The Ukrainian economy has been hit hard over the past two years by the shock of continuous geopolitical crises. The economic instability that followed Russia's annexation of the Crimean peninsula and the commencement of the pro-Russian separatist conflict in the eastern Donbas region in 2014, on top of the country's already shaky economic outlook prior to these crises, have hit practically all industries. Ukrainian daily Obozrevatel.ua recently published a list of major companies that are nearing insolvency or are unable to pay salaries to their workers. The list includes the country's most important corporations -- some state-owned, some private. According to the publication, in Kyiv alone at the beginning of October 2015 employers owed their employees nearly 81 million hryvnia ($3.56 million), and among the regions with most wage arrears is the war-torn Donbas, where employers owe more than $13 million in salaries.
One of the major debtor in the country is the city Kyiv and the surrounding Kyiv region. According to the Ukrainian Ministry of Social Policy, the list of indebted employers includes the state-owned Quantum Research Institute, which has failed to pay its 450 staff nearly $340,000, along with government factories like Burevesnik (which owes $184,000 in salaries to its workers) and Arsenal ($92,000 in wage arrears). The last two enterprises are part of Ukrainian military-industrial base and are key to nation's security. It is not just industry that has been hit hard - Obozrevatel.ua found the Ukrainian Socialist Party also owing money to its staff.
The largest debtor in the Kyiv region is the private airline Aerosvit. The company, which two years ago was declared bankrupt, still has to pay its employees nearly $5 million. Former employees have almost lost hope at this point of receiving their promised salaries. Some Aerosvit ex-employees, on condition of anonymity, said that they are owed $44,000 each. It is rumored that when the company paid pilots their overdue salaries, the executives demanded kickbacks of nearly 5-10 percent of the debt.
The biggest debts in Ukraine belong to the enterprises of the war-torn Donetsk region, where separatist military activities backed by Russia have disrupted the economic and industrial infrastructure. Despite the war, some large steel and coal plants are still operating there. Among Donbas's largest debtors are Selidugol, Krasnoarmeyskugol, Azovzagalmash, Azovelektostal, and many others -- all together, 163 regional enterprises owed a total of nearly 300 million hryvna, or nearly $13.2 million. In particular, at the Azovzagalmash state enterprise, which is located in peaceful Mariupol, just miles from the frontlines, and is a key city between the rebel-controlled area and Russian-annexed Crimea, the employees are owed 70 million hryvna. Those who still show up for work are assured that all fault lies in the lack of government orders.
"I was not paid during the summer months ... believe me, no one here blames the management - how can they give us money if the company has no orders. I don't remember when the state placed any such orders ... The last large order was a rocket-space complex for Brazil (in 2013)," said one of the employees on condition of anonymity. And it is not any better in the industrial Dnepropetrovsk region, home of the Yuzhmash machine-building plant, once famous across the Soviet Union. According to the head of the plant's independent trade union, the factory is working only one day a week starting this October. According to the Ministry of Social Policy, Yuzmash owes its employees more than 47 million hryvnia. This amount is large enough to outpace the debts of entire regions such as Luhansk and Volyn.
Despite such problems, there is hope that Kyiv government can take appropriate steps to prop up its economy. This September, Parliament voted to approve an $18 billion debt restructuring deal. According to the Financial Times, such restructuring would allow the recently elected pro-Western government to continue economic reforms in the country while raising pensions and salaries for cash-strapped citizens, helping to stave off inflation in the second year of an economic recession.
(AP photo)
