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The level of salaries in the mining and metallurgical complex traditionally significantly exceeds the national average

The growth of the Ukrainian economy in 2021 by 3.2% and the recovery after a difficult 2020 led to an increase in household incomes. Real wages (net of inflation) in Ukraine increased by 10.5% in 2021. Recall that in 2020 the growth was 10.1%. The average nominal salary in the country rose by 20.9% last year to UAH 14,000. At the same time, the growth of the average nominal salary in December 2021 in annual terms amounted to 23.1% – up to UAH 17.4 thousand.

The level of salaries in the mining and metalls complex at the end of 2021 has traditionally significantly exceeded the national average (UAH 14 thousand) and in industry (UAH 14.9 thousand). According to the State Statistics Service, the average salary in steel industry and the production of metal products increased by 15.7% – up to UAH 16.1 thousand.

Similar figures are shown by detailed statistics. According to the Trade Union of Steel workers and Miners of Ukraine, last year the positive dynamics of the average salary in the mining & metals industry segments was as follows:

  • ferrous metalls – an increase of 16%, up to UAH 20.2 thousand; in 2020 – by 3.3%;
  • iron ore mining – an increase of 10.8% to UAH 19.8 thousand; in 2020 – by 9.9%;
  • coke production – an increase of 0.6%, up to UAH 18.8 thousand; in 2020 – by 5%;
  • pipe production – an increase of 16.6%, up to UAH 15.4 thousand; in 2020 a reduction of -0.1%.

“The question of the adequacy of wages in the Ukrainian mining & metals industry is under constant control of the management of companies, the Federation of Steel workers of Ukraine and our social partners-trade unions. As a result, real wages at FMU enterprises almost doubled from 2016 to 2021. In December 2021, the average salary at our enterprises amounted to more than UAH 21,000. In relation to December 2020, it increased by 13.8% with inflation over the same period of 10%. At the same time, the most qualified workers in the main professions of the industry earn 1.5-2.5 times higher than the average salary,” speaks FMU executive director Sergey Belenky.

Salary nuances

The level of average salaries in the industry varied greatly during 2021 under the influence of various factors. Salaries increased under the influence of the planned increase in wages, payments of the 13th salary and bonuses; decreased or stabilized over time.

The dynamics of wages in the industry fully reflects the situation in its individual segments. Throughout the past year, a positive price situation was maintained in steel industry and, to a lesser extent, in iron ore mining. Salary peaks in ferrous industry in May and August fully coincide with payments on the 13th salaries and an additional bonus for the company’s birthday at ArcelorMittal.

The highest dynamics was shown by pipe producers, who “traditionally” earn less than in other segments of the mining and metalls complex. The growth of “pipe” wages was facilitated by the positive dynamics of this market and sales. According to the Ukrtruboprom association, Ukrainian pipe enterprises increased production by 15.1% in 2021.

Obviously, the weak link of wages in the industry was the situation with coke chemists – in August 2021, their wages collapsed by more than UAH 3,000 at once and did not return to the previous level until the end of the year. This is due to the increase in prices for coking coal in the second half of the year and the reduction in coke production by 1.3% following its results.

Private growth

The growth of salaries in the industry in 2021 was predetermined by the largest enterprises.

Metinvest

At the enterprises of the Metinvest group, the average salary increased by 10% – up to UAH 21.5-22 thousand. In 2020, the growth was 4%.

From May 1, 2021, as part of the equalization of salaries for workers performing the same tasks within the same profession and qualification, the group will differentiate raised salaries for production staff. Increasing did not affect the administrative and management staff of the management company. Also, from April 1, as part of the annual staff assessment based on the results of the previous year, new individual bonuses of 5-25% were revised and established.

“At the end of last year, the average salary at Ukrainian enterprises of the group, including Zaporizhstal, amounted to UAH 21.5-22 thousand, and the average salary of workers was UAH 19.5 thousand. In 2021, the salary of Metinvest employees in Ukraine increased on average by about 10% compared to 2020. Such growth made it possible to cover the actual level of inflation in the country, which last year amounted to 10%”, – reports press service of Metinvest.

Also, Metinvest increased the salaries of employees of the Dnipro Metalls Plant by 15%. after the purchase property complex of the enterprise by the Dneprovsky Coke Plant. Thus, the salaries of DMK personnel have risen to the general level for the group.

ArcelorMittal Krivoy Rog

At ArcelorMittal Kryvyi Rih, the average salary last year increased by 14% to UAH 21.7 thousand. Recall that in 2020 the growth was 5.5%.

“In 2021, ArcelorMittal Kryvyi Rih raised salaries twice and paid basic and additional bonuses to all its employees. Salary increase last year in May by 5-30% and in October – on 10%. The fixed part of the salary has grown, which in turn increased the size of average earnings and, accordingly, affected the size of vacation pay, sick leave, the 13th salary and other charges, ”explains Julia Zabolotna, Director of Human Resources at ArcelorMittal Kryvyi Rih.

In 2021, the discussion of salaries at the enterprise took hot forms. After the announcement of a 5% increase in salaries for everyone from May 1, the trade unions (there are already 11 of them at the plant) began to demand an increase by 30%. Protests even took place in Kryvyi Rih.

As a result, in the summer, the parties found a consensus on a general increase in wages from October 1 by 10%. For some categories, the increase was up to 30%. In addition, the employees received an award for the company’s birthday in August.

