Mines in Ukraine that have overdue debts in salaries to miners will be obliged to pay wages using 80% of the proceeds from the sale of their products, the Cabinet of Ministers agreed on July 21.
“The government has approved changes in the procedure for using funds provided in the state budget for restructuring the coal industry,” Prime Minister Denis Shmygal said.
According to him, this will help mining companies to pay off old wage debts.
Mines’ debts to employees are a big problem in Ukraine.
As of June 2021, the Ukrainian government owed more than Hr 367.5 million ($13.3 million) in unpaid salaries to miners, accrued between 2015–2020, as well as Hr 752 million ($27.3 million) accrued in the first five months of 2021, Ukraine’s Coal and Energy Ministry press service told the Kyiv Post.
In 2016, mines used coal revenue to cover 70% of their salary costs while the government paid for the rest. In 2020, mines could cover only 25% of salaries.
Coal production in Ukraine dropped from 64.9 million tons in 2014 to 28.8 million tons in 2020. Worse yet, every year, getting coal out of the ground becomes more expensive. Between 2015–2020 the mining companies’ debts to the state grew to Hr 32 billion ($1.1 billion).
Most of Ukraine’s mines are outdated and haven’t been properly maintained for dozens of years due to a lack of financing. Many mines are deeply unprofitable and rely on subsidies to survive. However, they are crucial to Ukraine’s energy and national security.
Mykhailo Volynets, chief of the Free Trade Unions Confederation of Ukraine, told the Kyiv Post that even when mining companies post huge losses and rack up debts, their directors continue to enjoy high salaries at everyone else’s expense.
The state has lost many mines after the Russian invasion. In 2014, 121 coal mines were operating in Ukraine. By 2021, Ukraine controlled only 33 of them.
