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Ukraine Compensation and Benefits Survey 2007/2008
Kyiv, January 11, 2008 – Ernst & Young’s Human Capital team presents Ukraine Compensation & Benefits Survey 2007/2008. The Survey provides information on general (fixed and variable) compensation levels for more than 200 positions, structure of compensation packages, and HR policies. This Survey is conducted annually for the last six years and the number of surveyed companies grew to 124 by now.
"The Survey results suggest that the situation on the labor market remains to be very dynamic. The expanding business environment of Ukraine stimulates a more intense competition for the existing workforce, which is quite limited in terms of availability of highly qualified personnel. The growing demand for professionals encourages high mobility of employees, on one hand, and, on the other hand, makes companies pay closer attention to their compensation packages and human resources policies if they are to attract a qualified workforce.
From August 2006 to July 2007 base salaries have increased, in average, by 17% and tend to grow further. This year the report again shows that salaries increased by 5% more than the planned average. The Survey data shows that when determining compensation policies in 2007, most companies were guided by level of inflation and even more so by an industry market data. The process of salary increase in 2007 repeats the pattern demonstrated in earlier surveys: companies undertake salary increase in an effort to match the pace of inflation, but enhanced spending in turn forces the market to adjust to the grown consumer power of the population, thus, this cycle starts again," comments Olga Gorbanovskaya, Senior Manager, Head of Human Capital group, Ernst & Young in Ukraine.
In 2008, the planned salary increase is marked at 16% compared to 12% last year, which will, most likely, be exceeded again next year by 4-5% or more.
With regard to currency of salary denomination, the trend remains to calculate and pay salaries in UAH (79%, up from 71% in 2006) as opposed to foreign currency (21%). The Survey data shows that overwhelming majority of companies (95% compared to 92% in 2006) used bank accounts as the only mode of transferring salary to their employees this year, regardless of an employee position within a company.
Establishing a formal performance evaluation system became a regular feature of HR practices in Ukraine. In 2007, 74% of companies implemented a formal evaluation system for their employees in 2007 with the largest share of evaluation assessment born by senior and middle management (79% and 78% respectively). We observed general growth in application of such programs to most categories of employees (e.g., share of manual workers grew to 64% from 51% in 2006). The majority of companies (83%) continued to adjust salaries for their employees once a year. January remained to be the most popular month for salary adjustments (41%).
The number of companies providing their employees with variable compensation in addition to the base salary remains very high, with annual bonuses being the most popular type. In particular, 83% of the companies pay annual bonuses. Quarterly bonus was reported as a distant second form of variable pay (33%) with still 31% of companies using monthly bonuses, mainly to address the performance of their lower level employees (manual workers).
Speaking of recent trends in HR management, in 2007 we observed the growth in a number of companies that plan to keep the current headcount of employees (47% from 40% in 2006). This shows an increased attention to retention as opposed to recruiting and was also reflected in somewhat less weight assigned to the importance of the recruiting of new personnel (67% compared to 75% in 2006). Due to the demands of retention of highly qualified personnel, the importance of both training/development and the availability of a competitive compensation and benefits package remained rather high.
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