ArcelorMittal Kryvyi Rih is a unique enterprise in its own way, where 11 trade unions operate at once. Dialogue with so many employee representatives is not easy. Especially when it comes to obviously unrealistic requirements, like a minimum wage of at least €1,000 per month. Last year, the FMU and the Central Council of the Trade Union of Metallurgists and Miners of Ukraine repeatedly acted as intermediaries between the management of the enterprise and local trade unions. As a result, compromises were found even in the most difficult issues,” notes Sergey Belenky.

Ferrexpo

At the enterprises of the company Ferrexpo last year, the average salary increased by 8.4%. For reference: in 2020, salaries were increased by more than 10%. The company did not specify the absolute amount of salaries, but it is known that the average salary in December 2020 at Poltava MPP was UAH 20.2 thousand.

“In order to remain a leader, we constantly monitor the situation on the labor market. The company also has an annual employee assessment program tied to the bonus part of the salary, which allows employees to independently influence the level of their salary” – they say in Ferrexpo.

“Interpipe”

From October 1 last year, the company centrally raised the salary to all employees by an average of 10%. However, its level is differentiated depending on the division and category of employees.

This decision was in addition to the previous increase, which occurred in the period of June-September, when different divisions and categories of personnel received an average salary increase of 10%.

Additional buns

In addition to financial motivation, mining & metals industry companies are actively using various programs of intangible preferences. Some of them may have a monetary component.

Metinvest

The Group constantly keeps personnel motivation programs under control and periodically changes them so that they fully correspond to business objectives.

“In 2021, the group focused on improving operational efficiency. Therefore, all changes in motivation systems were aimed at supporting these processes,” the company says.

For example, Metinvest has introduced a system of motivation at repair enterprises aimed at improving the level of customer service. Leaders of all levels were involved in this program. The system motivated them to increase the discipline of order fulfillment, whether it was the production of spare parts or repairs.

“We also introduced a piece-rate wage system for workers, which allowed us to significantly increase the productivity of repairmen. In addition, we worked on motivation systems for steel workers who work at the 1700 mill and at the MMP sinter plant. named after Ilyich. They are aimed at reducing metal consumption in the production of coils and reducing gas consumption at sintering blast furnace production,” Metinvest added.

Also, in 2021, the group introduced additional motivational payments based on the results of the year to employees who actively participated in operational improvements. They are intended not only for management, but also for workers.

“The payment based on the results of work for the year will be quite significant, and its amount will be calculated individually for each employee. This shows how the company engages people and is ready not only to set difficult tasks, but also to share part of the income with employees. We plan to continue this practice in 2022,” the group emphasizes.

Ferrexpo

Ferrexpo operates comprehensive program employee motivation. In addition, the company has developed a strategy to create new highly professional and multifunctional jobs. This allows the employee to consciously build a career through training and acquiring new skills and thereby influence their earnings.

“In addition to salaries, employees are provided with an expanded social package – medical life and health insurance, free travel to work, healthy food, the purchase of wellness vouchers, the provision of special clothing and footwear, and internal and external staff training is carried out,” Ferrexpo says.

Ferrexpo’s motivation and personnel management system includes:

  • additional material incentives in the categories “Best in the profession” or “Long continuous service” to employees who have achieved special professional results in their work;
  • corporate platform Fe_munity for mid-level employees;
  • initiative “Decree for men” – if a married couple works at an enterprise and the husband’s salary is higher, then the wife will receive compensation while he is on maternity leave;
  • free psychological support service;
  • annual medical examination and quarterly webinars on the formation of healthy habits, etc.

“The company is constantly working to improve the motivation system for employees so that everyone can influence and independently regulate the level of income. Together with experts, new forms of remuneration system and annual bonuses are being developed with performance indicators for professions and positions and their impact on remuneration,” Ferrexpo emphasizes .

ArcelorMittal Krivoy Rog

ArcelorMittal Kryvyi Rih is one of the few Ukrainian industrial enterprises that annually invests in the development and maintenance of recreation facilities for its employees and their families.

“In 2021, the company spent more than UAH 69 million on the rehabilitation and recreation of employees and their children. In the summer, 3,500 children rested in sea camps, and more than 18 thousand employees of the enterprise and their families rested at country camp sites,” says Yulia Zabolotna.

Salary prospects

All expectations point to a further increase in wages in the country, although high inflation may make adjustments to the purchasing power of the population’s income.

“The trend of wage growth will continue in 2022. Ukrainian specialists in the field of personnel management expect an increase in the level of salaries in the labor market in the range from 5% to 20%, depending on the area, – notes Alena Kutsokon, Head of Recruitment Department at Smart Solutions.

The state budget provides for an increase in the average monthly salary this year to UAH 15.3 thousand. The National Bank expects an increase in real wages by 6.1%, nominal – by 15%. In turn, Alfa Bank analysts predict that the average salary in 2022 will grow by 14.4%, to UAH 15.9 thousand.

Taking into account the expectations for the current year of price reductions for both global steel market , and iron ore raw materials , MMC companies are still cautiously assessing the prospects for a centralized increase in wages.

“The company continues to closely monitor all changes in the labor market and the economic situation in the countries of presence. We make the decision to raise wages taking into account market trends and the state of the company. The current state of affairs in the metal and iron ore market allows us to feel quite confident and to fully load our production capacities,” summarize Metinvest. “If market trends associated with inflationary processes, currency fluctuations, energy costs significantly reduce the purchasing power of our staff, then we will respond to these changes and raise salaries.” .