Blockade Leaves Tens of Thousands Without Salaries in Eastern Ukraine
25 May, 2017
The Yenakiyevo Metal Plant Photo: EPA/ ALEXANDER ERMOCHENKO

The ongoing economic blockade of the Russian-occupied Eastern Ukraine takes toll on lives of thousands of people, trapped in the war-torn region. Russian backed separatists took over the administrations of local Ukrainian companies in early 2017. Since then, the legal owners have ceased paying staff salaries. Currently, all trade with the uncontrolled part of Donbas has been suspended.

Meanwhile, the head of the so-called "DPR", Oleksandr Zakharchenko, who previously promised an "avalanche of investment" into the Donbas economy, said that all the companies will continue to work normally and produce goods for export. However, he did not elaborate on where they would export to. The companies' previous management said this is impossible.

Hromadske traveled to Russian-occupied Eastern Ukraine to find out what is really happening in the occupied factories and mines, and how the future looks for their employees.

How Many People Stopped Being Paid?

March 1 marked a complete loss of control over Ukrainian enterprises in the parts of Donbas occupied by militants, declared Ukrainian billionaire Rinat Akhmetov's financial and industrial holding company System Capital Management (SCM). This includes about 33 companies, many of them in heavy industry ranging from mines and steel plants to coke plants.

People who have lost wages do not risk going outside of the "republics."

The enterprises of Ukrainian billionaire Rinat Akhmetov in the uncontrolled areas employed 60 thousand workers. Since the loss of control they have all become officially unemployed. SCM group has created a Staff Support Centre, a special unit designed to help find workers employment in government controlled territory.

According to the press service for SCM's energy division (DTEK), only 670 employees have expressed interest in taking this opportunity. For the most part, they are executives and not ordinary workers. Management says the process is ongoing.

In the community group on VKontakte (a Russian-based social media network, now banned in Ukraine), the staff seemed skeptical of the prospect of relocation and employment in other enterprises. Some have appealed to the Staff Support Centre, but never received proposals. Others express fears associated with moving, such as the need to pay for rental housing and the considerably increased cost of utilities.

How Do People Survive Without Salaries?

Hromadske's sources in the uncontrolled areas in eastern Ukraine argued that life in the enterprises has come to a standstill; wages were frozens and employees were sent on unpaid leave enmasse. Dissatisfied groups have already made several attempts at protesting.

As Donbas News reported on April 19, about 60 workers from the Donetsk Zasyadko mine (since the "nationalization of the DPR" the "Opposition Block" deputy Yukhym Zvyagilsky owns the mine) came to Lenin Square in Donetsk to ask what happened to their salaries in the "transition period" and thereafter.

The demonstration was announced on social networks. However, the city authorities organized entertainment for young people at this time, blocking access to the main square. Instead, the miners went to the so-called "Ministry of Coal and Energy." Separatist media reported about the meeting between the so-called "DPR" officials and the protestors.

Photo taken from separatists resource

In the next two days the so-called "DPR Minister of Coal," Edward Galenko, met with members from the two mines. Miners were promised payment of salaries and arrears from January and February 2017. After that, mining protests were not reported in the media.

Instead, miners actively discussed the situation in the coal industry on the "Mines of Donbass" group on VKontakte. Judging by the comments, many people were not awaiting wages, they were desperate and prepared to take on any kind of work: "I can dig a garden. Minor repair work or odd jobs. For those who have any work, send me a personal message. Two months of unpaid leave and I haven't received my wages for January. It's a complete disaster. I have two children, fortunately parents help a little," wrote an employee of one of the Donbas Shakhtoupravlinnya mines.

Hromadske was able to talk to employees from several enterprises militants captured in early March. Their names have been changed for security reasons.

Donbas Miners: "The 1990s came back"

The "Komsomolets Donbas mine" in Kirovske, Donetsk region, is one of the largest coal mines in Ukraine. Until March 2017 it belonged to Rinat Akhmetov's DTEK group. It's infrastructure was damaged during the fighting in 2014, but the company continued to operate.

