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How to stop mass labor migration from Ukraine?

Author : Olexandr Honcharov

According to the experts, by the end of 2018, from 500 thousand to 1 million Ukrainian workers might leave the country in search of employment
10:00, 3 April 2018

Read the original text at 112.ua.

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Ukrainian politicians, constantly solving global problems of world significance, for some reason invariably forget about an average Ukrainian. At the same time, German authorities announced in 2015 that, according to their plan, the country would completely get rid of unemployment by 2020. Therefore, the government of Angela Merkel strives to maximize real incomes of its citizens and, accordingly, domestic consumer demand. The German authorities are doing everything to ensure that every German really feels these changes for the better in the labor market. And how about us?

Unfortunately, for the last 3 years, we have been completely silent about any results on the implementation of President Poroshenko's decree "On the Strategy of Sustainable Development" Ukraine-2020". Is there nothing to say to our politicians or have they already achieved everything? Perhaps the government of Groysman managed to reduce unemployment and stop the massive outflow of qualified workers from Ukraine? Alas, we are losing a lot in the competition for labor resources with the countries of the European Union. According to the official data of Ukraine’s State Statistic Service, in 2015 – 2017, 1 million 300 thousand people, that is, 4.5% of the population, left to work abroad (mostly emigrated to Poland, the Czech Republic, Italy, Romania, and Russia).

Related: National catastrophe: Ukraine becomes labor force donor

Every sign indicates that the rate of mass labor migration would continue to grow; first of all, people would emigrate to Poland. At the beginning of this week, Polish Vice-Minister of Foreign Affairs Bartosz Cichocki stated that in 2017, Ukrainian labor migrants transferred from Poland the amount corresponding to 3-4% of Ukraine's GDP. Also, the Polish diplomat stressed: "To understand the scale of this phenomenon, you must understand that in 2016, according to estimates, Ukrainians working in Poland, sent to Ukraine about 8 billion zloty (2,2 billion USD). In 2017 - more than 12 billion zloty (3,5 billion USD).

Frankly speaking, this rate of outflow of human capital is already threatening. Therefore, our local employers began to alarm, where should they get qualified workers and, in general, manpower resources? And if the Cabinet and the Verkhovna Rada cannot assess the risks, then it is absolutely impossible to carry out economic reforms, in particular, the labor market reform. Moreover, they continue to create deliberately unprofitable institutions in Ukraine. More than four years have passed; even Western sponsors and rating agencies openly state that these ministers and legislators only multiply systemic problems, impeding the economy from dynamically developing and further complicating the implementation of reforms.

Related: Being guest worker: How dangerous is labor migration for Ukraine?

But the most striking fact is that we are well aware of the situation, we understand it and patiently continue to expect our politicians to improve the labor market. Indeed, over the past few years, Ukraine’s chemical industry (by 61.6%), metallurgy (by 42.3%), and machine building (by 38.6%) have run at a deficit. Judging by how quickly the flow of negative news is growing, the situation in the Ukrainian markets would not become significantly better or dramatically worse. In a word, dear citizens, continue to go to the pharmacy and shops as yesterday: do not buy the unnecessary goods, do not waste more than you need, and hope for an increase in wages.

But even speaking about the decent wages, not everything is so simple here. A sharp increase in the minimum wage would stimulate inflation, as well as lead to imbalances in the local labor market. And as life shows, few people in power take into account these key factors, the possibilities of the Ukrainian economy and the main trends of labor migration. Therefore, during a recent press conference, the former deputy chairman of the NBU board, Olexander Savchenko, did not conceal his grief: "I am skeptical about the National Bank's capability to fulfill the inflation directive that they defined: first 7%, then 8%." According to the expert, the average inflation rate now ranges between 14-15%.

Related: National Bank warns of labor immigration increase in coming years

But who would be able to stop this endless way of inflation, threatening to collapse our Ukrainian market? It is no accident that the financial authorities began to prepare solutions in order to round up all calculations to 10 kopecks and to withdraw small coins from circulation. Until the end of 2018, coins of one and two hryvnias will be issued for a total of 145 million. In 2020, 10 hryvnia coin will be issued. And in parallel with the preparation of these innovations, the Verkhovna Rada adopted in the first reading a draft of a new Code of Labor Laws, which proposes to extend the working day to 12 hours and introduce the concept of "irregular work". However, it also provides for an increase in leave for 4 days and a separate fee for each additional hour of work.

Related: Ukrainians mostly went to Poland, Russia, Italy, Czech Republic for labor in 2017

And yet, we should honestly admit that for the past 4 years these politicians have not been able to create enough new jobs and stop the massive travel of workers abroad and to develop and implement a comprehensive business and power program to reform the previous economic model and develop labor resources. So we inevitably expect a default, as stated by Bloomberg analysts. Following them, Moody's international rating agency is expected to lower Ukraine's rating to the position of "highly speculative" (the next step is "default").  What should we do? Ukraine’s Cabinet needs a long-term plan to overcome the crisis and a roadmap for reforming the Ukrainian labor market, which the Verkhovna Rada will support.

Finally, it is a challenge for us to again become a dynamically developing country, attractive for national business and international investors. In the meantime, experts persuade that by the end of 2018, from 500 thousand to 1 million Ukrainian workers might leave the country in search of work.

This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.

Related: We need Ukrainian immigrants to cover deficit of labor force, - Head of National Bank of Poland

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