Ukraine's labor migrants: A circle of salvation or an anchor?

Author : Volodymyr Pylypenko

Source : 112 Ukraine

Every 30 seconds, one person leaves Ukraine in a search of a better life – 1 million people a year
12:20, 18 July 2018

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According to experts, this outflow of labor resources threatens not only the demographic situation but also entire sectors of the domestic economy. Is everything so dramatic - try to find out.

Course for the West

According to estimates of the International Organization for Migration (IOM), in 2017, 915 thousand Ukrainians worked abroad. That is, 12% of our compatriots have found a job outside the country or were going to find it in the near future

The highest level of potential labor migrants is in those regions, where the majority of the able-bodied population left: Ternopil, Zakarpattia, and Rivne regions. The essential motive is high wages and security.

According to a study by IOM, the average monthly earnings of one labor migrant in January-November 2017 was $ 722, and the salary of one full-time employee employed in Ukraine was $ 262.

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

Ukrainian government claims that 2.5 – 4 million people work abroad. Last year, the volume of currency inflows to Ukraine from the labor migrants amounted to $ 9.4 billion. At the same time, foreign direct investment amounted to $ 2.3 billion only. Those labor migrants give a head start to all our foreign investors. This is how a domestic model of the economy works.

According to analysts, the migratory mood of Ukrainians will grow. Only in the last academic year, the number of students from Ukraine in foreign universities increased by 56%. In fact, this is a "lost" generation for our country, as most of them would remain working abroad.

According to the State Statistics Committee, Ukraine has 16 million economically active population. Of these, 12.8 million are officially employed. Given these not very hopeful prospects, the collapse of the pension system is just around the corner. Currently, 10 working Ukrainians cover 12 pensioners. If the pace of migration continues, the ratio will change to “8 to 12.” Analysts warn that the labor outflow might annually bring $ 1,54 billion loses to Ukraine. In addition, the shortage of workers hinders the development of individual sectors of industry and leads to a decline in the regions.

Related: Public Policy Ministry to work with ILO on better management of Ukraine’s labor market

Competitions for free hands

Today, Poland, the Czech Republic, Slovakia, and other countries are competing for Ukrainian guest workers today. They simplify the permitting procedures and increase the quotas. The only state that does not fight for the workers is Ukraine itself. What is the position of the authorities? I would say, quite vague. On the one hand, officials show concern about the pace and volume of the migration. On the other hand, they assign responsibility for personnel policies to owners of enterprises and companies.

Labor migration is rapidly getting younger: earlier people of middle or pre-retirement age left the country, today young people and students are eager to leave. The shortage of personnel has long ceased to be a problem for the company owners only. We need a state order to train specialists in relevant fields. This is what the real sector of the economy requires. 43% of private companies are already experiencing problems with staff due to the labor migration.

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

Labor migrants have appeared long ago in Ukraine, and these the main investors of the country, who provide a constant inflow of currency. But these funds are not taxed, it is impossible for them to support the social sphere that most people use.

The source of stuff

The West has long realized that investing in attracting already trained adult professionals is cheaper than preparing them since childhood or stimulating fertility. We also have no other way than to develop similar mechanisms. Ukraine needs at least 17 million able-bodied population in order to materially ensure social policy. Now, according to the most optimistic forecasts, we have less than 12 million. The reality, as we know, differs from the statistics. Given the labor migration, this figure is obviously lower. Experts predict that by 2030, the number of able-bodied population in Ukraine will decrease by 5-6 million.

Shadow investors

The money that labor migrants send to Ukraine, allow them to feed their families. Given the unofficial channels for the transfer of finance, real remittances can amount to $ 20 billion annually. The amounts vary, since there are no reliable statistics on the volume of such transfers in Ukraine. We have to rely on the external evaluations.

Thus, the Minister of Foreign Affairs of Poland, Witold Waszcykowski, has recently stated that labor migrants from Ukraine annually send about 5 billion euros to their homeland. According to him, almost 2.5 billion euros are sent by the Ukrainians through the bank transfers. Approximately the same amount is transported in cash (across the border).

Related: How to stop mass labor migration from Ukraine?

This is more than credit tranches from the International Monetary Fund and the assistance of international donors, provided on draconian terms. But this money does not fill the country's budget. As a result, the budget of Ukraine receives less than $ 2,3 – 3,8 billion a year.

At the same time, paying taxes at the place of their jobs, Ukrainians fill with money the budgets of Russia, Poland, and Hungary. That is, they increase the social standards by their work.

Economic incentives

We have a paradoxical situation. The authorities say that labor migration is a challenge. But at the same time, it is the remittances of labor migrants that have become a real factor that helps to keep financial and social stability in the country! This money serves as a social stabilizer. Mass labor migration reduces the risk of a social explosion, unemployment statistics improve, and the country receives currency. Thus, some current problems are being solved, but the country loses strategically. The fact that labor migration needs to be stopped is not news for anyone. The question is how to do this in our conditions? Well, first of all, we must accurately diagnose the demographic situation in the country. We need to conduct a population census.

Related: National catastrophe: Ukraine becomes labor force donor

In addition, no "iron curtain" with the West is needed. It is more effective to reach an economic recovery in the country. There is nothing fantastic here: at least 5 million jobs for 10 years, plus the economic growth of 10% per year will make it possible to maximize the level of wages to an acceptable level.

That is, the average salary of the Ukrainian should not be less than $ 450 and within 10 years to reach the level of 2/3 of the average salary in Eastern Europe.

Economy is the main financial guarantee of the level of social policy. All those who promise to increase pensions and do not take measures to dramatically improve the situation in the financial sector, are engaged in populism.

Is Labor Migration Dangerous? Of course, it pulls the country to the bottom. Is it possible to stop it? Completely. Do the authorities want to change something? The question is rhetorical.

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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