According to the 2018 Humanitarian Response Plan for Ukraine, cash-based interventions and in particular multi-purpose cash (MPC) programmes continue to be one of the most appropriate and timely way not only to assist people in meeting their basic needs but also to further drive local economic growth through humanitarian assistance.
Since 2015, the Cash Working Group (CWG) has been playing an important role in facilitating the process of determining the income gap between the actual subsistence level and the average incomes in conflict affected areas of Ukraine. Tracking this income gap informs the periodic review of the Multi-Purpose Cash (MPC) transfer value, done on annual basis since 2015.
The CWG guidance document endorsed by the CWG in September 2017 showed an income average of 1,626 UAH/month. Average income levels were calculated based on several datasets provided by REACH, ICRC, WFP and IOM, which covered various vulnerability assessments of conflict-affected population living in GCA. The income analysis undertaken by CWG in June 2018 indicated that the median income per person per month for the general population in the 5km area of GCA grew by 40% (up to 2,269 UAH) comparing to the average income estimated by CWG in 2017. However, the mixed 2017-2018 income data for vulnerable population provided by humanitarian partners showed a minor 2% increase in average income per person (1,662 UAH/month). At this time, the CWG therefore agreed that the previous MPC guidance document approved by CWG members in September 2017 (endorsing a UAH 860/person/month) remained relevant for summer 2018. The partners, however, raised concerns regarding the increasing tendency observed for the actual subsistence line, and agreed that the 2018 income gap estimate for vulnerable population would be undertaken in autumn 2018 to determine whether the MPC assistance value should be amended in line with possible immediate and future changes in average income and actual subsistence line.
Income Gap Identification
The actual subsistence level in Ukraine is calculated and published on monthly basis by Ministry of Social Policy of Ukraine (MoSP). Graph 1 represents the dynamics of actual subsistence line since January 2017, highlighting the dynamics since the last increase of MPC amount in September 2017.
Despite seasonal summer decreases, the graph reflects a steady upwards tendency, with the average subsistence level increasing by up to 2.1% each consecutive month. In 2018, the average subsistence level thus increased by 9% to 15% when compared to the same month in 2017, with an overall average increase of 12% since September 2017. The average actual subsistence level for 2017 totaled UAH 2,941/person/month, while the average value for the first 8 months of 2018 was equal to UAH 3,235/person/month, representing a 10% increase. Considering the typical increase in actual subsistence line observed in winter, it is projected that the total yearly increase will reach at least 12% by the end of 2018.
The average income data, provided to the CWG for the analysis by humanitarian partners implementing cash programs in 2018, varied significantly from 815 UAH/person/month to 1,717 UAH/person/month (per agency) with the total average of 1,467 UAH/month or 46% of the actual subsistence level as of August 2018. However, several datasets provided by partners and included into analysis were comprised of beneficiary income data rather than general vulnerable population data, suggesting that the corresponding income data might be affected by the targeting and selection approach applied that in certain cases may be rather strict. The specific selection methodology adopted individually within the organization may add a distortion to the average income data, unbalancing it towards the highly vulnerable segment of the vulnerable population.
The analysis of average incomes of the general population in the 5-km area of Donetsk and Luhansk, GCA has shown that the average monthly income of in this area is UAH 2,000/person/month or 62% of the actual subsistence level as of August 2018. With reference to the previous assessments conducted by ACCESS MPC partners in 2017, the average monthly income of vulnerable population in the 5-km area of Donetsk and Luhansk, GCA does not exceed 85% of the general monthly income. Considering the latest REACH data, it suggests that the average monthly income of vulnerable population in the area of interest does not exceed UAH 1,700/person/month (53% of the actual subsistence level), which means that the vulnerable groups targeted by the humanitarian community continue to live at an income level significantly below the minimum cost of living.
As such the analysis above unlikely indicates on the increasing tendency in the average monthly income of vulnerable population residing close to the line of contact, while the income gap tends to increase in line with the growth of actual subsistence level reaffirming the assumption made in the previous analysis of the income gap undertaken by the CWG in June 2018.
MPC Value recommendation
The analysis of several datasets provided from the 5-km area of Donetsk and Luhansk, GCA has shown that despite the observed increase in the average monthly income of general population, there has not been a corresponding increase in the average monthly income of vulnerable and highly vulnerable population during the past year. Meanwhile, the actual subsistence level calculated by the MoSP, as indicated above, increased by 10% between 2017 and the first 8 months of 2018, with no tendency for the average cost of living to stabilize. These facts have resulted in the corresponding increase in the income gap for the vulnerable population living along the line of contact in GCA. '
Based on the above, the CWG proposed to increase the MPC transfer value by 12-15% in line with the increase of national actual subsistence level and considering the tendency of humanitarian cash actors to progressively move focus from the vulnerable population to the highly vulnerable one. During the CWG meeting held on the 11th of October 2018, partners endorsed the current recommendations and agreed to increase the MPC transfer value by 13% up to UAH 970 (per person per month). The new value goes into effect immediately. However, it can be reflected in individual agency programming as appropriate considering donor approvals and on-going distribution cycles.
Considering the steady growth of national actual subsistence level, the CWG highlights the importance of regular bi-annual income gap analysis to inform possible transfer value changes
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