economy

The ongoing conflict and economic downturn have taken a toll on Ukrainian businesses across the sectors and sizes. For them, the current political and market uncertainty would make a zero-growth scenario look like a positive development, which, however, is not yet in sight.

For an average observer, the past month in the United States has been characterized by a frenzy of oppressive government legislation designed to infringe upon personal liberty. While this has been true for most of the Obama administration, the maelstrom, whipped up by the media, on this specific issue regards a minor law passed by the state of Indiana and not the federal government.

Is there a difference between a starting entrepreneur and a disabled person? Yes, there is, and it\'s a big one. A disabled person has much fewer options if he or she wants to get a government aid compared to a starting entrepreneur. I remembered this joke when I was reading one of the government strategies. But the joke may soon become a reality if the government decides to implement it. And that\'s not funny at all.

We have the pleasure the present you one of the series of our policy papers that we will be publishing in the near future. The publication discusses the impact of minimum wage on the economy of six Eastern European countries. Enjoy your reading!

The economic situation in Ukraine in 2015 and 2016 will depend on progress in externally supported reform program and on stabilization in the Eastern Ukraine. Fiscal consolidation, decline in real wages and unemployment will cause reduction of real private consumption. Weak hryvnia, despite dragging down consumption and investments, helps to increase fiscal revenues and narrow the current account deficit.

In March, Ukraine’s government adopted the Action plan for reforms in 2015 and 2016 while the IMF board approved four-year USD 17.5 bn extended arrangement under the Extended Fund Facility (EFF). The EFF supports ambitious program of Ukrainian authorities, which would in IMF words ‘put the economy on the path to recovery, restore external sustainability, strengthen public finances, and support economic growth by advancing structural and governance reforms, while protecting the most vulnerable’.

Low demand and unfavorable political situation are the major obstacles for the development of industrial enterprises in Ukraine as of early 2015. Such were the results of the quarterly business survey in which Ukrainian businesses assessed the 4th quarter of 2014 conducted by the Institute for Economic Research and Policy Consulting.

The Greeks do not understand the imperative need for the reforms. Nor are they ready to reform. With the external pressure of the EU and other international institutions being the only reason to institute reforms, it is hard to expect any breakthrough. And this is the key problem.

From 2012 to 2014 Lithuania increased its minimum monthly wage by almost one third (from 800 Litas in 2012 to 1,035 Litas in 2014). There are suggestions to increase the minimum wage in 2015 even more the supporters of the idea claim that companies would adapt. But is it all that simple? According to the survey conducted by LFMI, minimum wage increases come at a cost and they eventually bring several negative consequences.

People are either cannibals or creators. The fundamental difference between the two is how in their opinion the world works. What to do when you\'re hungry – eat a neighbour or come up with a solution to growing vegetables in the middle of winter? Is the world a “zero-sum game” in which one can prosper only if others suffer? Yes would be the answer of a cannibal.