rely onexpensive forms ofcredit (e.g., overdrafts) with high inter‑ est rates and fixed loan servicing costs (Cunha, Lambrecht, and Pawlina 2011). Ukraine’s fight against poverty and inequality isone ofthe government’s key pri‑ orities. The “Sustainable Development Goals ofUkraine” program sets out the direc‑ tions togradually overcome poverty byeliminating its extreme forms. Libanova pro‑ posed some measures tofight income inequality inUkraine, inparticular, tochange the procedure for taxing individuals’ income byintroducing afull‑scale progressive scale oftaxation, tocomplete the process ofmonetizing benefits, tochange the prac‑ tice ofdetermining the cost ofpublic services (medical, educational, etc.) and how they are paid (state budget, local budget, insurance funds, etc.), toimprove the differenti‑ ation ofsocial transfers based onworking capacity, economic activity, and employ‑ ment (stimulating the able‑bodied population tothe most active behavior inthe labor market and inthe economy asawhole); tointroduce asystem ofcontrol over costs and wealth inorder toprevent large‑scale unregistered income; tointroduce asystem ofsocial elevators for low‑income people, the disabled, children deprived ofparental care, etc. (Libanova 2014). The gradual introduction ofEuropean social living standards inUkraine requires asignificant strengthening ofthe economic base, fiscal expansion, and efficiency ofso‑ cial spending aimed atreducing the risks ofpoverty and income inequality, aswell asbuilding areserve ofhousehold finances inthe event ofacrisis oranegative impact ofglobal challenges. Reasons for the deepening risks of poverty in the context of global challenges Onthe one hand, the fight against the spread and consequences ofthe COVID–19 pan‑ demic asone ofthe most significant global threats today has added tosafer living con‑ ditions, proper diagnosis and treatment ofthe disease. Onthe other, ithas worsened the general economic situation, increased unemployment and changed employment (remote work, forced reduction ofworking hours, unpaid leave, temporary suspension oflabor migration), increasing the cost ofhouseholds for prevention ortreatment, and thus causing the deterioration ofthe financial situation ofthe vulnerable population. According toanew OECD report and unemployment statistics released inJuly 2020, women, young people, and low‑income workers suffered the most during the quaran‑ 58 Andrii Ramskyi tine period. The introduction and extension ofquarantine, and the implementation ofother precautionary measures had anegative impact onthe labor market. According topreliminary estimates,1 inthe first half of2020, the unemployment rate surged byseveral percentage points compared toprevious years. Its rise signif‑ icantly exceeds the corresponding figures during the financial and economic crisis of2008–2009. Insome countries, inthe first and second quarters of2020, upto 10 times more working hours were lost compared tothe first few months ofthe crisis of2008–2009 (OECD 2020a). The unemployment inOECD countries inApril 2020 rose to8.5%, which isthe highest unemployment rate inthe last decade. InFebruary 2020, ithad been 5.2%. The number ofunemployed inOECD countries was about 54.5 million. Unemploy‑ ment inOECD countries atthe end of2020 was expected tobe 9.4% (inthe optimis‑ tic scenario ofthe pandemic), which significantly exceeds the level ofunemployment inperiods ofprevious economic crises (OECD 2020b; 2020c). According tothe pes‑ simistic forecast, the unemployment rate islikely tobe about 10%, and with the start ofthe possible second wave ofthe spread ofthe virus and, accordingly, the strength‑ ening ofquarantine conditions – itmay goup to12% (OECD 2020a; World Econom‑ ic Outlook 2020). Itis projected that the average employment in2020 will be4.1%, 5 percentage points lower than in2019. The share ofworking people may return tothe “pre‑COVID–19 crisis” level only inlate 2021/early 2022. The self‑employed, individual entrepreneurs, people ontemporary orpart‑time con‑ tracts, and migrant workers have especially suffered the loss ofwork and income. Un‑ employment risks include young people who received their education this year and will need their “first job”. Well‑thought‑out ways out ofthe crisis ofjobs, working conditions, and how they are paid for payment are becoming more important. Anexpress assessment 2 ofthe impact ofquarantine onemployment (conducted bythe Ukrainian Institute ofSocial Research named after Oleksandr Yaremenko, the Center for Social Monitoring together with the Department ofMonitoring Research ofSocio‑Economic Transformations ofthe Institute ofEconomics and Forecasting ofthe National Academy ofSciences ofUkraine) showed that one third (35.6%) ofthe economically active population ofUkraine during this period was excluded from the labor market. The most vulnerable were small businesses (four out often did not work) 1 A report on poverty and general well‑being will be published in autumn 2020, which is expected to clarify, in particular, expectations of the unemployment rate by the end of 2020, and the fore‑ cast for 2021 (Atamanov et al. 2020). 