How Poland made 'economic miracle' at expense of Ukraine

Source : 112 Ukraine

There are still questions, why is the retirement age being reduced in Poland, while in our country power wants to increase it? Spoiler alert: maybe the reason is that Ukrainian sons work in Poland and not at home and pay taxes to the Polish budget,
20:37, 15 June 2021

Open source

Our government continues to rejoice at the influx of money transfers of labor migrants from abroad. It is generally accepted in Ukraine to be glad that millions of Ukrainians, including young people, are literally fleeing the country in search of better earnings. Here we traditionally remember the history of Ireland with the mass migration of Irish people to the United States, and the outflow of labor resources from Poland after the accession of this country to the European Union.

In fact, all these comparisons are lame in both legs. The current outflow of labor resources from Ukraine is taking place against the backdrop of an unprecedented demographic crisis. Think about these numbers: the negative demographic growth of the population is 200,000 people per year (excess of deaths over births), or -0.36%.

Every year, almost one city disappears in the living body of our nation. This year, according to the forecast of the demographic model, 471,559 children will be born and 668,224 people will die. The transition point from positive demographic growth to negative exactly falls on 1991 (+ 0.04%). In the context of the demographic crisis, stimulating labor migration is a "common murder" of the nation. And labor migration is exactly stimulated: on the one hand, the government is pursuing a policy of maximum de-industrialization of the economy, when people have only one way - to the low-paid service sector. On the other hand, our government signs international agreements that maximally simplify the process of employing Ukrainians abroad. And the comparison with Ireland clearly does not work here, because the Irish fled to the United States in conditions of demographic overload, when 5-10 children were born in families and there was not enough fertile land on the island, which led to permanent mass hunger. The example of Poland is also not suitable, and for several reasons.

Firstly, Poles migrate to other EU countries within the framework of the single European labor market, they have the opportunity to pay taxes and contributions to their country's pension funds, being within the borders of the common economic space. The work of a Pole in Germany is like the work of a Ukrainian on shock construction sites in other republics during the Soviet era. Secondly, labor migration of Poles to the West was successfully replaced by labor from the East - mainly from Ukraine. It was a real demographic jackpot for Poland. They knew that next to them was a colossal reservoir of surplus labor resources that exceeded their national parameters. Millions of Ukrainians ready for both seasonal work and permanent migration. It was not difficult to predict that the so-called reforms in Ukraine would lead to economic losers and people would leave. The only thing that was required of Warsaw was to launch a global modernization of the national economy and infrastructure for the money of the European Union, using Ukrainians as a building material. The industrial policy implemented in Poland has become a colossal absorbent of our labor resources and a catalyst for the growth of the Polish economy, including additional budget revenues, due to which the Poles even gave back on the issue of increasing the minimum retirement age, canceling the previous decision pushed by Brussels.

Analysts at the Polish central bank do not hide the fact that Ukrainian labor migrants are one of the factors of the Polish "economic miracle". Our migrant workers are also suitable for Poland because they are very similar to the Poles in mentality and culture (at least, closer than immigrants from Africa), they easily learn the language and assimilate faster than other nations (which excludes the ghetto format following the example of the Arab colonies in France or Turkish / Kurdish enclaves in Germany).

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Obviously, there is no such reservoir of demographic resources next to Ukraine. We are the poorest country in Europe and cannot offer neighboring economies anything for labor immigration to us. And you should not rely on labor migrants from Africa and Asia (although there are some examples of this phenomenon, for example, in Kyiv taxis). Migration from Africa is predominantly social rather than labor in nature: Africans travel to Europe not so much for work as for social benefits. Asian migration to Ukraine is also unlikely, rather the opposite, because many Asian countries are now growing more dynamically than Ukraine, which leads to the fact that our university graduates can be found in China for work. In addition, any migration from Africa and Asia (for example, if it is caused by environmental reasons) will inevitably lead to an increase in social tension in Ukraine and interethnic conflicts. Asians will not be assimilated in Ukraine, which implies their enclave nature of penetration (in the ghetto format). And this is the path to social and national segregation, for which our society is clearly not ready.

Plus the specificity of the climate and a high level of compulsory expenses: rental housing and utilities.

In general, Ukraine is doomed to focus on its own demographic resources and an extremely limited source of external replenishment.

What could work for us is the model of repatriation of Ukrainians to their homeland, as in Israel: the law on return with the right of every Ukrainian to return home and automatically receive a Ukrainian passport. By analogy with the Israeli model, "the state of Ukraine will be open for Ukrainian repatriation and the gathering of the scattered." But for this, the country should launch a national economic development program, including industrial policy and a model of outstripping growth. That is, not under the current government.

Another misconception is the belief that labor transfers from workers increase our national income. On the one hand, this money is indirectly involved in the growth of trade turnover and the sphere of residential construction. On the other hand, when determining the gross national product, the balance of primary income is subtracted, including the balance of labor transfers. That is, the amount earned by Ukrainians abroad reduces this figure by $ 12 billion that Ukrainians receive in other countries.

But this money is extremely important for covering the balance of payments deficit and stabilizing the exchange rate of the national currency - the hryvnia. Take the data for 2020: the trade deficit amounted to minus $ 6.6 billion. Our service balance is positive (+ $ 4.8 billion is all that the IT sector, gas transit and tourism give us in the net balance).

But at the expense of these $ 12 billion of workers, there is an annual outflow of investors' income from Ukraine in the amount of $ 7.3 billion, and also compensates for a net outflow of FDI in the amount of almost $ 1 billion. Thus, several million Ukrainians work abroad and send money to Ukraine so that our business can freely and at a favorable exchange rate withdraw money offshore and to buy Western assets. After all, if there were no money from labor migrants, a huge hole in the form of a deficit would have formed in the balance of payments, and big business would have to withdraw money, that is, the dollar equivalent of capital outflow would decrease by a proportional amount: they would not have withdrawn seven billion, but, for example, four. That is, in the overall structure of the balance of payments, workers' money allows rich people to earn on capital outflows (including speculative in government bonds) a few additional billion a year.

Thus, a vicious model is being formed in our country: the population earns abroad and spends in Ukraine, while the "elites" earn in our country, but spend abroad...

Meanwhile, the Polish government ordered to issue identifier codes to Ukrainian workers for paying taxes to the Polish budget. In addition, against the backdrop of the pandemic in Poland, the employment of Ukrainian doctors has been simplified, and this despite the fact that our medical system annually loses thousands of specialists a year.

Now let's talk about the true effect of labor migration. If we take the economically active population that pays taxes in Ukraine, we get the generation of per capita GDP of 15 thousand dollars per employee. The number of seasonal and permanent labor migrants in our country is estimated at 5-7 million people. Let's take the bottom line of 5 million people. This means that working from home, Ukrainians who went abroad would generate about $ 75 billion in additional gross product. With an average rate of distribution of GDP through the budget of 30%, this is about $ 25 billion in additional tax revenues.

There are still questions, why is the retirement age being reduced in Poland, while in our country power wants to increase it? And why do Polish pensioners enjoy life, while ours survive? Spoiler alert: maybe the reason is that Ukrainian sons and grandchildren work in Poland and not at home and pay taxes to the Polish budget, not the Ukrainian one. And they do this due to the fact that the government was unable to create a model of economic development that would provide an average salary at the level of at least one thousand dollars a month...

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