Economic crisis in Ukraine

[MatryoshkaMan]

2 women I am chatting with - have illustrated the economic crisis that is gripping Ukraine at present.

Case #1 - salary slashed from $500 per month (Grivna equivalent of course) to $200 per month. Sounds like to make it a bit fair she is also working less - 1/2 time?

Case #2 - Salary slashed from 10,000 grivnas per month (about $1300) to about 5,000 (about $650) - for same job working same hours.

Costs have nor dropped to correspond to the wage cuts according to them. And we think we have it rough here!

Anybody else heard any similar stories lately? How is Russia faring in comparison?

[Ravens9273]

These two examples do not seem normal and very odd. Both very high salaries for Ukraine to begin with and salaries are normally done in US Dollars. Not Grivna. The fact salaries were stated in Grivna and at such high amounts for Ukraine seem very odd and makes this not believeable.
$1300 and $500?

Average salary in ukraine is about $250 per month.

My wife worked as a nurse. Average 67 hours a week and made $90 a month. I would say the two you talked to are well above everyone else even if they took large pay cuts.

[ECOCKS]

Very believable for Kyiv. The first is a middle class white collar type and the second is more of a semi-skilled wage level. Receptionists used to be making $500-600 regularly and sales reps and the like were over a thousand regularly. I would find this normal, especially for a gal who was sophisticated enough to speak English and be actively engaged looking for a foreign husband.

This has been going on for almost 8 months. Salaries have been slashed, sometimes as much as 60%, and employers may cut hours but more than half seem to be still expecting 40 hours a week (or more). Downsizing is prevalent throughout the country.

It's an employer's market over there right now.

[Mir]

Maybe this makes any sense:

http://www.payscale.com/research/UA/Country=Ukraine/Salary

[Sculpto]

officially reported pay and the amounts passed under the table are not congruent with the reported average income, espeically in Kiev, Donetsk and probably the other major cities.

[MatryoshkaMan]

The lady who told me she WAS making about 10,000 Gr. per month also told me that her rent in Kiev is $350 per month so obviously the economics in Kiev are quite different than the rest of the country.

[janic]

her rent in Kiev is $350 per month

??? Rents must have dropped significantly since I lived there. Even if she lives on the Borispol-side of the river. A small apt. in one of these ugly old blocks on the other side was not less then ~500 USD 2 years ago.

In respect to the salaries I would agree with ECOCKS. Above average but very believable.

[tfcrew]

The above link by city..
http://www.payscale.com/research/UA/Country=Ukraine/Salary/by_City

[Ravens9273]

The above link by city..
http://www.payscale.com/research/UA/Country=Ukraine/Salary/by_City

I will not argue with salaries in Kiev. I am not familiar with Kiev so It could be possible and will take what others here have said. However the above link is so far off based. I think they have US Dollars and UAH confused.

I can believe average income in Odessa be 18,000 UAH a year. Not 18,000 Dollars.

I did a search on google for average income in Ukraine. What I saw on several was average of 1500 UAH per month.

If the above numbers were correct on that website Ukraine would be considered a developed country and not a 3rd world country.

By those numbers Ukraine would be the 8th highest earning income country. Fitting in above Spain and Greece.
If these numbers were true us Men would not be the ones doing all the traveling. USA would have opened the doors to Ukraine for VISA FREE travel and I would not have headaches as to where to take my wife on vacation that will allow her to go without a visa. So many more options would be open with those income numbers.

[JR]

I have spoken with a lawyer in Russia who was laid off in such a way that she didn't get severance.

I have spoken with another woman who worked in numimatics and she was sent home indefinetaly without pay. She is applying for other jobs and is a bit depressed because during a second interview she was told she is one of two hundred being considered for one position.

I have spoken with another woman who has had her wages reduced by 40% but is still working 60 hours a week.

The woman I just visited in New York was laid off from her job with a real estate firm.

All of these ladies are from Moscow.

Things are tough everywhere.

[Sculpto]

from what I am hearing Russia is imploding. 

Lily... how are things from your viewpoint?

