Country (Ukraine): fewer mouths. How does mass migration affect domestic consumption and what does this mean for the economy.

Ukrainians are becoming less in numbers. In addition to demography the population is declining due to labor migration. In recent years millions of citizens have gone to work abroad. The "Nation" understood how demography and labor migration hit the domestic market and how it affects the economy.

How does mass migration affect domestic consumption and what does this mean for the economy.

We are not only not 42 million (from 52 million under USSR), but not even 40 million anymore. Experts say that the population in Ukraine has declined to 37 - 38 million, or even 35 million.

And this is a direct threat to the economy. At such a rate of population decline, GDP will not be able to grow not only by 40% in five years, but even by 25-30%, even if it is assumed that the government will conduct a competent policy.

The number of consumers in the country is declining. Sales of basic products are growing only in money - due to inflation. But in pieces and kilograms, that is, in kind, volumes are falling.

The situation could be corrected by a sharp increase in wealth, which would allow Ukrainians to buy more. But this also does not happen. Therefore, the domestic market is “collapsing”. Which not only forces domestic enterprises to reduce production but also affects the mood of potential investors. “If the domestic market with a population of 50 million is very interesting, then 40 million is already in question, and 30–35 million is a big question,” says Alexey Doroshenko, head of the Association of Retail Network Suppliers.

Last week, Minister Dmitry Dubilet said that the electronic census in Ukraine is over. True, its results have not yet been announced. “We have established the actual number of people in Ukraine. We used several methods, all of them gave approximately the same result. Next week, I hope we can share this data, ”said Dubilet.

So far, there are no specified figures on the number of population in Ukraine. Gosstat at the end of 2019 gives its estimate - 41.9 million people. Despite the fact that Ukraine began the year 2019 with an indicator of 42.2 million. That is, over the 10 months of last year, the population decreased by 212.5 thousand people. At the same time, only 54 newborns per 100 dead.

“Ukraine is now in the so-called third demographic transition, and in our country it has acquired a hybrid form. According to the classics, the third demographic transition is a low birth rate and an increase in life expectancy. But in our country low birth rates combines with low life expectancy, especially among men. That is, the population is declining rapidly, ”said Alexei Kushch, economist and analyst at the Growford Institute.

The situation is aggravated by labor migration. Ukrainians continue to seek a better life abroad, and many not only go to work, but also try to move to Europe, taking their families there. Nobody knows the exact number of labor migrants. Different numbers are called - from 3 to 9 million people.

“We have 17 million economically active people, and only 7 million officially work at enterprises (paying taxes and social security). That is, 10 million people “fall out”. It is clear that a discount must be made, firstly, on the methodology for calculating the economically active population, and secondly, unofficial employment. But even with this in mind, it turns out that labor migration is enormous. Permanent labor migration (when a person stays abroad for at least nine months a year) - at the very least 3 million people. Pendulum (seasonal and one-time work) - another 4 - 5 million, ”notes Kushch.

That is, it turns out that in fact in Ukraine constantly lives not only less than 42 million, but also less than 40 million. Some experts even call the figure of the real population of 36 - 37 million people.

And, according to the head of the Association of Retail Network Suppliers of Ukraine Oleksiy Doroshenko, this already affects the consumption of basic goods. “It is one thing if the country has a domestic market - 50 million people, and another - if 40 million, or even 36 million. It is clear that there is a decrease in consumption, especially since the well-being of people is not growing rapidly and they cannot buy more goods. And this factor could, if not level, then at least slow down the rate of population decline, which, in fact, is happening in the developed countries of Europe, ”says Doroshenko.

Less eaters and worse appetite

Former Minister of Social Policy Andrei Reva once accused Ukrainians of eating a lot, they say. What caused a wide negative resonance. But in fact, official statistics do not provide accurate data on the total consumption of goods and services by Ukrainians. However, the State Statistics Service shows the sales volumes of various goods not only in monetary terms (there the overall picture is lubricated by inflation), but also in real terms (that is, in tons and units).

According to them it can be judged that for most product groups in retail there is a decrease in sales. True, for 2019 on the website of the State Statistics Service there is not even this data. The latest retail information is for 2018. However, she confirms the general trend. And over the past year, according to Alexei Doroshenko, nothing has changed dramatically, except that the situation has worsened even more. And to a large extent - due to a further reduction in the population and labor migration. Simply put, there is, as before, in Ukraine there is simply no one.

So, through domestic retail in 2018 were sold: 213.9 thousand tons of meat, 128.9 thousand tons of meat products, 70.7 thousand tons of fish, 88.6 thousand tons of cheese, 22.6 thousand tons of butter, 93.7 were sold thousand tons of sunflower oil, about 170 thousand tons of sugar, 422.8 thousand tons of bread, 172.5 thousand tons of confectionery, 115.4 thousand tons of flour, 200.6 thousand tons of cereals, 163 thousand tons of pasta, 519 thousand tons of vegetables, 414.7 thousand tons of fruit, etc.

If we compare with 2015 (by the way, the most unfavorable in socio-economic terms for the last 10 years), then in almost all groups - a serious subsidence. So, in 2015, 243 thousand tons of meat were sold through retail, about 149 thousand tons of sausages, 72.2 thousand tons of fish, 30.7 thousand butter, 111.2 thousand sunflower oil, and 190.8 thousand sugar. tons of bread - 457.7 thousand tons.

