Why in Ukraine is the low salaries

Почему в Украине низкие зарплаты

Do not criticize employers.

In fact, the issue of unemployment and low wages is a market phenomenon. There is a demand for labor. I have a suggestion.

Depending on your field of expertise, it can vary. Somewhere the demand is higher, somewhere offer. Another problem aggravated by globalization, where labour competition is not only between companies but also between States. Only it’s not the key problem.

In Ukraine there are more severe structural problems that lead to this state of Affairs.

If to speak about Ukraine, we are the key issues in the labour market:

1. Poor performance. According to the world Bank on average each working person in the country produces products of 5 thousand dollars a year or $ 400 per month. It is very small! Because an employee who produces $ 400 per month, the company physically can’t pay more than this amount.

2. Low wages themselves create another problem – low customer demand. In simple language, the person eats less. Spending on clothing less. At cafes, cinemas, different kind of holiday. For example, the consumption of meat we have in almost three times less than in Europe. Ukrainian consumes 13 kg of pork a year, compared with 33 kg in Europe. Given that pork is our national product, it is very small! It is clear that the low consumption is reflected in business performance!

3. A vicious circle of low productivity and consumption gives rise to the following issue – high dependence on exports. If the Ukrainians are not able to consume enough products to sell to foreigners. Here, Ukraine does not possess success. We export is 1.2 thousand dollars per inhabitant. In Poland, the figure of 6.5.

Why is the country such a big problem with the economy?

The first is the high proportion of agricultural economy. Worldwide agriculture is the most inefficient. For this reason, still, to maintain good performance in Europe allocate subsidies to the sector.

To income, and hence consumption, people are not lagged behind other industries. The developed countries still maintained high import duties. A striking example of Switzerland. The world’s highest duty to “arguru” (40%) maintain high income of farmers and make non-competitive products of other countries. For this reason, the country is very expensive prices for food.

Second. The decline role of industry. In fact, the industry is still significantly wacoproductions the agricultural sector. The paradox of Ukraine in that part of the industry not working at full capacity, and outsourcing.

And it turns out that we create your product with high added value, and work on a small Commission for the creation of this product to other countries. So IT works, factories producing parts for well-known brands of textile production. All this affects the reduction of productivity, wages and exports.

Third. Ukraine produces less finished products with high added value. It also leads to low productivity, wages and exports.

Paul Wernovsky.