The "Komsomolets Donbas mine" in Kirovske. Photo: Olena Merkulova

In early March the head of the so-called "DPR," Oleksandr Zakharchenko appointed the "DPR Coal Ministry" the "supervisor" of the mine. Miners told Hromadske that there are currently no buyers for the coal produced there (before its "nationalization" it supplied Kyiv-controlled territory), workers were sent on leave at their own expense enmasse.

"Rates were severely cut. To reach a Ukrainian salary now they would have to pay a premium of about 100%. But now no one can even dream about this premium. In general management maintains a strange, if paid, is late. People are generally dissatisfied and more so everyday. Those who have somewhere to go have gone. For the Donbas miners it's like the '90s, and not just for them," said Komsomolet's employee Dmytro*.

Khrestivka (Kirovske until 2016), Donetsk region, is a small town near Yenakiyevo, an area of about seven square kilometres. Komsomolets Donbas is an urban development enterprise; the entire economy depends on the mine. If it closed, it would threaten the survival of about 25 thousand people. After losing control of the company, DTEK refused to pay workers severance. And not everyone is prepared to spend the money and energy to collect payments through the court.

"DTEK's remaining debt is just hanging. The union has not come up with anything better than to find lawyers who most people have to pay a thousand rubles in order to get their money back. That's just the way it is. Some hope for the best and are waiting, others have lost faith and get drunk..." a former mine employee, Oleksiy* told Hromadske.

Some miners see no other choice but to leave Khrestivka.

"A lot of young guys were desperate and forced to go work in Ukraine or in Russia, because they need to feed their families. To live on the money they pay is below human dignity," Oleksiy* said.

"We get groceries on credit"

The Mospyne coal plant is located in Mospyne, southeast of Donetsk. It's population is about 10,500 people.

On March 15, DTEK announced its loss of control over this company. Workers told Hromadske that they did not receive severance pay after actually being let go from DTEK and now have problems with the First Ukrainian International Bank (PUMB, owned by Rinat Akhmetov). Before the "nationalization" they received salaries and loans from this bank.

"I don't know how to pay back these loans now. They didn't pay salaries, and now the bank sends us texts saying 'you're in debt!'," said Andryi* in outrage.

The Mospyne coal plant. Photo: DTEK

Hromadske repeatedly appealed to the press service of DTEK for a comment on this information but never received an answer.

Andryi's colleague, Ruslan*, also said that wages fell twice and now surviving on this money is impossible.

"The coal comes, there's work, but meager salaries. I am a category four mechanic and my salary is 4,500 rubles [about 80 USD–ed.]. It's very small," he said.

According to Ruslan*, given that prices in the "DPR" are higher than the average in Ukraine, to live a normal life a family of three would need about 15 thousand rubles per month (about 265 USD).

"We live in our own house. We pay for power, water and garbage collection, so we can afford basic groceries ( onions, potatoes, beets, cabbage etc.) for half a month. Less than a thousand rubles (around 17 USD–ed.) is left over. Then – in the food shops we get groceries on credit. I don't know about others, but I am thinking of leaving," said Ruslan*.

"I don't see prospects for myself"

The Yenakiyevo Metal Plant, were figitive Ukrainian president Viktor Yanukovych used to work in his younger years, belonged to Rinat Akhmetov's Metinvest group until the "nationalization". They produced a wide range of products, part of which were exported.

In February 2017 the plant almost stopped working. Because of the blockade of transport routes they did not receive the necessary raw materials for production. On April 27 the self-proclaimed head of "DPR", Oleksandr Zakharchenko, came to the plant accompanied by media under his control to celebrate the "launch" of the preserved blast furnace #5.

The Yenakiyevo Metal Plant. Photo: Wikimapia

"In two weeks there will be cast iron. Iron ore will be obtained from the Russian Federation. 70% of production will be used in the domestic market, we have well developed industry able to consume a large amount of metal, and the surplus will be exported," said Zakharchenko.

