Labor productivity in Ukraine lags behind the EU by 3-5 times: what this means for salaries.

According to ТСН: The main reason for the low level of salaries in Ukraine is that labor productivity in the country is 3-5 times lower than in EU countries. This negatively affects the competitiveness of Ukrainian companies in international markets and may contribute to labor migration.

Expert Comments

This was stated by the head of the Parliamentary Committee on Finance, Taxation, and Customs Policy, Danil Getmantsev. According to him, labor productivity in Ukraine remains significantly lower compared to EU countries, especially Germany, where the lag reaches 7-10 times.

“This means that Ukrainian companies produce the same product longer, spend more resources for the same results, and therefore find it harder to compete in foreign markets,” Getmantsev explained.

Systemic Problems

In his additional commentary, he refuted the views of some “experts” who misunderstood his words, claiming that he asserted that “Ukrainians have low salaries because they work poorly.”

The economic category of 'labor productivity' does not indicate that people work poorly. In fact, the productivity indicator is measured by the ratio of GDP to the number of employees or hours worked. This is not about 'laziness', but about systemic factors that affect the level of GDP.

According to the MP, many businesses try to reduce the tax burden by operating as small companies that do not have access to modern technologies and investments. The war in Ukraine further exacerbates this situation as production facilities are destroyed and infrastructure is ruined.

“Ukrainians are hardworking people who have more working hours per week than Europeans. The problem lies in systemic factors affecting multifactor productivity, which need to be addressed. It is necessary to ensure wage increases across the economy,” noted a member of the financial committee of the Rada.

Social Consequences

Low labor productivity has not only economic but also social consequences.

“This situation leads to low salaries, restricts opportunities for employment for vulnerable groups, and creates conditions for future labor migration,” added the head of the financial committee of parliament.

Earlier, Getmantsev noted that one of the main factors for the low salaries of teachers and small pensions is tax evasion and the shadow economy, which amounts to about UAH 900 billion annually. According to him, half of the economy operates in the shadows, which negatively affects the welfare of the country, especially when 60% of expenditures go to defense.

Thus, the situation with low salaries and productivity in Ukraine requires a systemic approach to resolution. It is important to work on increasing labor productivity, modernizing technologies, and attracting investments. All this will contribute to improving the socio-economic situation in the country.