According to the results of the half-year period in Ukraine, for the first time since 2014, a significant decline in unemployment among the economically active population was recorded – from 9.7% to 8.3%. In accordance with the methodology of the International Labor Organization (ILO), the indicator is calculated as the percentage of the unemployed in the age group from 15 to 70 years. Given that most of the Ukrainian youth receive higher education and come to the labor market at the age of 20, and the retirement age in Ukraine is 58.5-60 years, the real unemployment rate is even lower than the State Statistics Committee voiced 8.3%. But this news is definitely not positive, because the main reason for the reduction of unemployment in the state is the lack of labor force, provoked by the increase in labor migration, and in the long run, we expect only negative consequences if we do not start doing something today.
According to the State Employment Service, in January-September, the number of job-offers increased in all categories, except for state administration, defense as well as financial and insurance business. Today, for civil servants, military men, and financiers it is harder to find work because these are the only professions among which the supply on the labor market is significantly higher than demand. For other spheres of economic activity, the number of applicants for one vacancy continues to decline. At the same time, if in previous periods blue-collar workers and representatives of the simplest jobs (52% of all job-openings) used to have the greatest demand, now the greatest number of job-offers was registered in the spheres of education and science (43.1%) and technical activities (20.7%).
Given that the labor market almost for the first time experienced not just a shortage of personnel but a shortage of skilled personnel, the business was seriously worried. According to a survey of business expectations conducted by the NBU in the third quarter of 2018, entrepreneurs noted that one of the key factors that could restrict their business growth in the future is a lack of qualified specialists. The corresponding complications of the search for staff are confirmed by the fact, that since the beginning of the year the number of enterprises that applied to the State Employment Service for assistance increased by almost 10%, employers can no longer search for workers on their own.
Thus, despite the fact that a large number of Ukrainians getting a job, it should be noted that this was not due to the rapid economic growth, that provided for new job openings, but because of the lack of workers in the domestic labor market, which did not actually change in terms of volume. And even worse, the number of offers began to grow in those areas, that require specialists with a high level of qualification – education, science, technical branches. Obviously, Ukraine loses in the competitive struggle with neighboring countries, which not only can offer them higher wages but also purposefully attract workers from other countries to their markets.
For many developed economies, perhaps the most urgent problem is the population aging, which provokes both problems with a pension scheme and a manpower shortage in the labor market. Unfortunately, the world’s experience in using state programs to increase the birth rate can’t be called productive. And the cumulative effects of such government actions are very distant in the time since from the moment of birth to the labor market it usually takes from 16 to 25 years. Today’s attraction of migrants is one of the most effective ways to deal with labor market problems relatively quickly, because on average the need for adaptation and integration of a migrant to a society is from 5 to 10 years, depending on how drastic his life conditions changed, but on the labor market a migrant goes a lot faster, especially if he gets help from the state.
And there are so many willing countries all over the world – the USA, Canada, Sweden, Hungary, Germany, Poland. These and other countries have approved state programs for attracting migrants. Their governments are purposefully looking for foreigners with qualifications to come to their countries. For example, in Switzerland, migrants are 50% of all food industry workers and 70% of all employees in the pharmaceutical industry. In Canada, 50% of all technologists and engineers are foreigners. In Belgium, migrants are half of all workers in the mining sector. And in the US, 20% of IT specialists are migrant workers.
Developed countries are aware, that attracting qualified professionals will not only improve demography and fill workplaces but also stimulate economic activity, tax revenues, and domestic demand for goods. In general, labor migration directly affects the GDP growth rate of the country. The contribution of migrants to Canada’s GDP in 2017 amounted to 8%, while Poland and Sweden, thanks to migrants, increased their GDP by 10%. And these indicators will increase if states continue to actively attract migrant workers to their markets.
For example, Poland’s economic growth has significantly accelerated since the beginning of 2017: by the end of 2017 GDP growth amounted to 4.6%, during the first half of 2018 – 5.1% (up to the corresponding period of last year). The main drivers, according to the NBU’s Inflation Report, are high employment rates, rising incomes, and rising demand. The revival of economic activity supported the high demand for labor and led to further employment growth. In the business sector, which covers 57% of the employed, this growth was the highest (4.7% in 2017 and 3.7% in the first half of 2018). The number of job-openings registered at the Polish State Labor Office remains record-breaking high and increasing by 5% each year. The largest number of job-offers is in trade, industry and construction sectors.
