Ukraine’s remittance economy

Ukraine is Europe’s biggest recipient of remittances in proportion to the size of its economy. More than 11 per cent of Ukraine’s gross domestic product comes from remittances and its 5m-strong workforce abroad last year sent home a record $14.4bn through wire transfers and cash carried across the border.

Between 1m and 2m Ukrainians work in Poland, drawn by a combination of linguistic ties, geographical convenience, higher wages and better economic prospects. Salaries are three times higher than back home, and gaps left by young Poles heading to western Europe have caused labour shortages.

The lion’s share of these workers are from Ukraine’s western regions around Lviv, the 1m-strong provincial capital an hour’s drive from Poland where there is a two-decade-long tradition of working both seasonal and long-term jobs across the border, from construction to vegetable picking.

A widespread distrust of local banks means that workers abroad are pouring their cash into other assets, particularly real estate. As a result high-rise apartment complexes are sprouting up around Lviv and property developers say migrant labourers are some of their biggest customers.

From the Financial Times

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