The forced stoppage put many enterprises on the brink of survival, affecting their ability to pay salaries. They began to accumulate debts more actively. YouControl analysts, a system for checking counterparties, analyzed data from the registry of the State Labor Service, and identified areas with the highest debt. We paid special attention to the delay in salaries for doctors and presented its dynamics in the quarantine period.
From 2017 to 2019, wage arrears increased by UAH 662 million (25 million USD, or 25%, which amounted to UAH 2.55 billion (95 million USD). During this time, the structure of debt has changed. So, if at the end of 2017 this issue was most concerned with the private sector - 75% of the total debt (UAH 1.4 billion or 52 million USD), then at the end of 2019 the private sector owed 63% to employees, and the public sector salary debt increased from 480 million UAH (18 million USD (in 2017 to 932 million UAH (35 million USD) in 2019. As of May 2020, the amount of debt in all sectors increased by UAH 300 million (1,1 million USD), which is a significant trend, because the year has not yet ended.
Most of the debt in the processing industry, in enterprises manufacturing electrical equipment, including ships, air and space vehicles, military equipment, weapons, and railway locomotives. The debt amount of 129 enterprises from this industry is UAH 1.26 billion (47 million USD). For comparison: the debt of 94 enterprises operating in the food industry is only 4,3 million USD.
One of the saddest trends in the accumulation of debts was shown by tourism and food. During quarantine, namely from March 10 to May 18, wage arrears increased six-fold - from 263 thousand UAH (9,700 USD) to 1.72 million UAH (64,000 USD). The sphere of art, sports, and leisure showed the most positive dynamics in the reduction of wage debt in this period. In May, it decreased to 27,500 UAH (1,000 USD), when in March it amounted to almost 120,000 UAH (4,500 USD).
In terms of the amount of debt by regions, the situation looks gloomier. The heaviest debt burden lies on the Donetsk region. On May 18, the amount of debt in this area amounted to an impressive 579 million UAH (21,5 million USD). Kharkiv, Dnipropetrovsk, Sumy regions, and Kyiv are among the leaders of the debtor regions. The sum of debts of these regions together with the capital is 80% of the total debt and slightly exceeds 2 billion UAH (74 million USD).
We add that information on enterprises' debts by industry may include deviations since not all companies have an identification number in the register. The debt of the designated enterprises amounts to almost 180 million UAH (6,7 million USD), or 6% of the total debt.
As of March 10, the salary debt to doctors amounted to almost UAH 15 million (558,000 USD), but the data for May 18 indicate its growth by 54% during the quarantine. The largest increase in debt is observed in the following areas: Lviv (debt increased by 6.33 million UAH or 235,000 USD), Ternopil (by 1.79 million UAH or 66,000 USD), Sumy (by 0.39 million UAH or 14,500 USD) and Kyiv region (by 0.72 million UAH or 26,000 USD). It is noteworthy that the total salary debt in Ukraine decreased slightly during quarantine (from 109 to 331 million USD), and the debt to doctors only grew. By a sad coincidence, among the leaders of debt anti-rating are those regions of Ukraine where the epidemic of coronavirus infection has spread most widely. Data from the registry of the State Service indicate that the largest share of debt falls on institutions with the main Standard Industrial Classification, “Activity of hospital facilities” and accounts for more than 60% of the total debt on physicians.
Although the debt to doctors is less than one percent of the total debt on salaries of all industries, it should be noted that this percentage is the most important during the epidemic. According to information provided by YouControl by the National Health Service of Ukraine (NHA), from March 1 to May 21, the service paid 165 million USD to primary health care institutions, 360 million USD to specialized and emergency care institutions, and for care for patients with Covid – 9,2 million USD UAH.
YouControl checked the arrears in the register of the State Labor Service and found that institutions that had debt on May 18, reduced it by only 10% on May 25.
Danylo Globa, YouControl deputy director of legal affairs, notes that the unjustified non-payment of wages is a criminal offense (article 175 of the Criminal Code of Ukraine). For this, the head of the enterprise may be fined up to 630 USD. The most severe punishment involves imprisonment for up to 5 years with deprivation of the right to occupy certain positions or engage in certain activities for up to three years. In addition, he says, the enterprise itself can be brought to financial responsibility (Article 265 of the Labor Code of Ukraine) in the amount of 527 USD.