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Is there shortage of labor in Ukraine that everyone is talking about?

Author : Bohdan Danylyshyn

More than 3.2 million Ukrainians are constantly working abroad. Now labor migration has a seasonal character, and about 9 million Ukrainians are involved in it according to data from the Ministry of Social Policy. What do these staggering numbers mean? What led to this situation? What problems does this create for the Ukrainian economy? How to solve the internal problems of the labor market, which lead to an increase in the number of labor migrants?
22:45, 11 July 2018

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Unfortunately, the level of wages in Ukraine cannot yet be compared with the European one. For example, according to OECD, the average salary in Poland in 2017 was 50.8 thousand zlotys (about 13.5 thousand dollars) per year, in Portugal - 17 thousand euros per year, in Spain - 28 thousand euro per year. And we, based on the Statistics Committee data, have less than 100 thousand UAH (about $ 3,820 a year, - Ed.). Therefore, in order to slow labor migration, it is necessary to raise the level of salaries in Ukraine to the European one, relying on the growth of the economy's productivity. The government is working in this direction. For example, the real wage index in May 2018 until May 2017 was 114.1%.

In my opinion, the most important is to achieve consistently high rates of economic growth - 3.5-5% of GDP growth for the year. On such a strong basis it is possible to ensure the growth of salaries and incomes of the population. The Council of the National Bank actively defends these ideas in its documents and recommendations to the board of the regulator and the government of Ukraine.

As for the reduction of migration sentiments, the world experience, including the experience of Eastern European countries, speaks of the need for an integrated approach: it is necessary to focus on creating decent jobs; strengthen the institutions of power; create conditions for increasing employment; increase labor productivity and the economy as a whole. For more effective regulation of migration, we need to implement these fundamental ideas.

I would not be so categorical in the conclusions about the total deficit of labor in Ukraine. It suffices to recall that the unemployment rate among the economically active population in the first quarter of this year was 9.7% (Ministry of Labor methodology), and among the working-age population - 10%. And although these figures are slightly better than in the same period last year, they still show that the supply of labor exceeds the demand for it.

It is another matter that the disproportions in the structure of the supply/demand on the labor market are becoming more pronounced, from the point of view of the qualifications and professional characteristics of the workforce. There is an acute lack of hands for certain professions, for example, gas welders, builders, as well as medical workers and others.

The situation in the labor market through various factors is rather difficult. The number of economically active population is decreasing, including due to unfavorable demographic processes. The number of labor migrants has increased and the population's migratory moods persist, as our economy cannot yet offer the necessary number of decent jobs.

On the other hand, the results of the survey on business expectations of enterprises conducted by the National Bank indicate a certain increase in demand for labor. Thus, the expectations of enterprises for changing the number of employees in the next 12 months (most in construction, trade and processing industry) have improved, which in turn explains the increase in the number of vacancies for these jobs.

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