<!–:en–>Ukraine Sees a Phenomenon Rare for Europe – Poverty-Stricken Employees<!–:–>

The economic monopolization and appalling conditions of business development – both domestic and foreign – result in technological underdevelopment and low demand for labor. As a consequence we see a phenomenon rare for Europe – poverty-stricken employees, the magazine Correspondent writes.

The magazine has two pieces of news from the labor market – a good one and not so good one. The good news is that the German concern REWE Group has opened its 24th Billa grocery supermarket in Ukraine. The bad news is that the company offers extraordinarily low salaries – about UAH 2,000, i.e. a third lower that the average in the country.

The journalist states that the answer to the question of why the global giant does not want to pay decent salaries is obvious – there is no reason to pay more.

The companies with yearly revenue in the millions – the large grocery retail networks, agricultural giants and even transnational corporations that have settled in Ukraine – keep hundreds of thousands of low-paid employees, the magazine explains.

The main reason for the low salaries is the fact that the Ukrainians agree to almost free labor due to the shortage for jobs which results from the narrowing of business activity. According to the State Statistic Service data 70,000 companies were shut down in 2012.

The second reason is the high fiscal pressure on the social safety nets and unemployment insurance, Correspondent writes. In Ukraine these rates are two times higher than, for example, in Germany. The third reason is the low labor efficiency and technical underdevelopment of domestic companies that yield a small wage share of the products' total value.

The head of the Committee of Economists of Ukraine Andrei Novak has stated the fourth reason is the low minimum wage. “The private sector is oriented onto the official minimum salary (UAH 1,143). It is the same even at the very successful companies”, the expert states.

The magazine gives another good example: Chernovitsi Garment Factory Arnica manufactures lingerie for the demanding European women of fashion. The world-known German brand Triumph International – is the factory customer.

It is a lucky break to get into the most profitable world market, the journalist writes, but even such favorable circumstances do not promote the factory tailors’ prosperity. On the average the salary of each of the 300 employees is about UAH 2,000, i.e. a third lower than the average in the country. This troubling situation is widespread in Ukraine. At the better part of the large and huge companies, the salary of the employees is extremely low despite the fact that the employers get a very good profit. For example, Lugansk company Alfa which supplies the automobile filters to Germany, USA, Poland, and South Korea pays its employees about UAH 1,800 a month.

The personnel of the grocery retail network ATB-Market is in the same situation. Despite the rapid growth (the network turnover in 2007 was USD 880,000,000 and in 2012 – over USD 2,200,000,000) the network offers its employees a salary of UAH 1,700 a month. As to what does not allow the companies to pay their employees more and how the corruption and fiscal pressure affect the companies’ opportunities, read the article in the new magazine Correspondent No 2 issued on January 18, 2013.

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