The bank’s furniture factory
KYIV, URKAINE— Ukraine’s central bank may rank among the worst in achieving sound money this year, but at least it finally got out of the furniture business.
Lost among the 12,000 workers Valeriya Gontareva inherited when she became the country’s fourth central bank governor in 18 months were dozens of artisans making products such as wheeled shelves and armoured doors at a building the bank owns on the outskirts of Kyiv.
“We found a maintenance unit costing us $260,000 a year,” deputy governor Vladyslav Rashkovan said by email. “Actually, it was kind of a separate enterprise employing 65 people. They were all fired.”
It’s a story being repeated across the swollen bureaucracy ranked Europe’s most corrupt by Transparency International. President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk are racing to cull payrolls by the tens of thousands to meet International Monetary Fund demands for spending curbs.
Ukraine had about 335,000 civil ser- vants at the beginning of last year, almost triple the number in neighbouring Poland, where the economy is four times bigger and the pay is multiple times higher. Under former president Viktor Yanukovych, state spending reached 47 per cent of gross domestic product, more than oil-rich Norway.
The problem isn’t just that there are too many people in a position to extract bribes, it’s that they aren’t paid enough to stop them from seeking other income, according to Roman Nasirov, who runs the sprawling State Tax Service.
Nasirov said he’s in the process of firing 17,000 people to cut his workforce by 30 per cent so he can give everyone else a 40-per-cent raise.
The wage issue also applies to parliamentarians. In a populist move to quell public outrage over corruption, lawmakers voted to slash salaries to about 6,000 hryvnia a month, less than it costs to rent a studio apartment near parliament.
Underpaid workers in Ukraine use corruption as another income.