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Ukraine’s Minister of Foreign Affairs Pavlo Klimkin has recently blindsided everyone with a sudden "visa-free coming-out." He stated that "any good thing – be it the Association Agreement, or the visa-free regime - could be beneficial, but carries some risks as well. I have been involved in a visa-free process for many years, and now I see that more than last year, million Ukrainians left Ukraine. One hundred thousand people leave Ukraine every month, and the question is not only high salaries. It is generally understanding of the future and of the quality of life."
The attempt to accustom the Ukrainians to go to Bratislava for a cup of coffee has failed. In order to drink coffee in Bratislava, it is necessary to earn good money, and it is better to do it in Bratislava, and not in Horishni Plavni (with all our respect to this toponym).
In the fourth year of "reforms," such confessions make one think: who actually manages our country? In terms of knowledge, experience, professionalism. After all, "visa-free" is an ordinary humanitarian option and only some strange people consider it as a kind of civilizational "cleavage" and a way of escape from "unwashed Russia," to which, perhaps, you could say "good-bye," but all those "Klims Chugunkins" that occupied the power offices cannot do that.
Bloomberg has decided to contribute to the discussion of Ukrainians’ way to the European promised land. The article stated that the problem of labor migration from the country was worried even by the NBU, and it is not easy to concern this institution because all problems are reduced to a set of objective market factors.
According to Western analysts, since 2015, Ukraine has lost 7% of its active workforce. Given the demographic hole, the problem of population aging, the loss of part of the labor force as a result of the annexation of Crimea and Donbas war - the figure sounded like a verdict to the whole system of state policy. We can only talk about a set of chaotic and rather malicious ways of officials’ influence on the economic environment.
After all, most of the Ukrainians look like "idiots or people with limited horizons" in the eyes of well-known European officials, but in fact, they do not belong to either the first or the second group.
According to Bloomberg, the Polish bait deprives Ukraine of its working resources. That is why recruitment has become one of the most profitable businesses. But even experienced headhunters cannot cover the demand for "Ukrainians," and the flow of labor migrants to Poland is growing and is unlikely to stop, even if Poles at the entrance to their country will be forced to spit on Stepan Bandera's portrait: Ukrainians are already accustomed to mimic to the external environment.
At the moment, the demand for Ukrainian labor resources in Poland is five times higher than supply, which means that the migration flow from the country will only be strengthened. And the main leaving group would not be the middle class, but the young people of 25-35 years. The "thoughtfulness" of state policy could be appreciated in all its glory here: the state spends tens of billions of hryvnias a year on the education system, and in some time, it is waving a handkerchief to its graduates at the station. These costs are too expensive, aren’t they?
Now the difference in the level of real labor incomes is 1: 3 or 1: 4 in favor of Poland: if in Ukraine the average salary hardly exceeds 200 euros, then the western neighbor could offer some 1000 euros. And the difference of this pressure in the level of labor incomes will take away the active population from Ukraine.
But of course, Klimkin is right - not by money alone... It is about the future as well as the quality of life. The motherland is not able to ensure any future or perspective of the quality of life today. The "perspective" has been killed by pension reform, and the quality of life has been killed by the medical reform. But there is another basic factor that Klimkin has blindly ignored: Ukrainian society is deprived of prospects since it does not see any potential elites that could start at least some progressive movement. Namely, a forward movement, not a promise of paradise now due to the usual state money "redistribution". But in order for this movement to begin, it is necessary that those "elites" who came to power on the crest of revolutionary foam, get out of the beach and as soon as possible...
Meanwhile, according to the UN, by 2050 the population of Ukraine could be reduced to 36 million people. And our country is in danger of becoming a place of old people and children.
According to Bloomberg, from 2006 to 2017, 1,164 million people left Ukraine, 507,000 of them left for Poland and 343,000 for Russia. In addition, 147 and 122 thousand people migrated to Italy and the Czech Republic respectively. Some 23 thousand moved to the United States, which is comparable to the migration to Belarus - 22 thousand Ukrainians went to live in the country of the "last dictator of Europe" in search of a better life.
Labor migration strikes the young people: young people migrate not only after graduation but during their school years. Ukraine beats all the records by the number of its students in the universities and colleges of Poland, the Czech Republic, and Hungary. And if the first group of migration has a tendency to partial re-emigration, the second group, as a rule, very quickly adapts to the new homeland and assimilates.
It is also necessary to take into account the indicator of the so-called internal labor migration. Today, several hundred thousand workers are territorially located in Ukraine, but they receive wages abroad, in the same place they pay taxes. In five years, this layer can grow tenfold and compete with classical migration: it is about IT professionals, outsourcing, and the handmade sector.