2 The survey of the adult population was conducted from 12 to 22 May 2020 in 24 regions of Ukraine and the city of Kyiv. A total of 2,058 respondents were interviewed via telephone. Standard de‑ viations at a significant 95 percent and a ratio of variables from 0.1: 0.9 to 0.5: 0.5 are 2.33–3.21 percent. 59 Ways to Overcome Poverty and Income Inequality in the Context of New Global Challenges… and the self‑employed (one inthree was unable towork). During quarantine, among the economically active population: – 30.6% did not work; inparticular: 19.2% were onforced leave (without pay); 7.7% were dismissed bythe employer; 5.9% had restrictions onthe activities ofindi‑ vidual entrepreneurs; 8.8% lost their jobs; 6% were onpaid annual leave; –66.5% worked; inparticular: 42.2% worked atthe same place according tothe pre‑quarantine schedule; 21.6% had reduced working hours; 4.3% found ajob (another/temporary/additional) and worked; 20.8% worked remotely. Atthe same time, 8 out of10 labor migrants lost their jobs; 4 out of10 small‑busi‑ ness entrepreneurs did not work. According tothe survey, only asmall proportion ofemployees’ working conditions and wages did not change, and income remained atthe pre‑quarantine level (Express assessment… 2020). Migration and labor processes were significantly changed atthe beginning ofquar‑ antine, which led tojob losses and the return ofmigrants totheir home countries. Mi‑ grants’ money transfers also decreased. The intensification ofmigration offoreign labor from Central and Eastern European countries that belong tothe European Union, i.e., the Czech Republic, Estonia, Lithu‑ ania, Latvia, Hungary, Poland, Slovenia, Slovakia, Bulgaria, and Romania, took place after the opening ofthe labor market bythe EU–15 (Kwiatkowski 2010). Analysis ofthe size ofmigration outflows from Central and Eastern Europe (CEE) countries makes itpossible toclassify them into three groups: countries with high migration potential (Latvia, Lithuania, Romania), moderate migration potential (Hungary, Bulgaria, Po‑ land, Estonia, Slovakia), and low migration potential (the Czech Republic, Slovenia) (Organiściak‑Krzykowska 2017). Asaresult ofemployment abroad in2004–2015, cit‑ izens ofCEE transferred funds totaling 166.6 billion euros totheir home countries. The ways inwhich this wealth isdistributed atthe individual level improve the living conditions ofmigrant household members and, indirectly, the socio‑economic situa‑ tion ofevery CEE country (Organiściak‑Krzykowska 2017). InUkraine, the problem ofthe migrant remittance market isof particular interest. Ukraine isapowerful donor ofinternational migrants and arecipient ofmoney trans‑ fers – arelatively stable source offoreign exchange inflows into the country (Table 1). During the period 2017–2019, remittances from migrant workers increased by$2.7 billion, and in2019 they amounted toUSD 11.9 billion. More than 30% ofall money transfers came from Poland. In2019, revenues from the Czech Republic almost doubled (upto 9.3% ofthe total amount ofremittances, or1.1 billion US dollars). Inthe wake ofmeasures tocombat the spread and consequences ofthe COVID–19 pandemic, the following processes took place: the return ofmigrant workers totheir home countries and areduction inemployment ofmigrant workers who remained abroad due tothe slowdown ineconomic activity inthe recipient countries. The forecast ofmoney transfers toUkraine for 2020 was reduced by2.6 billion US dollars, orby 20% (down to9–10 billion US dollars) due toboth the reduction inthe 60 Andrii Ramskyi number ofmigrants and reduced economic activity inthe destination countries. Atthe same time, the impact ofthe current crisis isexpected tobe short‑term, and from 2021 the growth ofremittances will resume (Tokarchuk 2020). Table 1. Volumes of private remittances to Ukraine (through official and unofficial channels of receipt) Country 2017 2018 2019 USD millions In % of the total amount USD millions In % to the total amount USD millions In % to the total amount Receipts, incl.: 9264 100 11111 100 11921 100 Poland 3116 33.6 3649 32.8 3658 30.7 Czech Rep. 435 4.7 846 7.6 1113 9.3 USA 679 7.3 870 7.8 984 8.3 Italy 447 4.8 492 4.4 498 4.2 Germany 318 3.4 426 3.8 462 3.9 Cyprus 285 3.1 341 3.1 391 3.3 Source: National Bank of Ukraine 2020. The current global crisis will have agreater negative impact onremittances than previous crises, asit ischaracterized bymany countries closing their borders, which has