The leader of the separatists said that the Yenakiyevo Metal Plant provides work for 7,000 people. However, the company's employees are not so optimistic.

"Everything is bad, and if not then close to it. With the arrival of new leaders the people were given a so-called 'raise'. All different amounts. On average around 3,500 to 4,000 rubles [about 60-70 USD–ed.]. To help you understand, if before I got around 6,000 hryvnia [about 228 USD] a month all total, now I get 3,500 rubles [about 56 USD] –it's just awful," says Katerina*, a Yenakiyevo Metal Plant employee.

Katerina* said there weren't cuts but rather they all received significantly reduced salaries: "Now the plant really does not work. Well, it seems to be trying to run. But it's not clear what markets to look to for raw materials," she said.

Another Yenakiyevo Metal Plant employee, Oleg*, said that some of the raw material was delievered, but not all of it.

"I don't see prospects for myself here," he said.

"They Promised to Pay Later in the Week, It's Been Four Months"

Ukrainian businessman Dmytro Firtash's Konstsern Styrol factory, which produced mineral fertilizers in Horlivka, stopped paying wages back in January when the blocking of railways in government controlled areas started. In April, some workers received between 7.50 and 15 USD. Nothing has been heard about the money since. Production has stopped completely, but most people continue to go to work.

"For four months they promised to pay later in the week. Apparently, it hasn't come yet..." factory worker Volodymyr* told Hromadske.

Konstsern Styrol factory, Horlivka. Photo: Vladimir Lapshyn, Wikimapia

As Zakharchenko stated, the so-called "DPR Ministry of Industry and Trade" is responsible for the Styrol factory. The curators promised to resume work in several plants, but what will happen to the rest is unknown. However, the new administration hasn't let anyone go, except pensioners.

"On April 11 nearly the entire factory was sent home with 2/3 of their salary (this usually happens when a job is terminated at the enterprise's initiative), but they did not pay. There are 50% wage arrears from January, and all of February, March and April," Styrol employee Viktoria* told Hromadske.

What's Next?

If it were possible to supply the captured companies with Russian raw materials, there would be problems with sales, especially of coal.

"Talking about supplying coal to Russia probably doesn't make sense because the market is full. Add additional customs clearances and other tarrifs, and the coal won't be competitive there," quality director for the Avdiivka coke plant Gregory Kleshnya said in a comment to Hromadske.

This is the same Avdiivka coke that before the "nationalization" received coal from the "Krasnodonvuhillya" and the" Shcheglovska Glyboka mines" that are now under militants' control.

According to the former owners of certain enterprises, the "export destinations" that Zakharchenko talks about also don't exist:

"The quality of the coal does not meet the requirements of foreign markets," reported the SCM press service, citing DTEK director Maksim Timchenko.

The Ministry for the occupied territories said that the Ukrainian side will monitor attempts to export from seized enterprises, because this is illegal. Officials are not ruling out the possibility that the mines are producing coking coal to be redirected to the Russian market either:

"We can track the movement of goods into the territory of the Russian Federation, but proving this in court is another matter. This is a question of the Ministry of Justice and the Ministry of Foreign Affairs getting involved in internal claims," Deputy Minister Georgyi Tuka told Hromadske.

Currently, there is no plan to return the lost plants and mines to Ukrainian jurisdiction and the Security and Defense Council has banned any trade with them.

"The only method is to push the international community on Russia and Russian puppets currently prevailing in uncontrolled territory. No other ways exist," said Tuka.

As there will be tens of thousands of Ukrainians left without wages, it remains to be seen if this will lead to a new wave of immigrants. While most are waiting, some have tried to find other jobs in their hometowns.

"I got a job at a dairy factory. If you want, you can find some work," said a former Horlyvskyi Styrol employee, "But a salary makes you hope for the best."

/*Names have been changed

/The author's name has not been disclosed for security reasons

/Translated by Eilish Hart