The service market in Ukraine was formed according to the centralized economy system. Since 1991, when Ukraine became an independent country, it inherited the market structure, based on state-owned consumer services centers, which provided services in Ukraine to the public. Most consumer services were concentrated in urban areas. Services market was completely monopolized by the state, and providing services to the population was not considered prestigious. Wage in this sector was lower than in other sectors of the economy, so there was a lack of good workers.
Since forming the market business became to develop. However, economic crisis complicated this process. At the beginning of the XXI century state and municipal enterprises continue to dominate on this market (recreation, education, utilities, etc.). Current status of services market in Ukraine is characterized by the following features:
1) the dynamic development caused by the huge reserves to expand its structure, increasing the volume of services;
2) the effective functioning of small business entities;
3) collective ownership enterprises achieve the best performance in volume and generic structure;
4) the dependence of small business services from the state financial support.
Laundries and dry have the worst situation on service market of Ukraine. Since the beginning of financial crisis in 2008, the volume of work decreased by 25-30%, and some customers half cut their spending on washing. Restaurant chains and beauty salons faced decline of attendance and decided that it is cheaper to spend money on equipment and set up their mini-laundry than pay to contractors. About 70% of private customers decided not to use services of laundries.
Market of beauty services in Ukraine also was hit by crisis. Reducing of family budgets in Ukraine significantly reduced the number of visitors these institutions. Customers became to choose beauty services more carefully. Owners of beauty schools complain that this blow can destroy their businesses. Ukrainians almost do not visit beauty salons any more.
The situation on the market of corporate insurance is similar. To keep the companies that continue to insure their employees, insurers plan to reduce the cost of policies to reduce the amount of coverage and offer additional services in Ukraine.
Forecasting the decline of the corporate market, insurers began to redistribute its residues. Most of them don’t specialize in specific areas any more and try to attract new customers with tested methods. According to the most optimistic forecasts, insurers will have to maintain 80% of companies that have not yet abandoned the continuation of insurance, the pessimists predict a figure of 40-50% of companies.
Prospective Services in Ukraine
Tourism business is the most promising market in Ukraine. There are numerous unique tourist, cultural and recreational places. However, tourism in Ukraine is not highly developed yet. This is due to the lack of relationships between all kinds of economic activities related to tourism business, in particular between transport, agriculture, construction, medicine, culture and others.
Prospects for the development of tourism in Ukraine related to the implementation of the program of establishing transport corridors in Ukraine and development of the Crimea. Effective development of the tourism industry is closely related to the extensive transport infrastructure as transport services play a crucial role in transfers of human, money and goods.
Prerequisite for the development of tourism in Ukraine is the effective functioning of the hotel industry, which provides about 60% of all tourism revenue. At present, the development of hospitality business in Ukraine is slowed down due to a number of external and internal factors. Therefore, it is important to establish new high class hotels and small family hotels.
Market of gas stations is very profitable in Ukraine. The prospects in this market are in building new stations and reconstruction of old objects. Experts claim about further concentration of this business by large networks, although successful owners of gas stations will remain in big cities. Expect do not forecast arrival of networks to small towns.
Mobile banking (m-banking) allows mobile subscribers to use features of bank account by mobile phone. Banks are increasingly turning to the idea of mobile banking, which allows them to cooperate with individuals without increasing the cost of developing networks of offices. M-banking services in Russia, Ukraine and Belarus have more than 1 million subscribers..
Syndicated lending is a promising sector among traditional financial services, when banking syndicate performs large credit operations, combining several banking institutions. Syndicated lending to the real sector of the economy is considered by experts as one of the most promising directions of development of the Ukrainian financial market. The purpose of syndicated lending is the desire to make credit history of Ukrainian companies more transparent, to provide access to a wide range of investors to financing companies with dynamic growth.
A major impetus for the development of the domestic market was the Euro 2012. This fact encouraged the authorities to develop the service sector. The development of services in Ukraine requires additional investments, including foreign investment. Attracting foreign capital will provide not only the receipt of the necessary financial resources, but also advanced technologies that will improve quality, availability and culture of services in Ukraine.