Well, you are wrong here, it doesn't. Symbol % may be confusing, you think it's mathematical probability of successful... something. It is not. Would it be better if instead of symbol % there was some abstract "skill points"?
Besides, as I said, 1% is relative, not absolute (overall) quality, do you know the difference? If a player on level 15 has relative quality 12%, he has overall quality 73. If he has overall quality 70.25 (showed as 70) or lower, his relative quality is showed as 1%. The same about skills, except we don't see their overall quality (but can calculate in the same manner, because player's quality is just the average of all the skills).
So, even if player has Shooting 1% on level 15, it just means that his Shooting has overall quality 70 or lower. That doesn't mean he can't kick the ball. He kicks the ball on 70... ehm... points! Or less :3
Every your level up players don't get worse. -20% is an illusion of losing quality, in fact it is not. Just demands grow up on higher level.
Again, just replace symbol % with some abstract "relative skill points" to avoid strange conclusions. Or just calculate and use overall quality.
Also, you are looking for the realism in a casual mobile donation game. Really?