The report is intended to determine theappropriateness of the social protection system in meetingthe needs of the poor in Ukraine, and what are the changeswhich can be instituted to improve such system. To this end,the report presents the poverty measurement in the country,assesses current social programs, and suggests a frameworkfor system redesign. In particular, it points at thechallenge of a transition economy, in realizing that povertydoes appear even among the employed population, whilechildhood poverty does indeed affect the future of a nation.The study presents the survey methodology, based on ahousehold survey, measures of income and expenditure, and ofinequality, examining the poverty line through amultivariate analysis of poverty risks in the country,including housing subsidies, energy arrears, in addition towar entitlements and privileges. It finds that the Ukrainiansocial support system could address social needs well, as ithas sufficient resources to do so, though currently, it doesso poorly. Thus resource allocation needs to be improved, bytargeting categorical benefits, testing asset and incomepotential, as well as using indicators to substitute for thedirect measurement of income. An additional quantitativeanalysis will be required to better plan management, andeffective evaluation, in addition to a system redesign toreduce funding for poorly targeted programs, whileincreasing social funding at large. A strategy is proposedto phase-in a social assistance reform over a four-yearperiod, supported by the Bank.
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