That is, the trend cannot be attributed to a “one-time” exit of labor migrants. “The decrease in consumption is from year to year. And it has already touched almost all product categories, even the cheapest, on which people seem to not have to save, say, bread or cereals. Nevertheless, bread production in Ukraine has been declining for the third year in a row, ”says Doroshenko.

According to the SSSU, in Ukraine both the number of population and per capita consumption of basic food products are declining. So, if in 2014 the average Ukrainian ate 20.3 kilograms of dairy products per year, then in 2018 - only 19.1. Egg consumption fell from 20 to 19 pieces per year, fish - from 1.6 to 1.4 kilograms, sugar - from 3 to 2.7, potatoes - from 6.9 to 6.3 kilograms, vegetables - from 9 to 8 , 9 kilograms, bread - from 9 to 8.3 kg. That is, in the country there are not only fewer people, but also everyone eats less. What is illogical - incomes of the population have been steadily growing since 2017. Most likely, according to experts, we are talking about "unaccounted for" official migration statistics.

At the same time, monetary indicators of retail are constantly increasing. Over the 11 months of last year, compared with the same indicators in 2018, the turnover grew by 10.4%. “Trade is the driver of the economy. If the economy as a whole grows by 3% per year, then trade - by 10%, ”notes Alexey Kushch.

But, of course, such dynamics is ensured, first of all, by rising prices, which are ahead of inflation in the grocery basket. Say, last year, with inflation below 5%, many food products rose by 8-15%.

The decrease in consumption concerns not only foodstuffs, but also consumer goods - clothes, shoes, household appliances, etc. However, the figures are more difficult to track, since a large share of the goods is sold through spontaneous retail, online stores and in other areas.

But the “minus” in trade is fixed by individual companies. Say, Eldorado reported that, according to the results of the third quarter of last year, sales fell by 1.5%.

And according to a GFK survey, in the household appliances market in the third quarter of 2019, minus 0.6% was recorded.

Industry trap

The narrowing of the market has already affected industry performance. So, according to the State Statistics Service, food production fell by 1.5% in 2018. And for 11 months of 2019 - by another 1.1%. At the same time, some categories collapsed more significantly, say, cheese production - by more than 11%, butter - by 16%, sausages - by almost 6%, etc. True, there is a whole heap of problems in the fall of the food industry. Including the crowding out of domestic products by imports due to the sharp strengthening of the hryvnia. It accounts for up to 50% of the assortment in certain categories.

“If import products were previously positioned as elite, then they began to master the middle price category, but now they occupy an increasing share even in the social categories of products,” says Kushch.

But the fact that the population consumes less and less also affects production volumes. Moreover, domestic processing has always been focused primarily on the domestic market. And enterprises are unlikely to be able to accelerate exports to such a level that it covers falling sales within the country.

Sergei Vovchenko, head of the Supervisory Board of Dairy Alliance (TM Yagotinske), says that a lot of factors affect milk production. “For cheese and butter, for example, there is a decline due to the collapse of world prices. If in 2018 oil was exported at 4.5-4.8 thousand dollars per ton, then this year, from the second quarter, the price is actually at the cost level. But low consumption affects. True, here the main reason is not so much migration as low solvency. The volume of dairy products in our country is half that in Europe, ”says the expert.

In their company, last year, sales of whole-milk products increased (by 6% in the first half and by 4% in the second).

“Migration is a double-edged sword,” the head of one of the food industry enterprises told Strana. - On the one hand, it provides a large flow of money to the country. On the other hand, it reduces the number of consumers. Yes, incomes are growing, but physically one person cannot eat more than a certain amount of food, no matter how much money he has. Therefore, relatively speaking, if previously 10 thousand people lived in the city with an average monthly income of 5 thousand hryvnias, and now 7 thousand people live with an income of 9 thousand hryvnias, this means that the total income increased from 50 million to 63 million hryvnias . But this does not mean that in this city they began to buy more bread. They buy much less bread there - because there are fewer people. And so on most products. And they buy more clothes, gadgets, which are mainly imported. Fortunately, the dollar fell. And the consumption of domestic products is falling. ”

According to Aleksey Kushch, amid a reduction in the domestic sales market, our economy is also losing its other advantage - a relatively cheap labor force. And here it is also worth looking for reasons in labor migration. Indeed, the most qualified and active specialists leave the country. And with what remains, employers are constantly forced to raise salaries, even if their qualifications do not meet the requested money.

And this approach further reduces the competitiveness of our enterprises. “Therefore, without returning Ukrainians to their homeland, we should not expect 40% of GDP growth or even 30%,” Doroshenko added. Experts evaluate the methods proposed by the state to return migrant workers with skepticism. In particular, soft loans under the “Come back and stay” program, for which the parliament recently allocated 2 billion hryvnias, according to Kushch, is unlikely to have a tangible effect.

After all, labor migrants who are aimed at their own business can take cheaper money in Europe, and the rest are not interested in loans at all, but, first of all, in salary, as in Europe. Which they still can not get in Ukraine.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.