Transnational corporations might prevent economic catastrophe of oligarchic country

Author : Olexandr Honcharov

Source : 112 Ukraine

Income the average Ukrainian fell below the level of the inhabitants of North Africa
11:10, 28 July 2017

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112 Agency

Only the transnational corporations from the US, the EU, and Asia are able to stop the movement to the economic catastrophe of an oligarchic country. The actions of our overcredited oligarchs, nurtured by the cynical politicians, only exacerbate the already difficult situation in the economy and escalate the demographic crisis.

For example, a leading analyst at Warsaw Enterprise Institute and the Polish defense industry companies adviser Andrzej Talaga said: "The income the average Ukrainian fell below the level of the inhabitants of North Africa. The scale of decline is so great that it requires a radical plan for strong international support, but anything is still not happening…" According to statistics, all the poorest citizens - pensioners and recipients of subsidies – suffer the most.

However, according to the Cabinet, the average salary in Ukraine is growing. In this regard, the State Service of Statistics notes that the average nominal wage in March this year increased to 6752 hryvnia, that is, increased compared with February (by 6.8%), and by 18.7% compared with March of the last year in 2016. In accordance with the reform of the wage system in the country, the average wage is projected to increase by 37% by the end of 2017. But we must not forget that more than a half of this growth is eaten up by inflation, and that the final statistical figure significantly distort the data for a very narrow group of highly paid officials and top managers of state enterprises.

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For example, the head of the Naftogaz of Ukraine has a salary 2.5 times higher than the US President Obama had.

But the worst thing for our economy is that the outflow of the human capital from the country is intensifying. The same Polish expert points out that in 2017, 1.2 million Ukrainians are in Poland, who came in search of work and a large part of them can stay here forever. Talaga also suggests that due to the abolition of visas with the EU, migration will only increase, and depopulation of Ukraine will become even more likely. By the way, not only the poor citizens of our country are in distress, but also those who, according to our standards, have high incomes.

Judge for yourself, in recent years, the population's saving behavior has changed quite dramatically, i.e. If before the crisis, we had a model of increasing consumption by increasing the debt, now the propensity to save has sharply increased. This is due to the fact that people are forced to save money for a "rainy day" because there is no confidence in the prospects of employment. Real unemployment is only growing. Now I have no doubt that the "unfreezing" of the loan portfolio of the population will take place later than the "unfreezing" of Ukrainian enterprises portfolio.

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In this period, it is necessary to actively engage financially well-off people to insurance companies, non-state pension funds and institutions of joint investment in the domestic market. Finally, job loss and loss of earnings are different things, this is a key social risk. And since we aspire to the EU, Ukraine is also obliged to introduce an accumulative system and all types of social risks to insure our employees. Go to a single National Insurance Fund, including pension, social, health insurance, as well as insurance against job loss and so on.

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It is not difficult to foresee the dumb question of our MPs, they say, then employers will have to pay contributions. Yes, it is necessary! And these contributions in the EU countries fluctuate from 0.15% of the wage fund in France to 0.5% in Estonia. I also admit that politicians who have been paid by oligarchs will raise the howl and groaning, they say, they will also rob us here. But if you do not want to pay fees, pay a decent salary to your employees, insure the risks.

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Well, and, of course, a fair question arises: how exactly can transnational corporations help us? Here is the answer. They have too much liquidity not to be engaged in primitive speculative operations, and therefore being strategically-oriented, they are interested in investing their long investment money in infrastructure projects in the organized public market and in the real sector of the Ukrainian economy. To stimulate the development of local medium and small businesses in order to maintain domestic demand at the proper level and ensure the growth of people's real incomes.

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Otherwise, we with our foreign colleagues will continue to record the decline in the incomes of the population of Ukraine. By the way, foreign investors often ask, if they are so clever, then why are they the poorest and most disorganized nation in Europe?

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