INFLATION CONTINUES TO FALL IN UKRAINE BUT UNEMPLOYMENT THREATENSTO RISE.
Publication: Monitor Volume: 3 Issue: 112
Consumer prices in Ukraine rose during May by only0.8 percent, according to preliminary official estimates. (Interfax-Ukraina,June 6) This means prices increased during the first five monthsof 1997 by only 5.2 percent and that Ukraine’s annual inflationrate is now well under 20 percent. This is lower than the inflationrate in Russia, where consumer prices rose 7.4 percent in thefirst 5 months of the year. (Interfax, June 5) It is also lowerthan the inflation rates posted in Poland and Hungary, not tomention nearly all of the other CIS economies, for this time period.Ukraine, which experienced 10,000 percent hyperinflation in 1993,is emerging as one of the region’s low-inflation economies.
However, there is little sign that Ukraine’s remarkable progresswith price stability is being translated into economic recovery.Labor Minister Nikolai Biloblotskyi announced last week that thenumber of officially-registered unemployed workers was likelyto double, to 1.1 million, by the end of the year. (Interfax-Ukraina,June 5) This projected increase is to result from large job lossesas part of the government’s program to restructure the coal industry,according to which 55 of Ukraine’s 276 coal mines are to be closedthis year. Biloblotskyi also said that the 580,000 workers listedas unemployed on May 1 constituted a five-fold increase over thefigures for the end of 1995. Moreover, he estimated Ukraine’shidden unemployment at the end of March 1997 to be 3.4 millionpeople, or 25.2 percent of the labor force.
It is hardly surprising therefore that, according to a recentsurvey by the National Institute of Strategic Studies, livingstandards continue to fall for most families in Ukraine; or thatcoal strikes closed some 19 coal mines in eastern Ukraine duringthe first week of June (Itar-Tass, AFP, June 4) The monetary andfiscal austerity that seems to have extinguished inflation inUkraine has also led to widespread wage arrears (coalminers areowed an estimated $819 million in back wages by the government)and the general breakdown of the Ukrainian financial system. Neitherthe government nor the international financial agencies advisingit seem to have a clear program for repair.
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