Real wages slow to 18.9% yoy growth in December

Real wages in Ukraine grew 18.9% yoy in December,
slowing from 21.4% yoy growth in November, the State Statistics Service
reported on its website on Jan. 29. The average monthly nominal wage reached
UAH 8,777 (USD 320), indicating growth of 17.4% m/m and 35.5% yoy.

Geographically, the highest wages in December were in
the city of Kyiv (UAH 14,035), and the regions of Ukrainian-controlled Donetsk
(UAH 9,886) and Mykolayiv (UAH 8,828). The lowest were paid in the agricultural
regions of Chernihiv (UAH 6,656), Kirovohrad (UAH 6,798) and Ternopil (UAH
6,828). Wages in public administration and defense (57.5% yoy), agriculture
(45.3% yoy) and education (45.2%) increased the most in December. Within the
industrial sector, the highest nominal wages are in pharmaceuticals (UAH
16,062), utilities (UAH 11,654), and mining (UAH 11,169).

Evgeniya Akhtyrko: December’s
cooling wage growth resulted from an economic slowdown in 4Q17, a higher
comparative base and persistent inflation. Nevertheless, the nation’s economic recovery
is having a positive effect on real wages, which have experienced double-digit
growth since May 2016.

We expect real wage growth slowing to 9-10% in 2018
despite the projected boost in economic growth, as the high comparative base of
2017 will not allow for maintaining double-digit growth in the second half of
the year. High inflation will also
play a role.

There is the risk that the government will make a
populist move ahead of the presidential elections, scheduled for March 2019, by
increasing the minimum wage to UAH 4,100 during the year from UAH 3,723
effective since Jan. 1. However, such a hike is not planned by the state
budget.