Ukraine's ailing powerhouse

Ukraine's ailing powerhouse
By Euronews
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As Ukraine’s legislative election nears, the temperature of the campaign is warming up.

In the heavy industry hub of Donbass, in South-Eastern Ukraine, people have already made up their minds.

This mining and steel region is the stronghold of president Viktor Yanukovych and his Party of Regions, and people here are standing by their leader.

Mykola Shmigol is proud of his job as a blast-furnace keeper for Donetsksteel.

Today he and his wife are celebrating their 25th anniversary. The whole family is having lunch at the Center for Slavic Culture in Donetsk, a club funded by his company.

“I’ve been working for more than 10 years, 12 years at this plant,” says Mykola. “Here at the Donetsk metallurgical plant we get the full package. Starting with the protective work suit – jackets and gloves -, full social cover, including holidays and sick leave. So I think that workers here are fully protected.”

His wife Elena doesn’t work:

“I do not work, my husband doesn’t let me,” she says. He loves and values me very much. I stay at home, take care of the house and our children, their studies. I like my life, my beloved husband is near, what else do I need?”

Mykola earns 900 euros a month.

That’s a good wage in a country where the average monthly salary stands at around 250-300 euros.

It enables him and his family to enjoy a certain quality of life.

“We have stability. I don’t think it will be any better with a new government. We saw it already. It didn’t affect the steel industry, coal production, agriculture or the Ukrainian economy,” says Mykola.

But the tough reality of the global economic crisis could soon pose a threat to Mykola’s family’s safe haven.

“It is not a secret that these are not the best of times for the steel industry, especially in Europe and the CIS,” says Andriy Yemchenko, deputy general manager at Donetsksteel.

“However, the energy-saving technologies that we have introduced help factories survive and move forward.”

However, energy-saving technologies may not be enough for companies to continue providing their employees with a good standard of living.

Global competition is tough.

“Ukrainian producers are not very efficient in terms of elaborating, designing new steel products,” says Ihor Burakovsky, Director of the Institute for economic research and policy consulting.

“It means that what we are producing is of medium quality, and in this sector in particular we are up against extremely tough competition, like China for example.”

Along with the steel industry, the government’s power relies heavily on the coal mining industry.

Donbass is one of the country’s major mining regions, and coal is an important political weapon.

Euronews met a miner as he got ready for his early morning shift.

Sergiy Abrosimov lives with his wife and son on the outskirts of Donetsk.

“The morning starts and my dog wakes me up. He has his own internal clock and he knows that I wake up at 4 o’clock in the morning. If the alarm doesn’t ring, my dog will wake me up, for sure,” he says.

Sergiy is master shaft sinker at the Pokrovske Colliery Group.

While he may have to rise early for work, he knows he is better off than most Ukrainians.

The mine where he works belongs to the same holding as the Donetsksteel plant, now owned by a Russian oligarch.

Sergiy has been working there for many years.

“I can afford many things, as I’ve been working for 30 years, I have experience and some savings,” says Sergiy.

“I can afford a good car, a rest at a sanatorium, travels abroad. Living conditions have changed since the Soviet times, everything is developing fast. There are no restrictions and people live a normal life.”

Ukraine’s coal mining industry is outdated and inefficient. It is heavily subsidised – just keeping it afloat costs the state an estimated one billion euros a year. Much of it goes to Donetsk.

“For a miner, 2,000 or 3,000 euros is an excellent salary,” says Sergiy. “It would be for anyone in Ukraine – with that kind of salary, you can afford a lot!”

Other regions view this generous policy towards Donbass miners with much scepticism. But he says they deserve their high salaries:

“I have visited different parts of Ukraine and people are the same everywhere. Maybe people in Donbass work more, since the industry is located here. Here people work hard, they get up early. When a person works hard he has no time to think about politics, he just works. So maybe Donetsk people are a bit different, since they work a little bit more,” says Sergiy.

Many young people are studying to become miners or mining enginers.

But that may not be a wise investment in the future. Many experts agree that nearly half of Ukraine’s mines whose infrastructure is obsolete and dangerous should be shut down. Ihor Burakovsky of the Institute for economic research and policy consulting:

“It is officially acknowledged that approximately 40% of Ukrainian coal mines need to be restructured and the majority of these coal mines simply need to be closed, if you take into account the depth of the extraction and difficult geological conditions such as dangerous gases. There is a need for new technologies.”

While the government continues to handle its vital Donbass electorate with care, it has also announced plans to sell off more than a hundred mines next year.

They will be handed over for next to nothing, but only to those private investors willing to modernise them and to preserve the jobs in the mines.

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