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EU-Ukraine relations: the role of the civil society…
EU-Ukraine relations:
the role of the civil society
Session 3:
The social impact of the economic crisis.
V.Yurchyshyn,
Razumkov Centre in cooperation with LMDU (Sida)
V.Yurchyshyn
EU-Ukraine relations: the role of the civil society…
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Real average wage
Index, beg. 2006р. = 100
160
150
140
130
120
110
03'10
11'09
07'09
03'09
11'08
07'08
03'08
11'07
07'07
03'07
11'06
07'06
03'06
100
V.Yurchyshyn
EU-Ukraine relations: the role of the civil society…
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Summary Macroeconomic Data
yoy %
2008
2009 (e)
2010 (f)
GDP
CPI
GDP
CPI
GDP
CPI
Euro area
0,7
3,3
-4,2
0,3
0,3
0,8
Switzerland
1,8
2,4
-2,0
-0,4
0,5
0,5
Bulgaria
6,0
12,0
-6,5
2,7
-2,5
1,6
Latvia
-4,6
15,3
-18,0
3,1
-4,0
-3,5
Poland
4,9
4,2
1,0
3,4
2,2
2,6
China
13,0
5,9
9,0
-0,1
8,5
0,6
Ukraine
2,1
25,2
-14,0
16,3
2,7
10,3
IMF World Economic Outlook, Oct.2009
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EU-Ukraine relations: the role of the civil society…
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Structure of average monthly total resources per household
60
54,2
51,6
50
2008
2009
40
30
24,6
27,6
21,2
20,8
20
10
0
labour remuneration,
cash pensions,
income from
stipends, social benefits
entrepreneurship, selfemployment
income from sales of
agricultural products,
cash support from
relatives, non-cash
benefits and subsidies,
pther receipts
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EU-Ukraine relations: the role of the civil society…
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Losses and imbalances of wage policy:
increasing social tension in the society due to the fact
that the percentage of the population with subsistence
income makes one third of the total number;
with existing low-cost labor the interest of owners and
employers in introduction of new techniques and technologies
is undermined;
decline in employees’ motivation for highly-productive
labor, skills improving and updating;
aggregate demand remains weak;
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EU-Ukraine relations: the role of the civil society…
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Losses and imbalances of wage policy (cont.):
low salaries have a negative impact on the increased
economy capitalization, housing market development
the depletion of intelligence and “brain drain” take place qualified professionals leave education, science, and health
care spheres, thus, sharply limiting the development of
human capital;
as a rule, such results are “favourable” factors for
extension of corruption, contraband of inexpensive and
poor-quality goods etc.
V.Yurchyshyn
EU-Ukraine relations: the role of the civil society…
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Average wage and min cost of living
2500
Nominal wage (avg.), UAH
2000
Min cost of living, UAH
1500
1000
500
12'09
09'09
06'09
03'09
12'08
10'08
06'08
03'08
12'07
10'07
06'07
03'07
12'06
10'06
06'06
03'06
12'05
10'05
0
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EU-Ukraine relations: the role of the civil society…
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Credits and deposits of households, UAH m
300000
250000
200000
150000
Credits
100000
Deposits
27.01.10
13.11.09
30.08.09
16.06.09
02.04.09
17.01.09
03.11.08
20.08.08
06.06.08
23.03.08
08.01.08
25.10.07
11.08.07
28.05.07
14.03.07
29.12.06
50000
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… to make social and wage policy successful and
effecient:
higher level of national economic development – more the
economy is interested in the highest average level of labour
income of population, diversity of needs and preferences of
domestic consumers.
And vice versa, the lower the economic efficiency is, the
less goods and services are produced, the poorer their range
and quality is, the more essential is the direct “need” of
the economy in steady low consumer incomes of the
population. Moreover, in this case economy is
interested in unsophisticated needs of customers,
underdeveloped consumer interests;
V.Yurchyshyn
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EU-Ukraine relations: the role of the civil society…
… to make the salary policy successful (cont.):
amid the weakness of state institutions and technologically
backward economy, the more intelligent and potentially more
productive the labour is, as a rule, the lower it is paid (primarily,
concerning research field). Moreover, low-paid labour of leading
employees occupied in intellectual spheres and sectors researchers, designers, engineers - disincentivises labour
efficiency in the economy;
artificially-low remuneration is an important factor in the
degradation of labour. Under these conditions it (low
remuneration) more serves the purpose of social support and can
not be a factor of welfare and quality of life.
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EU-Ukraine relations: the role of the civil society…
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GDP – hope of recovery in the short term ?
- Final consumption expenditure of households in the near
future will not grow rapidly.
Retail trade turnover continued to decline, indicating a further cooling of domestic
demand and consumption.
-Investments – current economic situation does not create
incentives and preconditions for increasing capital investment/
- Net exports remain volatile and depends on the pace of
recovery in the world economy, in particular the demand for
key Ukrainian export.
Rising energy prices (natural gas) can grow faster than prices of metal products.
Imports stimulation in the case of aggregate demand growth in Ukraine.
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EU-Ukraine relations: the role of the civil society…
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Risks of the post-crisis period for Ukraine
-decline of domestic demand: significant decrease in
household incomes, access to credits for businesses is
hindered; for the export-oriented business – decline of foreign
demand;
- deinstitulisation of the economy. State measures to
support economy inevitably mean substantial growth of the
state’s role in business. This may result in politicisation and
monopolisation of markets, curtailment of private initiatives.
V.Yurchyshyn