EBA opposes raising “minimum wage”
The European Business Association is against increasing the legal minimum wage as, in its opinion, this will lead to an increase in shadow employment in the country.
Increasing fiscal pressure in the midst of the economic crisis and uncertainty will stimulate the growth of the “shadow” wage sector, which will lead to a fall in tax revenues from that part of the business sector that will resort to “shadowing” its activities.
According to the EBA, this will result in a worsening of the business environment for bona fide taxpayers: “they will bear additional costs for paying the USC while facing increased unfair competition from the shadow sector, which will grow as a result of the adoption of the proposed draft law”. The Association insists that Draft Law No. 3963 is unacceptable if the maximum amount of the USC’s accrual base is not reduced.
Kyiv’s Dnipro Hotel sold at auction for UAH 1.1 billion
On 15 July the State Property Fund held an auction for the sale of the capital’s Dnipro Hotel. The hotel was sold for UAH 1,111,222,22 to Smartland LLC.
Once the auction is completed, the winner must pass a “do-gooder” check of its funds, after which the contract is signed. The investor has 30 days to transfer the money, otherwise a penalty will be charged, and after two months the results are cancelled. The State Property Fund named the following key post-privatization conditions for potential investors:
- maintaining a hotel with at least one hundred rooms, having at least four stars and staff without reducing the salary for at least six months;
- repayment of receivables, in particular on wages, no later than six months from the date of transfer of ownership;
- retaining the word “Dnipro” in the name.
The Dnipro Hotel was put up for sale at the starting price of UAH 80.92 million. 29 companies participated in the auction.
Eurozone economy now in recession
The economy of the 19 countries in the Eurozone fell by 12.1% in quarterly terms in the second quarter of 2020, according to final data from the EU Statistics Office. The drop in GDP was the most significant since the beginning of accounting of this indicator in 1995. In annual terms, the Eurozone’s GDP fell by 15%.
A record drop in GDP was recorded in Germany (-10.1% compared to the previous quarter), France (-13.8%), Italy (-12.4%) and Spain (-18.5%), Trading Economics notes. In the first quarter, Eurozone’s GDP fell by 3.6% on a quarterly basis and by 3.1% on an annual basis. EU GDP in the second quarter fell by 11.7% on a quarterly basis and by 14.1% on an annual basis.
According to preliminary data, the number of employed people fell by 2.8% in the Eurozone and 2.6% in the EU compared to the previous quarter. The drop in indicators was also the highest in the history of observations.
Ukraine topped rating of transparency of public procurement again
The Ukrainian public procurement system has taken first place in the Transparent Public Procurement Rating. The system scored 97.05 points out of a possible 100.
Moldova is in second (92.81 points) and Colombia in third place (91.77 points). Tajikistan has the worst score, 37.88 points. Last year, Ukraine took second place (86.26 points), losing to Moldova. In 2016-2017 Ukraine topped the rating.
The rating is conducted by the Institute for Development of Freedom of Information together with partner organizations. It evaluates public procurement legislation and process transparency by 64 indicators. At first, the rating only covered the European and Asian regions, and now it includes 39 countries around the world.
The authors of the rating noted that over the past year, Ukraine had some positive changes in public procurement, particularly adoption of the new wording of Law On Public Procurement, Law On Combating Corruption and the introduction of online monitoring of the public procurement by the State Audit Service.
“Green” energy overtakes classic energy in EU for first time
Renewable energy sources have overtaken coal, oil and gas for the first time in the EU’s electricity generation sector. Wind, solar, hydro and bioenergy generated 40% of electricity in the 27 member states in the first half of the year, surpassing fossil fuels as a source, which accounted for 34%. This is evidenced by analysis done by the Ember climate analytical center.
As a result, carbon emissions in the EU energy sector fell by almost a quarter in the first six months of 2020. While electricity demand in the EU fell by 7% due to COVID-19, electricity generation from renewable sources rose by 11%, mainly due to new wind and solar installations, which produced a record 20% of Europe’s electricity. In Denmark, 64% of electricity was generated from wind and sun. In the meantime, electricity production from fossil fuels fell by 18%. Coal took the brunt of the decline in production in each country. The drop in Portugal was 95% and 58% in Spain.
Banking & Finance
The EBRD to provide EUR 25 million in credit to Ukrainian State Air Traffic Services Enterprise to maintain liquidity
The EBRD and Ukrainian State Air Traffic Services Enterprise have signed a Memorandum on providing a loan to support liquidity to the tune of EUR 25 million for 3 years.
The purpose of the loan will be to replenish working capital for the payment of the payroll fund, payment of mandatory payments and financing of critical operating expenses for the provider of air navigation services. The Ukrainian State Air Traffic Services Enterprise, which is not funded from the state budget, but only from its own funds received for air navigation services provided to airlines is facing, as a result of the unprecedented crisis in the airline industry, the threat of losing the ability to support operational activities and fulfil social obligations to its employees. Unlike airlines, an air navigation service provider cannot halt its activities because it is part of the country’s critical infrastructure.
Airbnb aims to list shares on stock exchange
American home reservation service Airbnb Inc. has reported that it sent a confidential request to the US Securities and Exchange Commission (SEC) to conduct an initial public offering of its shares on the exchange (IPO).
The IPO is expected to take place after the SEC completes a review of its documents for compliance with the market and other conditions. This is an unexpected turnaround for a company whose business has been badly affected by the coronavirus pandemic.
According to media reports, the company initially considered direct listing, which does not involve raising funds, but settled on a traditional IPO. Airbnb’s revenues in the second quarter, which ended on June 30, fell by 67% on a year-on-year basis, to USD 335 million, Bloomberg reported earlier this month, citing knowledgeable sources. But excluding interest, taxes, depreciation and amortization, the company’s loss came to USD 400 million.
The company has already raised USD 2 billion in funding by issuing debt and securities to cope with the COVID-19 crisis. Airbnb cut about 1,900 workplaces, which is about 25% of its staff, in May of this year.