[ECOCKS]

The above link by city..
http://www.payscale.com/research/UA/Country=Ukraine/Salary/by_City

Take a good, close look at the number of respondents to that survey - 403. Out of a total population of 45 million-odd.

As mentioned above, legal wages are under-reporte, sometimes as much as 20 percent of what is actually received (tax scamming on a national, institutionalized level). Also, salaries will be higher in the 6 major cities than the millions who still live in the provincial villages. Government workers - healthcare, teaching, adminstration, militsia and military are extremely low-paid so disregard them from consideration unless you're dating someone who works for one of those.

Rents are much cheaper outside of the major cities with Kyiv and Odessa topping the charts in rentals per sq. meter. Still  you can be easily thrown off by this since about 85% of the poulation still live or possess their inherited apartments from the post-breakup days. Even the new generation in the workplace is often living in crowded conditions with their parents and families. Often girls from the provinces come to the big cities and share with 1-3 others to keep costs down and still send some money home to take care of the parents and children. So, don't let the seeming incongruity of apartment rentals versus income throw you.

Most people still do not have a car and rely on the extremely cheap public transport although costs have risen by some 300% it is still a great deal for the residents. Trains are also extremely cheap with a basic slot in a sleeper compartment running roughly $40-50 to go all the way across the country.

The bigger thing to remember though is that anyone you run into on credible sites is from an above-average group as well. If they speak fair or better English, they have an additional skill that most in the country lack. Just because all are "college graduates" don't assume they are equal to ours here, either in sophistication or earnings power. Many college grads are excited to be working in mundane jobs such as office boy, cell phone salesman, hotel waitress, desk clerk, etc.

Anyway, these are normal situations you describe for the type of people most of us would end up dating.

[Kuna]

from what I am hearing Russia is imploding. 

Lily... how are things from your viewpoint?

Imploding???  Not from what I saw...  but I'm sure some people are finding it hard.

When eating out in Moscow we almost always were in places that were full.  I was surprised at the number of young (twenty-something) couples dining out in quite expensive restaurants...  Coffee shops seemed busy and shops/supermarkets were definitely busy.

I did notice a lot of commercial properties for rent - but at the same time there were still several highrise commercial buildings under construction around Moscow's 3rd ring road.

In St Pete the streets and bars/restaurants were busy at night, and cafes/coffee shops seemed to be well attended during the day.  It may be an unfair comparison because of the number of tourists and I guess tourists will have money to spend.

In Dnepropetrovsk there were definitely some businesses closed since our last visit.  Some of my wife's friends have had wages cut but none have had hours cut.  On the other hand others seemed to be doing pretty much OK...  especially those working in the tech sector.

My wife was surprised at the number of women with children because she was expecting a baby drought to accompany the news of the declining economy.

My wife's former workplace have done some restructuring but their new offices are nothing short of opulent... equal to or more luxurious than anything you'd find in my thoroughly modern city.

Living costs have definitely gone up and you can see that in Dnepr in basic things like public transport, meat  and utility costs... 

Yes, things are tough in FSU but to say Russia is imploding is just another questionable comment from a poster with questionable judgement.  Without doubt Dnepr appears to be in a much different position to Moscow and St Pete - but that may have something to do with the big city versus smaller city comparisons.

[Sculpto]

Imploding???  Not from what I saw...  but I'm sure some people are finding it hard.

When eating out in Moscow we almost always were in places that were full.  I was surprised at the number of young (twenty-something) couples dining out in quite expensive restaurants...  Coffee shops seemed busy and shops/supermarkets were definitely busy.

I did notice a lot of commercial properties for rent - but at the same time there were still several highrise commercial buildings under construction around Moscow's 3rd ring road.

In St Pete the streets and bars/restaurants were busy at night, and cafes/coffee shops seemed to be well attended during the day.  It may be an unfair comparison because of the number of tourists and I guess tourists will have money to spend.

In Dnepropetrovsk there were definitely some businesses closed since our last visit.  Some of my wife's friends have had wages cut but none have had hours cut.  On the other hand others seemed to be doing pretty much OK...  especially those working in the tech sector.

My wife was surprised at the number of women with children because she was expecting a baby drought to accompany the news of the declining economy.

