MBS Blog

Here is another look at Ukraine from our good friend Stuart. He is an English teacher whom has many years navigating through the maze of living and working in Ukrainian society.

Below, Stuart writes about his recent experiences dealing with day-to-day life and the effect on Ukrainians. 

“In September last year I was looking for a new apartment to rent. Greedy landlords and agents were rubbing their hands with glee, telling me how prices which had already doubled in 2008,would continue to rise in 2009 so I had better decide quickly. I was looking for a new secretary at the same time. My salary offers were considered unworthy and downright offensive.

Just 4 months later it is clear that “what goes around comes around,” something of course we Westerners have plenty of experience but something that’s quite new here. Now of course I’m glad my landlady has reduced the rent so much. Should I be? No, because reducing rents and property prices are signs of what’s really happening and it’s going to hurt us all by reduced revenues, So, such small savings bear no comparison to the losses we are now experiencing.

The World economic crisis is beginning to hurt Ukraine in a big way now. Although foreigners living here obviously get a feel for the economic climate, they don’t always know how acute the problems are unless their businesses are being affected. We get a lot of our real information from speaking and socializing with native Ukrainians. Whilst it’s true that there are many very wealthy people here who may not be affected at all by the downturn, most people are working class or small entrepreneurs and they are feeling the pinch.

Generally revenue, salaries and wages are in local currency but bills other than household utilities are paid in dollars. As the dollar is currently at 8.0- 8.5 hryvnia against the norm of last year’s 5.00 to the dollar, people aren’t earning any more than they were last year, people are effectively worse off, and that means they really are poorer.

Most working class people were struggling before, now they’re getting desperate. If people are paying their rent in dollars, as most do and on the basis that traditionally rent is 50% of their income, the most important issue for them now is how to earn enough just to survive. Small businesses have to increase their turnover just to stay still because they have to convert their revenues into dollars to pay their suppliers and rents. And often it’s not possible to even buy dollars or they have to pay well above published rates. So it’s no wonder people are tightening their belts.

One source told me that 7 Kilometers Market just outside Odessa-one of the largest outdoor markets in Europe- is half closed, despite container rents dropping from an average $4000 per month to a mere $500. As people are reluctant to spend on anything but the basics, business is suffering. Many people have savings but even those are threatened. Although banks are still offering high interest accounts, who will trust them with their hard-earned cash when banks are folding everywhere?

One Ukrainian friend who had struggled over the years to save up $10,000 for her future and believed banks were safe havens in this bright new Ukraine, has been told that the bank has no money. They aren’t yet contemplating bankruptcy but the message is ‘we’ll pay you when we get some ourselves!’ Another friend pays $600 to rent a table and a chair in a flower market. Such excessive pricing we’ve become used to over the last few years as inflation and pure greed have accelerated in a way we Westerners could never imagine.

Whilst rents and consumable prices are reversing into freefall, prices for basic essentials such as food, gas, electricity and water are rocketing into the stratosphere. Utility prices have doubled in the last 6 months at a time when most wages have effectively halved through currency variations.

Technorati Tags: Stuart Biddulph, Ukraine, Odessa, English teacher, Anton Olff, MBS Ltd., apartments, global economic crisis, ex-pat, foreigners, 7k Market, entrepreneurs, salaries, wages, utilities, hryvnia, U.S. dollar, small business, Europe, savings, food, gas, electricity