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12 December 2018

Over the past two years, the average salary of workers employed in agriculture has more than doubled and almost reached record levels of 2013 (USD 303). What is the reason for such growth?

In May of this year, the average salary in agriculture amounted to UAH 7,713 and was equivalent to USD 294, last year for the same period, the figure was USD 216, and in 2016 - only USD 144. There are several reasons for this:

Reason № 1. Opening of a visa-free regime between Ukraine and the EU

The opening of a visa-free regime has a significant impact on the labor market in agriculture, since the average wage in this field is currently one of the lowest in Ukraine, and a large number of workers leave their jobs in order to find a more paid job in the EU. The process has also been reflected in the domestic labor market, as employers are forced to raise wages and improve working conditions in order to keep existing workers in the workplaces and attract new ones.

Reason №2. Reducing of a single social contribution

From January 1, 2016, the rate of the single social contribution was reduced from 34,7% to 22%. This is a compulsory payment to the system of state social insurance, which consists of 4 deductions: to the Pension Fund, to the Unemployment Insurance Fund, for temporary disability and accidents at work. This step has been taken to enable employers to channel savings to raise employee wages and invest in the development of their own businesses.

Reason №3. Increasing the minimum wage

As a result of the single social contribution reduction, not all entrepreneurs directed the released funds to increase salaries for staff or the development of their own enterprises. In order to accelerate the wage growth process, the Ukrainian government decided in 2017 to raise the minimum wage. And in such a field as agriculture, where a significant proportion of workers gets «the minimal» and sometimes some wage part in the envelope, this step has pushed for an increase in the average wage and its unshadowing.

Despite the positive dynamics of growth, the average wage in agriculture is significantly lower than the average Ukrainian monthly salary.

Пєтя1

Source: State Statistics Service of Ukraine

 

Lack of wages in agriculture decreases each year in comparison with the average national indicators. This dynamics can be seen in the graph below.

Пєтя2

Source: State Statistics Service of Ukraine

 

The mechanization and automation of production processes in agriculture reduces the need of enterprises in low-skilled workers and increases the need for specialists of middle and high qualification. The shortage of personnel is felt at all levels of production. However, if you can still find candidates for positions that require a low level of professionalism, then a hard-line struggle amongst the enterprises is being carried out by qualified specialists. Accordingly, companies, trying to build a professional team, are willing to pay more for existing professionals and poach others with higher wages and better working conditions. This situation contributes to a rapid reduction in wage lag in agriculture from other sectors.


 





  • Baker TILLY
  • Agroresurs
  • AMAKO
  • Lozova Machinery
  • Limagrain
  • Zeppelin
  • GrainAlliance
  • HTI
  • CHS
  • Quivogne
  • Global Chemical Group
  • Amazone
  • Goodvalley
  • IMMER Group
  • kws
  • LNZ Group
  •  Agricom Group
  • Агроріск
  • Райффайзен Банк Аваль
  • horsch
  • Phosagro
  • uahk
  • Сygnet
  • Syngenta
  • Svarog
  • Agco
  • Lembke
  • Agroregion
  • ugt
  • Agroswit
  • Mriya
  • Eridon
  • Monsanto
  • MHP
  • Maschionet
  • Maisadour
  • DuPont Pioneer
  • Alfabank
  • Agroscop
  • Agroros
  • Agrimatco
  • Avgust
  • NCH Advisors
  • Crop Life International
  • Continental farmers Group
  • AgroGeneration
  • credit agricole
  • danone
  • claas
  • john deer