anadditional negative factor onlabor migration. The pandemic affected children’s meals and school attendance. The introduction ofquarantine interrupted the educational process around the world. From March toMay 2020, more than 91% ofstudents did not attend school, and from May toJuly 2020, itwas 60–70% ofstudents (United Nations Development Programme 2020). Inmodeling the impact offorced school leaving onmultidimensional poverty, ac‑ cording tothe conservative scenario, asignificant role isplayed bythe decline inthe quality ofeducation and the risks ofsubsequent employment with high wages. The COVID–19 pandemic has also disrupted lifestyles and food supply chains glob‑ ally. According tothe World Food Program, the number ofpeople indire need offood could increase to130 million in55 countries. The above factors indicate adeepening ofmultidimensional poverty. The 2019 Mul‑ tidimensional Poverty Index iscalculated in101 countries, where 5.7 billion people live. The index isable toassess the full spectrum ofpoverty, taking into account lim‑ itations inhealth, education, and living standards (including, inparticular, nutrition, infant mortality, school life, school attendance, cooking fuel, sanitation, water, elec‑ tricity, flooring, and property ownership). People who experience deprivation byat least athird ofthese weighted indicators fall into the category ofthe multidimension‑ al poor (the percentage ofthe population with adeprivation rate of20–33%). In2019, 1.3 billion people fell into the category ofmultidimensional poverty, ofwhich 886 million people – more than two‑thirds – live inmiddle‑income coun‑ tries, and 440 million people live inlow‑income countries (United Nations Develop‑ ment Programme inUkraine 2019). 67 Table 4. Use of the Fund for Combatting COVID–19 as of 31.07.2020 № s/n Direction Measures Funds allocated, UAH millions Cash expenditures, UAH millions Spent from the allocated sum, % 1 Cash assistance to citizens Cash assistance to children of entrepreneurs (individuals) 1155.0 549.7 1.7 2 Social support Financial assistance to the Unemployment Insurance Fund 6972.5 6079.4 87.2 3 Social support Financial assistance to the Social Insurance Fund (incl. for the payment of sick leave) 2512.1 1538.2 61.2 4Measures to prevent outbreaks of COVID–19. Purchase of ventilators 100 0 0 5Measures to prevent outbreaks of COVID–19 Provision of laboratories of Min. of Health, and purchase of personal protective equipment 2990 339.1 11.3 6Measures to prevent outbreaks of COVID–19 Prevention of COVID–19 in institutions of the State Penitentiary Service 23.7 5.9 24.7 7Measures to prevent outbreaks of COVID–19 Reimbursement for Independent External Evaluation trials in 2020 52.5 52.5 100 8Measures to prevent outbreaks of COVID–19 Construction, reconstruction, and repairs of state roads 35000 3505.7 10 9Measures to prevent outbreaks of COVID–19 Equipment for reception departments of support hospitals 5300 0 0 10 Measures to prevent outbreaks of COVID–19 Construction and repair of reception departments of support hospitals 1680 0 0 11 Measures to prevent outbreaks of COVID–19 Purchase of equipment, personal protective equipment 41.2 0 0 12 Measures to prevent outbreaks of COVID–19 State support in the field of culture, tourism, and creative industries 1000 0 0 13 Surcharges for employees on liquidation of COVID–19 Surcharges for the members of the military, National Guard, State Border Service, and police of the Ministry of Internal Affairs 2530 1845.1 72.9 Ways to Overcome Poverty and Income Inequality in the Context of New Global Challenges… 68 № s/n Direction Measures Funds allocated, UAH millions Cash expenditures, UAH millions Spent from the allocated sum, % 14 Surcharges for employees on liquidation of COVID–19 Surcharges for medical workers in health care facilities of the Ministry of Internal Affairs 171.1 91.2 19.1 15 Surcharges for employees on liquidation of COVID–19 Increased allowances and surcharges for medical workers 5955.4 0 0 16 Restoration of state budget expenditures Partial recovery of expenditures in the field of physical culture and sports 475.8 0 0 Total 65,959.3 14,006.6 21.2 Source: Mіnfіn systematizes information… 2020. The directions cited inTable 4 were financed only by21.2% (or0.35% ofGDP), which indicates funds were diverted from their intended purpose ormisused. Under some programs, nofunding has started atall: the purchase ofventilators, increased allow‑ ances and surcharges for medical workers, the purchase ofequipment for reception departments ofsupport hospitals, etc. Inthis regard, itis proposed tostrengthen state financial control bythe Accounting Chamber ofUkraine, state internal audit inthe Ministry ofFinance ofUkraine and introduce monitoring offunding for these areas bythe Ministry ofSocial Policy ofUkraine. Conclusions and suggestions Summing upthe analysis ofthe problem ofpoverty and income inequality inthe context ofnew global challenges and making the important conclusions for Ukraine, itshould benoted: 1. The tendency toreduce extreme poverty, which has become entrenched inmod‑ ern society over the past decade, has been reversed, exacerbating the problems ofpoverty under the influence ofthe spread ofthe disease dangerous tohumans, i.e., the COVID–19 pandemic. 