In addition, according to the NBU, due to structural changes in Polish education system at the end of the 1990s and the significant increase since then, the number of graduates in the faculties of economics, law and social sciences, the Polish labor market has caused a significant imbalance between the demand for the real sector of the economy and the offers on the labor market. It is clear that with the acceleration of the rates of economic growth in Poland, this imbalance has only deepened. In particular, according to a survey by the Work Service group, at the beginning of the third quarter of 2018, almost half of the employers stated problems with finding workers, especially in grassroots (25%) and middle (15%) sector of the company’s employees. Moreover, the deficit was highlighted primarily by large companies (62%) employing more than 250 employees and enterprises of the industrial sector (75%). A quarter of these employers noted, that they finally hired employees from Ukraine.
According to a Personnel Service survey conducted at the beginning of the second half of 2018, almost 17% of Polish employers intend to hire Ukrainian workers during the next year. Among the main reasons, the most frequent was the availability of job offers for which there are not enough citizens (57%), correspondence between Ukrainian and Polish qualifications (53%), and the availability of offers, which Poles are not interested in at all (31%).
On the example of Ukraine, we see what happens if the state loses its employees – its economy is decreasing, and the rate of GDP growth is decreasing. The crisis 20% reduction in our economy, after the annexation of the Crimea and the occupation of the Donbas, is an extremely deep decline. As a rule, after such crashes, maintaining a good growth rate is quite easy, because, despite the loss, the potential of our country is quite powerful. However, macroeconomic stabilization made with the titanic efforts has grown into stagnation, the economy is developing very slowly, the GDP growth rate of 2-3% per year is extremely low, and to a greater extent it is due to the fact, that one of the consequences of the recent economic crisis has been the rapid pace of labor migration of Ukrainians.
Indeed, our losses are quite temperate, since most Ukrainian migrants are “commuters”. They go to work for a certain period, and then return home, their families live here, their economic ties with their homeland are not torn.
As of July 2018, according to the Personnel Service survey, more than half of Ukrainian workers worked in Poland within one to three months, another 28% – within three to six months, that is, they used a simplified procedure for employment for short-term earnings. A significant part of the respondents came several times (35% – more than three times) and planned to return in the near future (57.5% of respondents), however, more than 74% of respondents were not going to stay permanently.
That is, the migration process is not irreversible at the moment, and Ukraine has a chance to return home-based “commuting” migrants and substantially improve both domestic consumption and GDP growth, it is only necessary to create proper conditions for its citizens, realizing that if neighboring countries are ready to spend money to attract our employees, then we also have to do it in order to withstand this competition.
By comparison, as of 2015, the average net income of a Ukrainian worker in Poland was higher than the income in Ukraine by 390 dollars, and in the construction industry – even by 573 dollars. In July 2018 more than half of the Ukrainian migrants in Poland received from 674 to 944 dollars. It is not worthwhile to compare it with Kyiv wages, let alone regions. However, domestic employers are still convinced that wages are the first source for saving in difficult times.
The availability of good work as such is no less important. It’s no secret that business is actively developing in big cities, but in small towns and villages, it may be stuck. And here the authorities should do their best to attract investment in creating new jobs so that Ukrainians don’t go to neighboring countries and stay to work in Ukraine. And the investor’s interest will appear as soon as our state gives at least some guarantees, that property rights in Ukraine will be properly protected, and in case of litigation, a case will be treated impartially. Actually, the vulnerability of investors’ rights for many years is the main barrier for investors’ entry into our market, and everyone on Hrushevsky Street definitely knows that. The ways out of the “migration” crisis are so simple and obvious, that it is difficult to find the excuse for the inaction of power.
However, instead of actively fighting for the return of our citizens home, the government and the NBU are glad, that the amount of foreign currency that migrant workers transfer to their relatives in Ukraine exceeds the number of tranches received by the government from International Financial Institutions – in the first half of the year, the workers transferred to Ukraine about $ 6 billion, and by the end of the year, the NBU expects, that the volume of their transfers will increase to $ 11.6 billion.
The main question is, does the government realize, that the time for the return of Ukrainians is fading, they learn languages, improve their qualifications, adapt, go to markets of other countries, and then the percentage of those, who return home six months later will decrease, creating more and more problems for the Ukrainian economy.
By Valentyna Yushchenko