Page 24 - bne IntelliNews Ukraine Country Report May 2017

national average wage, placing Ukraine at the bottom of a list of OECD countries for pay – but not any more, according to GAGU.
“The hike of the minimum wage in early 2017 completely reversed the picture. With a ratio of more than 50%, the country jumped to the top of its peer group,” GAGU said in a recent paper.
Before the hike 42% of workers in GAGU’s sample earned less than the new minimum wage level and so need pay rises, or faced the sack if they were unproductive at the new salary levels. And that is the fear: if wages rise too fast then companies will simply shed the more expensive workers.
“In January 2017, employment indeed fall by 1.4% as compared to December 2016, and the question is if this observation can be related to the doubling of the minimum wage in that month,” GAUG asked.
If the minimum wage hike had an effect on employment, this should have been more severe in regions and sectors with a higher share of employees that earn up to the new minimum wage. In terms of regions, Ternopil, Chernivtsi and Kherson stand out, while in the sectoral view the service sector is the most affected. But so far GAGU research has found no link between the new minimum wage and the uptick in unemployment.
The waters are muddied somewhat by the fact that over a third (35%) of Ukraine’s economy remains in the shade, according to the Ministry of Economic Development and Trade. Also wide spread under-the-table schemes to avoid income tax also make it hard to know what is really going on.
24 RUSSIA Country Report April 2017 www.intellinews.com