My wife's former workplace have done some restructuring but their new offices are nothing short of opulent... equal to or more luxurious than anything you'd find in my thoroughly modern city.

Living costs have definitely gone up and you can see that in Dnepr in basic things like public transport, meat  and utility costs... 

Yes, things are tough in FSU but to say Russia is imploding is just another questionable comment from a poster with questionable judgement.  Without doubt Dnepr appears to be in a much different position to Moscow and St Pete - but that may have something to do with the big city versus smaller city comparisons.

Kuna, I dont disagree about Moscow.  Its been a few months already but there were no obvious signs of implosion when I was there, on the contrary.  I am basing my comment on what my lady and others have told me about the situation in Tomsk and the reading I am always doing. 

[ECOCKS]

If you define implosion as contraction of the GNP then both Russia and Ukraine can fit that. I don't pay much attention to Russia's ineptly managed economy except as it affects their political posturing and amusing saber-rattling, but even their internal propaganda seems to be falling short lately. If they keep straining their credibility and manage to completely destroy their FDI environment, then implosion and widerspread chaos is possible.

This will be a trying time for the oligarch's. Darwin's law, accompanied by whatever law governs sheer ruthlessness, will winnow out some of the lucky, opportunistic ones who have played both sides of the fence for too long. Others (smart ones who are a bit older) may figure this is a good time for retirement to Switzerland or a Black Sea dacha.

[Sculpto]

I think ecocks is 100% right from what I am hearing and reading.  Moscow is a bubble.. not so different from where I live.. one of my FB friends posted the other day.. "no recession in SF" and defended it by mentioning a high end restaurant was full of diners.  Yet.. the retail vacancy rate is the highest I have ever seen in the 19 years I have lived here and more people i know are laid off than at any period in that same time period.  All that shines is not gold.

[Kuna]

This will be a trying time for the oligarch's. Darwin's law, accompanied by whatever law governs sheer ruthlessness, will winnow out some of the lucky, opportunistic ones who have played both sides of the fence for too long. Others (smart ones who are a bit older) may figure this is a good time for retirement to Switzerland or a Black Sea dacha.

Define oligarch... and then I might tell you you'll be sorely disappointed to find some are doing amazingly well.  When money is short some will profit no matter what.

I will not share some of the things I saw on my last trip to Moscow but I will tell you the posts by the pretenders on this board have no relationship to the reality I saw.  (This does not refer to you ECOCKS)

Those rubbing their hands together at Russia "imploding" just have no clue.  Yes, things are tough for some but people need to remember the current downturn is NOTHING compared to the hardships in the history of Russia (and Ukraine).  These people deal with hardship in ways we will NEVER understand.

I think there are a lot of envious people living in the west...  that just justify their naivety in strange ways.

[kievstar]

I just returned from Eastern Ukraine and many people are doing very well.  Maybe construction cranes are not swinging like they did or commodities selling.  But there are many ways to make money in Ukraine.  Take the average reported wage and times it by three and that is a more realistic salary.  Of course 90% of the population is poor but they have always been poor.  Even when not working they find ways to get by. 

Past two years approximately 7,000 to 7,500 people reported wages higher than 1 million Ukrainian currency (see link below - note this is far from 1 million usd).  The largest number of rich citizens in Ukraine live in Kyiv, Donetsk and Dnipropetrovsk according to the article.  Do you think a country of 45 million people only has 7,000 people making more than 200,000 usd a year. 

http://www.kyivpost.com/nation/44399

Regarding Moscow and housing.  If people want to live in Moscow, prices will stay high as long as demand is more than supply.  Moscow is different than Kiev.  Majority of the expensive apartments in Kiev were bought by foreigners for investment.  Was speculative.  With job losses the demand is not there and these foreign buyers are in trouble.  Moscow is more than just oil it is a major city with many foreign companies eastern Europe headquarters or sales offices there. 

What is Kiev's business?  Not as clear as Moscow.  More of a political city as many of the rich people in Kiev are from the East and only are in Kiev as that is where the political scene is.  Areas of Kiev are controlled by the various mafia clans not as clear as in Donetsk which is the most dominated mafia city in Ukraine and people who live there all know which areas are controlled by who.   

