Kyiv, 4 February 2014 – “Despite the economic and political instability in the country, the labor market remains quite busy and active. Companies continue to review compensation packages and invest in the training and development of employees. Furthermore, companies plan to raise salaries and increase numbers of staff in 2014,” says Olga Gorbanovskaya, Partner, Head of the Human Capital Group, EY.

The Compensation & Benefits Survey annually conducted by EY’s Human Capital Group provides detailed information about compensation package structure for more than 400 positions and about the leading HR policies and practices in Ukraine. EY has conducted this survey for the past 12 years; this year over 180 companies from various industries participated in it.

According to the Survey, actual annual salary growth in 2013 averaged 9%, very close to the predicted 10% at the median. 74% of companies increased salaries for at least one category of employee. Salary growth is expected to 10% at the median in 2014 (according to the 47% of participants who planned to raise salaries). The highest percentage of salary increase for at least one category of employees was observed in the TV (13%), the lowest - in the banking sector (4%) in 2013.

As regards the compensation structure, about 37% of the participating companies already use a grading structure and 36% plan to implement it next year. Most companies that already have a grading structure use a single structure for all employees (78% of respondents), while 22% of companies use different structures for different categories of employees.

HR priorities in 2014

Survey participants listed performance management and training and development (including distance learning) as among their main HR policy priorities for 2014. Furthermore, companies mentioned recruitment, promotion and retention, as well as building grading payment structures, as key issues.

HR policies and practices

In general, company benefits packages have remained stable in recent years. The most common benefits have been medical insurance, company cars and mobile connection.

In 2013, the proportion of participating companies providing corporate cars to their employees stayed almost unchanged, at 82% (it was 85% in 2012). According to the survey, 94% of participants provide their employees with the possibility to use corporate mobile connection, 76% of them provide mobile devices and more than half (69%) pay for mobile connection within a certain limit. In addition to the above, the limit for mobile spending per employee ranges from UAH 100 to UAH 1000 depending on the employee’s position in the company.

In 2013, 79% of participating companies provided health insurance. Another 22% sponsored medical care for their employees. To the standard services included in the health insurance package such services as vaccination (62%), vitaminization (55%), immunization (33%) and prenatal care/childbirth medical assistance (39%) were added this year. Annual personnel insurance fee for middle management, professionals and manual workers significantly increased and can reach UAH 3,600 at the median depending on the category of employee (compared to UAH 2800-3400 in 2012). For top and senior management the figure was about UAH 4,800 at the median.

In 2013, 20% of respondents offered their employees long-term incentive programs, which is comparable with the data for 2012 and 2011 years (23% in both periods). Survey participants most frequently used stock options/stock purchase plans and restricted stock grants (both 35%). In addition, 29% of companies use cash-based deferred bonuses, 19% use phantom plans/SARs and 3% use other forms.

The survey also covers issues related to additional benefits for employees, including pension plans, company loans, sponsored meals, covered sporting activities and many other things.

Recruitment policy

The majority of participating companies (63%) noted that they plan to keep their numbers of employees stable in 2014. More than a third of companies (31%) plan to recruit staff in 2014. Professional staff positions typically account for the most recruitment (33%). More than half of the survey participants (61%) noted that they use the services of recruitment agencies for recruiting employees. Most often the companies use recruitment agencies to find candidates for top and senior management positions (50% and 58% respectively).

About the General Industry Compensation and Benefits Survey – 2014 in Ukraine

The majority of companies-participants in 2013, as in previous years, were companies with 100% foreign investment. The percentage of Ukrainian-owned companies in Survey 2013 was 21% and the percentage of joint ventures was 13%. About 24% of participants are open joint-stock companies; 9% of participating companies are representative offices of foreign companies, but more than half of the companies (54%) are private companies, similarly to previous years.  Also, 47% of our survey participants have over 500 employees, a percentage that is slightly less than in the previous year (52%).

In line with tradition, the most active participants in the Survey 2013 were FMCG sector companies (23%), chemical and pharmaceutical companies (15%), banks (13%) and retail companies (9%). Furthermore, the Survey is now incorporating new industries, such as oil and gas and logistics.