Labor migration from Ukraine increases: Should it be limited?

Author : Olexandr Honcharov

Source : 112 Ukraine

Over the past 2.5 years, Ukraine has received 22 billion US dollars from the labor migrants, which is 11 times more than the amount of the IMF loans for the same period
09:17, 9 August 2018

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Massive labor migration slows the country’s economic growth, and finally, Ukraine has realized it. We must admit that over the past 2.5 years, Ukraine has received 22 billion US dollars from the labor migrants, which is 11 times more than the amount of the IMF loans for the same period. The process of understanding it seemed to be long and painfully, but only at the end of last week, the Inflation report was published by the National Bank (NBU).

NBU analysts note: "One of the main risks of the key scenario is the continuation of the outflow of the workforce from Ukraine, which will create high rates of further imbalances between the labor market supply and demand." To be more precise, mass labor migration provokes the growth of prices, while Ukraine’s economic growth slows down. It should be noted that labor migration hinders the growth of production rates in construction, industry, agriculture, transport, and communications. And, unfortunately, under the present authorities, we are completely unaware of the negotiations between the Cabinet and the NBU. What economic solutions should we expect?

Related: Labor migrants transfer almost $ 10 billion a year to Ukraine

Therefore, business and ordinary workers still cannot draw a clear picture, at least about the state economic tactics for 2019, as well as about the strategy. At the same time, our government and the Verkhovna Rada give no clear to the key question: are the authorities ready to offer Ukrainians a model of the national labor market that would respond to the modern technological challenges, preserving social stability and jobs? And we should not forget about the limited capacity of the Ukrainian market.

And yet, I think our people need to prepare for the worst. To be frank, like many of my compatriots, I hoped for the best, but so far it has turned out as usual. But I do not lose my hope. I still hope that the National Bank and the Cabinet will make changes in the monetary and credit policy and the current economic model for the development of the national credit market and increase the level of compensation for labor. Have you ever wondered why the flows of labor migrants from Ukraine are increasing? The answer is simple and obvious: because the real recession of the economy continues, people do not know where to earn the money at least for payment of the utility tariffs.

Those entrepreneurs who still produce something in small business - are fully credited. The rest are actually unemployed or are "on the rocks." For example, average salaries in Poland are 1000 euros, that is four times higher than in Ukraine. In addition, Kyiv subway fare has risen from 5 to 8 hryvnia (from 0,19 USD to 0,3 USD). This is a significant blow to the purse of an average Kyiv pensioner, with his minimal pension of 55 USD. By the beginning of the summer of this year, people have significantly increased debt for housing and utilities, and now the debt is 1,4 billion USD, as evidenced by official statistics, and barely half the population of Ukraine is able to afford to pay the new utility prices.

Related: Ukrainians are forced to become labor migrants: How to return them?

It seems that the politicians do not despair and instead of creating incentives for business development and self-employment in the country, people are offered to save expensive gas and electricity. That is why our labor migration continues to remain at a high level; moreover, from year to year, it is rapidly accelerating. So, in 2016, the number of funds received by Ukraine from the labor migrants increased by 8%, in 2017 - by 24%, and for the first half of this year 2018 - by 31%.

Related: How to stop mass labor migration from Ukraine?

And in this regard, here we quote Olexander Derkach, a former banker, and now a shareholder of the hard cheese factory: "It is profitable for me, as an employer, that people work for 115 USD per month at my enterprises. It is profitable for me, as a producer for people to have salaries 1000 USD, so that they could buy more. Unfortunately, we are not a bank with the foreign capital, people do not want to work for 115 USD per month, and I do not judge them. In the 90, my monthly budget was 20 USD. Sooner or later, but the trend of the wage growth would begin, and people will come back."

In the meantime, as the entrepreneur Derkach has rightly concluded, it is better when 3 million people work abroad and live a decent life than if they just hang around and run around our streets with grenades.

I think that somebody from the financial and economic block of our Cabinet should be ready for resignation. Everything has its time, but it's better to do it sooner than later.

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

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

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