Moscow is a real city and Kiev is a mickey mouse economy.  Rich people needed apartments / housing to live in.  But it was overbuilt and oversold.  There is limited new investment coming into Kiev and there is little reason for a foreign company to open up there eastern Europe head quarters or sales office in a country when Moscow and Warsaw are better options.

Kiev airport is a disgrace with limited foreign flights.  Hotels are way behind schedule to be built.  Businessmen do not like staying in apartments.  When city of Kiev had a major banking conference last year, they ran out of hotel rooms.  One conference did that.  Can you imagine a city of 3 million people wanting to have two major conferences at the same time?  Kiev was about hype and many people got rich and now many people are also held with the bubble burst.  Most of the victims are not from Ukraine as they were not as stupid to invest in 500,000 usd plus apartments before they were built.  Also, the foreign construction companies seem to be hurting but the local ones controlled by the various clans are not.  That is enough for one post.  Clans may not be a correct term but it is what executives at the consulting firms in Ukraine use to describe the various mafia clans.  Do not buy into Kiev unless your in the know. Otherwise your just buying a lottery ticket. 

[Gator]

Kievstar,

Good report.

Regarding Moscow, my wife is there for three weeks (leaving the kids with me).  The economy is neither booming nor suffering.  The major complaint is that prices have increased (I suppose because of market devaluation of ruble).

One of her friends has purchased an apartment under construction outside the fourth (and final) ring road around Moscow.  She paid it off over a year ago and the building is still not finished.  The level of construction activity is slow, just a few Uzbeki clamoring around. 

Many Americans purchasing proposed condos have lost their 25%+/- deposits when the projects failed.  That seems insignificant in comparison to paying 100% of the price upfront.

[ECOCKS]

Define oligarch... and then I might tell you you'll be sorely disappointed to find some are doing amazingly well.  When money is short some will profit no matter what.

I will not share some of the things I saw on my last trip to Moscow but I will tell you the posts by the pretenders on this board have no relationship to the reality I saw.  (This does not refer to you ECOCKS)

Those rubbing their hands together at Russia "imploding" just have no clue.  Yes, things are tough for some but people need to remember the current downturn is NOTHING compared to the hardships in the history of Russia (and Ukraine).  These people deal with hardship in ways we will NEVER understand.

I think there are a lot of envious people living in the west...  that just justify their naivety in strange ways.

Implosion certainly seems a bit strong unless you are applying the strict definition of contraction (implosion) of the GNP. Collapse doesn't seem imminent (except for a couple of party platforms). I see or know of no envious people living in the west, possibly some wish it as some sort of perceived retributioon on the Soviets but envy (?), nah, just wishful thinking perhaps.

By oligarchs, I am referring to the ruling elitny who have personal fortunes and political power (though occasionally physical power as well) which are based upon the previous economic and social situation. Post-perestoika, selected military, religious, criminal and Party heads transitioned to this group by one or another pathways to power and privilege. As I mentioned, these times will be trying for them.

A great number lacked the business skills to properly maintain what they managed to steal or otherwise end up acquiring and, as a result, had been living off their capital gain for the last decade or so. Due to the ride on the valuation roller coaster, many seemed to have been growing their wealth when in reality they were trading assets amongst themselves which had rapidly adjusting values as the markets developed. This was apparent to some, mostly external econnomic analysts and international business concerns who have been watching the economic activities during this time (and buying into dozens of industries throuh FDI and front purchasers).

To take one example, let's have a quick look at banking. There are over 160 banks in Ukraine. Nearly a dozen were in danger of collapse and even the good ole boy network of the privileged had to rein in their compatriots before they collapsed the banking system of the entire country through sheer ineptitude exacerbated by greed. Note that none of these banks were owned by non-FSU sources. The better setup banks were purchased a couple of years ago by various French, Italian, Austrian, Greek and Swiss banking groups. Solid capitalization, access to parent reserves, stringent control systems, and, best of all, an influx of foreign-trained professional bankers and employee development programs, allowed them to stave off collapse and quickly initiate tighter control measures which kept them off the watch lists as the economy soured. A half-dozen banks, all FSU-owned/based, were forced to recapitalize. This shifted the balances of power and now 10-15 of the more powerful families have seen there balance sheets change significantly and their prestige among their peers erode as the failures affected others.

