1.5. The employment and salaries of employees

Total employment in tobacco factories in Ukraine has decreased from 6734 people in 1996 to 5299 people in 2000, that is, 27%, while total cigarette production increased by 31%. (Fig. 1.8a). 

It can be explained in the 5 Ukrainian factories where production has decreased. At most successful joint ventures, employment is growing (Philip Morris) or stable (Reemtsma). However, if we compare certain indicators, such as the number of workers used to produce 1 billion cigarettes (Fig. 1.8b), we see that employment is much lower at these joint ventures (from 40 to 190, while at Ukrainian factories it is from 200 to 600). Therefore, any policy that would support an increase of cigarette production in Ukraine would not cause an increase in employment at tobacco factories. In 1998, R.J. Reynolds closed a factory in Lviv. 620 workers were discharged. In 2000 (in compare with 1999), BAT increased production by 68% and discharged 29% of workers.

The average salaries at cigarette factories are rather high when compared with other kinds of industry salaries (Table 1.7). However, at fermented tobacco factories it is actually the same as the average in the country. By international standards the salary is rather low: in 1996 it was equal to 215 $US, and in 1999 - 303 $US. The top managers of most of the TTC tobacco factories are foreigners, who have salaries that correspond to those of tobacco managers in Western countries, while the average salaries of Ukrainian workers are much less.

Table 1.7. Employment and salaries (in hryvnas) in tobacco industry

1.6. Tobacco taxes