Situation with unemployment in Ukraine: Tricks and statistics

Author : Olena Honcharova

Source :

Official statistics in Ukraine shows that the unemployment rate in 2016 began to decline. However, this hardly indicates the economic recovery. Moreover, the statistics for 2017 may became worse.
21:30, 30 January 2017

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Nowadays in Ukraine we are witnessing a period of political and economic instability after the revolution of Dignity and in connection with Donbas conflict. And in this time, only the brave venture to invest in Ukrainian business. The tightening of tax legislation also does not contribute to such actions.

Economic experts assure that the number of unemployed people in the country is growing. There are few main reasons for this. Companies began to decrease the production volumes, the demand for goods and services dropped; staff reductions in government agencies have also taken place, and since December 2016, when the tax system changed, sole proprietors began to feverishly close their businesses. So very soon private entrepreneurs will join the ranks of unemployed citizens.

What do the numbers mean?

According to the latest data published by the State Statistics Service, the number of unemployed in Ukraine by the end of III quarter of 2016 amounted to 1.6 million people. In comparison with the beginning of the year, it is 100 thousand less. However, when compared to the end of the III quarter 2015, the unemployment rate even increased by 0.2% and now stands at 9.2%. However, now there is no data regarding the end of December, and the numbers could worsen.

Experts argue that such data has no grounds. In addition, they do not take into account the territory of Crimea, occupied Donbas and ATO area. "Unemployment rate is not decreasing in Ukraine. In almost every region of the country, according to the ILO (International Labor Organization), the number of unemployed population has increased ", notes the analyst of the NGO Public Audit Taras Galayda.

In 2014-2015 industrial production volumes fell by about 30%, and in key sectors such as mechanical engineering, the fall is even higher than this indicator.

"Now, these rates declined, but decrease for 2016 still continues to be about 7-8%. And it is no secret that industrial production has always been a major source of employment of the population ", - says Galayda.

According to economic expert Oleksander Okhrimenko, the statistics actually hides a lot, because many people simply do not register at Employment Centre, or work unofficially. For example, if there were 390 thousand of unemployed persons in December 2016, and in December 2015 were registered 490 thousand, than we can say that the situation in the country has improved.

"The reason is obvious: one can’t be registered at the Center for Employment for a long time according to the law, that is, about six months Center may pay an allowance, and that’s all. Accordingly, the official data of the State Statistics Service show a good result - the reduction of unemployment, " says Okhrimenko.

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In addition, the expert says that in some cases, unemployed persons just can not be registered in Employment Center.

"According to the law, there is a list of the necessary documents, which the client needs to bring in order to be registered, but there and postscript: and other documents at the request. Sometimes person may be asked to bring a certificate which is hard to bring, for whatever reason, and he will not be registered or his allowance would be reduced, " he said.

The real figure of the unemployment rate is impossible to calculate, as not all people are officially employed or registered at the Employment Center. Some, on the contrary, manage to sit on two chairs - receive unemployment benefits and work unofficially at the same time. And those who are considered incapable of work, for example, mothers with small children or senior citizens, still actively work part time. Experts believe that today the real unemployment rate is around 10-11%.

How reducing of sole proprietorship would affect unemployment rate?

Since December 2016 the representatives of many sole proprietors, who worked in the simplified tax system, began feverishly close their businesses. President of Ukraine Petro Poroshenko has signed a tax change that Rada adopted along with the budget for 2017 and since January 1, the single social contribution of 740 UAH must pay all sole proprietors without exception, even those who do not receive currently profits from their businesses. Therefore “sleeping” sole proprietors’ businesses were among first who did not hesitate to close. And who has not had time to do this before the end of 2016, are making it now. According to Tatyana Pashkina, some businessmen, providing seasonal employment and services, also decided to formally abandon the business to avoid paying taxes for nothing.

"But there are those that closed in protest, because people got tired of the fact that change of functioning conditions for them happens too often, and it becomes impossible to predict something, anticipate risks of instability", says Pashkina.

Thus, from mid-December 2016 to the 20th of January 2017, almost two hundred such businesses closed in Ukraine. More than 185 thousand entrepreneurs officially stopped their activities. Some of them have received the status of unemployed, others have become employees of another companies. It is possible that there are those who simply went into the shadows, or left the country.

The tendency of sole proprietorship closing may be observed across the country. The largest number of the closed businesses is in Kyiv region - 17.2 thousand, Kharkiv - 12.4 thousand, Dnipropetrovsk - 11.2 thousand. The main blow was struck by representatives of the retail trade (43.3 thousand), warehousing services (10.8 thousand), wholesale trade (8.4 thousand) and transport services (7 thousand).

Experts are unanimous: the closure of businesses will affect the unemployment rate in the country, but not crucially, since the majority of those who are now closed, earlier did not work or were in a sleep mode. The only thing is that the statistics in this case would be more realistic, because all those who are now scaling down activities, previously considered employed.

Related: Unemployment rate in Ukraine rose to 1.3% in November

Which workers employers are looking for?

The State Employment Service of Ukraine reported that among other occupational groups mostly in demand among employers are skilled workers with tools: fitters, turners, electric and gas welders, drivers, seamstresses, repair workers (22%), as well as working on the maintenance of equipment and machinery (16%). Service workers are also in demand (sellers, cooks, waiters, barbers, security guards, and so on). In the agricultural sector - agronomists, tractor drivers and working on maintenance of agricultural production. There remains a demand for doctors, engineers of various branches, teachers, accountants, cashiers, as well as IT professionals. We need technicians and pharmacists, managers with experience. Among the simple professions most in demand are maintenance workers, cleaners, janitors, porters and warehouse workers. By economic activities most of the jobs are in enterprises and institutions of processing and extractive industries (a quarter of positions); in trade and repairs (16%); in transport (11%).

Perhaps Europe will help?

According to Eurostat, the average unemployment rate for EU countries fell from 9.3% in 2015 to 8.5% in 2016. The reduction in unemployment rate has occurred in most countries, except Belgium, Denmark, Estonia and Austria. The highest unemployment rate was in Greece (23.3%), Spain (19.4%), Croatia (12.9%), while the lowest - in Hungary (5.0%), Germany (4.2%) , Malta (4.0%) and the Czech Republic (3.9%).

According to the director of the Ukrainian Institute of Management and Politics Ruslan Bortnik, Europe partly accumulates the unemployment in our country - in the past year about million of Ukrainians went to the European Union to work. First of all, there are highly skilled employees, in whom Ukraine has invested a lot of money to educate engineers, doctors and internet experts. There is also interest in the representatives of the working specialties. For example, fruit and vegetable pickers and ancillary workers.

"But our main potential is not used in Europe – we are talking about lawyers, economists and other experts, which number in Ukraine is more than sufficient. Therefore our hope that the neighboring countries will help to solve the problem of our unemployment rate is meaningless, " says Ruslan Bortnik.

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