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💰Determining the Minimum Wage in Construction

When setting the minimum estimated wage level, construction companies refer to the indicators determined by the procedure established by the Ministry for Communities and Territories Development of Ukraine, which currently amounts to 13,707.89 UAH. However, according to representatives of the construction market, these indicators do not fully reflect the actual situation.

🌐This issue was discussed during the roundtable "Improving the Mechanism for Determining the Minimum Wage in Construction", organized by the Confederation of Builders of Ukraine (CBU) in collaboration with the Council of the Business Ombudsman of Ukraine.

Lev Partskhaladze, President of the CBU, emphasized the importance of addressing this issue: workers are not willing to work for such wages, which complicates the process of carrying out construction works for companies and leads to misinterpretation by regulatory authorities.

As noted by Tetiana Korotka, Deputy Business Ombudsman, this wage level is a bottleneck that prevents more companies, including foreign ones, from entering the market.

🔍Ahead of the roundtable, opinions from construction subcontractor companies were anonymously collected, including through a survey regarding the wage levels of employees. Oleksandr Chervak, CEO of the CBU, presented the results to the participants of the roundtable.

📊The survey focused on the alignment between the normative estimated and actual wages in different regions of Ukraine, as well as the average monthly wage levels in these regions. Respondents were also given the opportunity to express their opinions on the formula for calculating the estimated wage and other possible methods of regulation.

Separately, respondents were asked what the wage increase coefficient should be for workers in the frontline areas. The majority believe that wages should be increased by one and a half times.

Additionally, new criteria for reservation have recently been established. A mandatory criterion is the level of salary — both the average salary across the company and the salary of the specific individual being submitted for reservation. It must be 20,000 UAH. Therefore, if the salary in tenders is indicated below this level, workers performing state orders can no longer be reserved.

👤Anatoliy Berkuta, Vice President of the CBU, shared with the attendees how the regulation of wages in the construction sector began in Ukraine. He emphasized that a high wage level is essential to attracting specialists to the construction industry, especially in the context of a shortage of skilled workers.

As Anatoliy Berkuta noted, the wage level should be based on the share of wages in the cost of works. For example, in Europe, this share is about 30%, while in Ukraine it is 7%.

🏛️An important step, according to Mr. Berkuta, could be the creation of an independent pricing authority that would monitor and publish prices for construction materials, which could be used when forming estimates.

The Vice President of the CBU also provided examples of how construction workers' wages are regulated in different countries, particularly on government order projects. Competitive wages allow for the attraction of top specialists to projects that are important for the country, regardless of the region. It can play an especially significant role in bringing Ukrainians back from abroad.

👤Artem Bezuglyi, Director of the State Enterprise "National Institute for Development Infrastructure", focused attention on the issue of pricing: why certain criteria are included in the formula for calculation and not others. Mr.Bezuglyi gave several examples of how the mechanism for setting the minimum wage level could work, along with the advantages, disadvantages, and peculiarities of each option. One alternative is to abandon the approach where average figures are multiplied by various indices. Another effective approach is the analytics of construction companies' reporting.

Additionally, it is necessary to clearly understand how the established wage levels align with the employee classifications. Typically, the average level is set for class 3.8, and how to apply the same principle for higher classes.

👤Roman Ivanenko, Owner of "Trest KMB-3" LLC, presented the issue of “shadow” wages and their negative consequences for the entire business in detail. He proposed a solution that could help with de-shadowing—introducing a coefficient for the transitional period.

🤝The participants of the discussion reached a common opinion that the minimum wage in construction should be established by the relevant Ministry, especially when it comes to government-funded construction. It should also be universal to prevent the creation of "depressed" regions and high enough to attract professionals to the industry in general and to state orders specifically.

The participants also discussed the specifics of determining wages for workers in frontline areas and the consideration of new criteria for conscription in the wage formation process.

As a result of the discussion, it was decided to collect all proposals and, after reviewing and further discussion, submit the findings to the Ministry for Communities and Territories Development of Ukraine.

This topic is extremely important and requires further discussion.

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