The age group from 0 to 17 years at the moment amounts to 7.6 million people. These people will become the backbone of labor resources in the next 10 years, but taking into account the dynamics of labor migration by 2025, only 3-4 million of them could remain in Ukraine. It should be noted that in 1990, this group has amounted to 13.3 million people. Thanks to this fact, the country still maintains the conditional integrity of labor resources, because today these people are 28-45 years old. And could the "backbone" be formed by age group of some 3-4 million people?
It seems that someone has already imposed a plan for further Ukraine’s development, however, this is not the Marshall plan, but the so-called "Morgenthau plan" – turning the country into a garden and a sawmill of Europe. As is known, the key elements of the failed "Morgenthau plan" for postwar Germany were such directions as the destruction of the national banking system, the restriction of fertilizer production and the liquidation of the chemical industry, deforestation, and a strict tax policy. The failure of this plan was eventually realized even by the Americans. After visiting Germany in 1947, former US President Herbert Hoover said: "It is an illusion that New Germany can be turned into an agrarian state, which is unattainable until we destroy or remove 25 million people from it." That economic model, which is imposed today in Ukraine, suggests a population reduction of up to 35 million people in the next 5 years.
How can we change the basic settings of the Ukrainian economy so that the flow of labor migration from the country stops? First of all, it is necessary to radically change the system of redistribution of public goods and resources. In an interview with Le Monde, Joseph Stiglitz said that the source of inequality in the modern world is the system of rents and monopolies. As applied to Ukraine, we perceive this by the example of the rental model of our economy, which concentrates, with the help of infrastructure systems, most of the national wealth at 5-10 points and distributes it to several "families". The population can only hope for an administrative increase in the minimum "poverty level" in the form of a minimum wage. In other words, Ukraine is trapped in poverty, when the lack of growth in real household incomes leads to a reduction in consumption and a "squandering" of economic potential. As Stiglitz stated: "Inequality is not a fateful inevitability, but the result of political decisions." It is necessary to radically change the system for determining the level of the minimum wage, switch to hourly tariffing, special sectoral, professional and regional tariffs. The minimum salary for a locksmith and a supermarket guard should not be equal, as well as the minimum wage in Kyiv and a small town. Human resources management should become the subject of a long-term state policy.
On the IMF blog from April 10, 2017, a short article by Mai Chi Dao, Mitali Das, Zsoka Koczan, and Weicheng Lian - "Drivers of Declining Labor Share of Income" appeared. The group of authors examined the issue of global inequality and disparities in wages.
“In emerging markets and developing economies, global integration has allowed for expanded access to capital and technology and, by raising productivity and growth, has led to a rise in living standards and lifted millions from poverty. However, these forces may also be associated with declining labor income shares, by shifting the production in emerging market and developing economies towards more capital-intensive activities. We find that global integration, and more specifically participation in global value chains, was the key driver of declines in labor shares in emerging markets,” they wrote.
Even Turkey, participating in world technological schemes, lost up to 5% of its "labor" income. Emerging markets suffer from the fact that the main surplus value is located in the "golden billion" countries. But Ukraine is not Turkey and its place in the world "food chain" is much lower. On what does this place depend? First of all, from the will of local elites and their ability to protect the national interests of their country.
One of the indicators that characterize the degree of exploitation in a given country is the ratio of the total wage fund to the volume of GDP. In Ukraine, this indicator has significantly decreased: if in 2010-2013 it was 42-43%, then in 2015-2016 it fell to 34-35%, while in developed countries the "exploitation rate" is more than 50% that is, half of the social wealth is distributed through the wage fund.
Why did the index of exploitation in Ukraine deteriorate significantly, which ultimately led to increased labor migration? There are two reasons for this. First, the economy is increasingly sliding to simple commodity cycles, that is, to goods with a low level of added value, in the production of which the specific weight of wages is small. The second is the concentration of capital sharply increased due to the total splicing of financial and industrial groups with the system of state administration, which led to a more extensive redistribution of social wealth in favor of several monopoly entities and a reduction in the share of the total wage fund in the GDP structure.
In fact, Ukraine has sunk to the level of "wild" capitalism of Karl Marx times. According to his "poverty theory," the more intensive the level of exploitation is, the higher the luxury and excess at one pole of society and poverty and despair are. In fact, this is the mold of modern Kyiv, where the marginalization of a significant part of the population is associated with a flow of expensive foreign cars and the opening of luxury restaurants.
In conclusion, I would like to note that until recently the alternative "Marshall Plan" was offered to Ukraine by Sir Richard Charles Nicholas Branson, financial titan from Great Britain, founder of the Virgin Group corporation (a conglomerate of 400 companies), owner of the state of $ 5 billion. After negotiations with our officials and attempt to launch TransferWise payment service in Ukraine, the international finance guru has not voiced any similar offers anymore. But the fact itself is indicative - the potential of our country is so huge that it draws the attention of the world's leading investors.
So it turns out that because Ukraine moved towards the EU like a girl from a famous fairy tale was going to the Emerald City, the Scarecrow was her mentor, whose head was stuffed with straw in the best case.
This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.