Trying times. Some oligarchs prosper in times like these. As I said, it's Darwinian. Some of the "strongest" are still shifting assets into better positions, others screwed up and were in bad positions to begin with and are now wondering what to do as they are reduced to "only a few tens of millions" or their last 100 million or so. Some are losing their cool and reverting to thugee tactics and "liquidation" of their partnerships (and partners), In the next election, we'll see a power shift which brings up a new clique or two and lowers some of those who have been enjoying the low-hanging fruit the last couple of years. The real test will be how many can learn from these times and how many still keep slicing off pieces of the family fortunes and selling them to maintain the illusion of success for a few more years.

We'll still see some blatant ripoffs and maneuvering as the more opportunistic try to take advantage of the situations. Witness Yulia T.'s gas games and the incredible recent events in the gambling industry. Who wants to bet that 5 to 10 years from now, there are 6-10 gambling centers in the FSU, all trying to become just like Monaco, St. Moritz or Las Vegas? Look for some return to small, low-stakes gambling licenses after these are setup since there is still a need to separate the working class from their disposable income. Along with that, expect the owner/shareholders of the high-end operations to be some familiar faces (Puti..cough...cough...) and to see corporations emerging with strings of smaller slot-machine halls and low-end joints.

Ironically, the mass population is coping with this much better than the elites who are casting about for what pathway to wander down next. One guy complained he couldn't sell his $120,000 automobile toy even when he offered it to buddies as low as $60,000. As someone said, the Ukrainian have survived for so long on so little, they have beome experts at "getting by" with next to nothing. For those who like to contemplate the universality of truisms and cliches - remember the old sign about "we who have done so much with so little for so long are now experts at doing everything with nothing." The FSU doesn't work very well, but it does manage to queak by and the people have survived pogroms, pruges, shortages, famines, Chernobyl, floods and so on, they simply look at these times and shrug that it is life, we will endure.

[JR]

I read today that both GM and Ford have suspended production of automobiles in Russia due to a 47 percent drop in sales from one year ago and the inabilty to find credit worthy buyers.

Also Gazprom is laying off 7,000 workers out of 11,400 at one plant?

[remiel6]

can't speak of moscow since I've never been there and only traveled thru kiev, I know my fiance has been told more then once in the last few months that they are delaying paying her wages. I assume its a money shortage of some kind. Given my experiences traveling there the economy I assume is not real well, but then again I am in michigan and its really not well here either.

[BillyB]

2 women I am chatting with - have illustrated the economic crisis that is gripping Ukraine at present.

Case #1 - salary slashed from $500 per month (Grivna equivalent of course) to $200 per month. Sounds like to make it a bit fair she is also working less - 1/2 time?

Case #2 - Salary slashed from 10,000 grivnas per month (about $1300) to about 5,000 (about $650) - for same job working same hours.

Costs have nor dropped to correspond to the wage cuts according to them. And we think we have it rough here!

Anybody else heard any similar stories lately? How is Russia faring in comparison?

A few Ukrainians I talked to said when America has an economic crisis, the prices of things go down for the consumer, when Ukraine has an economic crisis, the prices go up.

[Muddy]

Sorry to hear about you and your ladies troubles BillyB.

It is a sad story and I hope everything will be OK for BOTH of you.

My wife has had nothing but good things to say about the GoodOl' USA, BUT...She NEVER "badmouths" Russia either....NEVER!

I will add one thing that Marina has been griping about lately. Just recently, at her company, the owner has slashed ALL employees paid vacation time in half.

Instead of my wife having 2 weeks, she now has 1 week paid vacation time.

The owner said he had to do this or start laying people off.
The bad thing is, I bought airline tickets back in February (when they were DIRT CHEAP) for Marina to go home to Omsk in September for 2 weeks.

Now, it looks like she will not get paid for one of the 2 weeks that she is there.


GOB

[JR]

Shhhhhhh, go back to sleep...nothing is wrong