2. New risks ofpoverty both inUkraine and around the world may include forced self‑isolation ofpeople (without monetary compensation ofincome), forced un‑ paid leave tolook after young children and primary school pupils for the peri‑ od ofquarantine inkindergartens and schools; reduced income when changing working conditions (reduced working hours, teleworking); increased expendi‑ Table 4. (continued) Andrii Ramskyi 69 Ways to Overcome Poverty and Income Inequality in the Context of New Global Challenges… tures onmedical services, medicines through COVID–19 and other unforeseen expenses byhouseholds. 3. The generalized scheme ofstate aid during the outbreak ofthe new dangerous disease should beaimed atimproving the living standards ofthe population and provide funding for measures toeliminate the effects ofCOVID–19 and the in‑ surance ofhealth workers who directly provide medical services; eliminating se‑ rious disturbances inthe economy through targeted assistance tohouseholds and enterprises; promoting the development ofcertain economic activities orcertain economic areas. 4. The main ways toovercome poverty and income inequality torestore the resil‑ ience offinancially vulnerable Ukrainian households and ensure the development ofhuman capital can include: – expanding the list ofunemployment benefits, inparticular, for payments for reduced working hours, unpaid leave, early termination ofthe contract for the quarantine period, transition totemporary work with lower wages; – introducing paid leave for one ofthe parents tolook after young chil‑ drenand primary school students for the period ofquarantine inkinder‑ gartens and schools; –simplifying the procedure for obtaining long‑term sick leave for the treatment and rehabilitation ofpatients, aswell aslegislative consolidation ofsick pay toisolate all family members living with the patient during outbreaks ofdan‑ gerous diseases, including the COVID–19 pandemic; –introducing incentives for employers toset upsafe work and create new jobs. 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Biorąc pod uwagę fakt, że zapobieganie rozprzestrzenianiu się i lokalizacja niebez‑ piecznych chorób, ich leczenie i rehabilitacja pacjentów dotykają wszystkie części populacji, mają negatywny wpływ na wszystkie dziedziny życia ludzi, a także przy‑ czyniają się do wzrostu zagrożeń społeczno‑ekonomicznych, w tym ubóstwa i nie‑ równości, badanie tego zagadnienia jest niezwykle istotne. Konsekwencje finansowe tych wyzwań dla wielu gospodarstw domowych wyrażają się w spadku dochodów realnych, wzroście kosztów i długów oraz ich niespłacaniu, co generalnie powoduje nagłe ubóstwo i zwiększające się nierówności dochodowe i majątkowe. Cel artykułu: Zbadanie zagrożenia ubóstwem, w tym nagłego ubóstwa, nierówności dochodowych gospodarstw domowych w sytuacji walki z pandemią COVID–19 oraz wskazanie sposobów ich przezwyciężenia. 73 Ways to Overcome Poverty and Income Inequality in the Context of New Global Challenges… Metody: przegląd literatury naukowej, prezentacja danych statystycznych i badania statystyczne. Ustalenia i wartość dodana: W wyniku badań przedstawiono listę nowych zagrożeń ubóstwem i nierównościami dochodowymi oraz podsumowano wstępne oceny skut‑ ków COVID–19 dla gospodarstw domowych; określono oznaki krótkoterminowych strat; oceniono wypłacalność gospodarstw domowych jako możliwy powód nagłego ubóstwa; dokonano międzykrajowych porównań zagrożenia ubóstwem; przedstawio‑ no system pomocy państwa mający na celu poprawę poziomu życia ludzi w okresie wybuchu nowych niebezpiecznych chorób w UE i na Ukrainie; określono sposoby przezwyciężenia ubóstwa i nierówności dochodowych służące przywróceniu bezpie‑ czeństwa finansowego gospodarstw domowych znajdujących się w trudnej sytuacji finansowej i zapewnieniu rozwoju kapitału ludzkiego. Słowa kluczowe: finanse gospodarstw domowych, stabilność finansowa, walka z ubóstwem, nierówności, migracje zarobkowe, bezrobocie, pandemia COVID–19, ekonomiczne konsekwencje globalizacji, państwowe wsparcie gospodarstw domowych © by the author, licensee Łódź University – Łódź University Press, Łódź, Poland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution license CC‑BY‑NC‑ND 4.0 (https://creativecommons.org/licenses/by‑nc‑nd/4.0/) Received: 2020‑10‑30; verified: 2021‑04‑20. Accepted: 2021‑05‑27