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Exporting labor would save Ukraine

Author : Oleksandr Okhrymenko

10:03, 2 March 2016
Exporting labor would save Ukraine

Author : Oleksandr Okhrymenko

Ukraine would adopt the successful experience of Georgia. In 2004 in Georgia, the share of private remittances in GDP was only 6%, but now Georgian migrant workers form 12% of the GDP

10:03, 2 March 2016

PHL

According to preliminary results, Ukrainians in 2015 transferred to Ukraine about $ 5 billion, that they earned abroad. This is 35% less than last year and two times less than in 2013. But if you look closely at the balance of payments of Ukraine, it is a win. The foreign trade of Ukraine in 2015 showed a deficit of 1.2 billion dollars (more than the currency was sent abroad than received). Direct foreign investment in Ukraine by the end of 2015 was received in the amount of $ 3 billion. Moreover, in 2015 Ukraine paid off old debts to non-residents in the amount of $ 4 billion. In the end, turned negative again, but $ 1 billion.

By the end of 2015 the balance of payments surplus in Ukraine amounted to about $ 850 million, but only thanks to the money of migrant workers the balance of payments surplus was reduced.

The first month of 2016 has shown that, unfortunately, exports of Ukraine continue to fall. The most fortunate scenario is to keep the drop in exports in 2016 to 40% in comparison with 2015. Russia launched a new round of trade war against Ukraine. During January 2016 Ukraine's exports to Russia amounted to only $ 160 million, which is 45% less than in January 2015. Ukraine would face a large drop in exports to Russia. In fact, Russia has decided to close path for our products, and this will significantly reduce the export and, consequently, production in Ukraine. Replacing Russian market with other markets, and especially the EU market, is unrealistic. Particularly because for the January 2016 Ukraine's exports also fell in the EU, but is less likely to 11% compared with January 2015.

Related: Labour migration: Ukraine is losing people and future

We must soberly assess the economic situation in Ukraine. And it shows that the process of transformation of the Ukrainian economy, where the main emphasis is on the agricultural sector, while the industrial production, especially machine building and chemical industry, collapses. It is not surprising that in Ukraine appears a surplus of labor. Official unemployment shows little in the Ukrainian labor market. The estimated unemployment rate in Ukraine is determined at the level of 10-12% of the working population, which is about 2 million people of working age. It makes no sense to wait, they in the next three to five years will find work in Ukraine. It is necessary to do so, like Poland, Lithuania, Romania, and other Eastern European countries - to encourage the labor immigration, to encourage Ukrainians go abroad for earnings.

According to some sources, already 3-4 million Ukrainians work abroad, and, as you can see, the amount of money they send to Ukraine is much more than Ukraine earns by foreign trade. It is therefore advisable and the two million Ukrainians aim to work abroad, it will remove the tension in the labor market in Ukraine, and most importantly, provide the inflow of foreign currency in Ukraine.

Related: Ukrainian migrant workers in Poland send home EUR 5 bln annually

Ukraine would adopt the successful experience of Georgia. In 2004 in Georgia, the share of private remittances in GDP was only 6%, but now due to the money of Georgian migrant workers formed 12% of Georgia's GDP. In Ukraine, the money migrant workers form while only 4% of GDP. This is clearly shortcomings in our government. We must bring this figure up to six percent, and the plan for 2026, due to money of Ukrainian abroad workers could generate a minimum of 10% of GDP. To this end, as part of the Association Agreement, Ukrainian authorities should make every effort to conclude bilateral agreements with the EU that Ukrainians could legally work there. Moreover, the recently adopted Law of Ukraine "On labor migration" just gives Ukrainians the opportunity to work legally abroad and thus help the economy of Ukraine.

It is very important to register this objective in the new program of Yatsenyuk’s government in 2016 to make it possible to strengthen Ukraine's actions to stimulate employment-based immigration. In this situation, it is likely the only way that can really help Ukrainian economy to overcome the crisis. All the hopes for a massive influx of foreign investments, which were so actively discussed at the stage of signing an association agreement with the EU have not been fulfilled. Waiting for an economic miracle in the conditions of the Russian military and commercial aggression is unrealistic in the coming years. Therefore, all hopes are for the export of labor as the savior of the Ukrainian economy.

Related: Ukrainian export exceeds import by $4 billion

Related: Blockade of Russia will cause $ 450 mln fall in exports

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