Wage Indexing

Indexing wages – a mechanism for increasing income of the population intended to compensate for increases in consumer prices for goods and services. The mechanism and conditions of the index are regulated by the Law 491-IV "On Indexation of monetary income" from 06.03.2003, and the arrangements for indexation (CMU decree 1078 of 17.07.2003 was). Consider the indexing of one of the types of income of the population – indexing wages paid employees at the company. The algorithm for calculating the amount of indexed wage is rather complicated, because requires consideration of many nuances. Increasing incomes and in relation to indexation carried out with the first of the month which begins the month in which the officially published consumer price index. Indexation of personal income (wages in particular) is carried out if the value of the consumer price index exceeded the threshold index, which is set at 101 per cent.

Indexing to be wages, which includes wages for work performed under the tariff rate (salary). Indexing and subject to additional payments, allowances, bonuses and warranties provided by the legislation and compensation, with a permanent character in the cost of living for the working age population. That part of the money funds, which exceeds the size of a living wage, indexation will not be reimbursed. The amount of indexing is determined by multiplying the subject of wage indexation on the amount of growth of consumer price index, divided by 100%. Month, which provides an increase in wages, as well as the month when the employer and the employee executed an employment relationship is considered to be basic, and indexation of wages in this case performed.

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