Most public enterprises are less profitable than private ones

The profitability of 61.1% of state-owned enterprises is lower than the median indicators of private companies. This was shown by a study by the Center for Economic Strategy, which analyzed the financial performance of companies over 10 years.

Farthest from the median business indicators are the public construction sector (almost 90% of companies below the median), HoReCa and mining (76% each).

As noted in the State Property Fund, the state does not require the managers of state-owned enterprises to achieve profitability, but measures management efficiency by improving the results of the previous period. So company directors may not worry about generating profits, they only need to minimally improve last year’s performance to be considered effective managers.

The research is yet another proof that the state cannot effectively manage enterprises. In Ukraine, they become elements of corruption schemes and “feeders” for those who aspire to power. The only solution to the problem is the privatization of state-owned enterprises. It will make it possible to overcome corruption, attract investments and fill the state budget.