Unemployment in Ukraine is rising – how to deal with the state



Unemployment in Ukraine is rising - how to deal with the state

The current wave of unemployed people has been the most serious test for Ukraine for almost 20 years. Looks like it’s time to activate plan B – construction

During quarantine, the number of people registered with the National Employment Service increased by 27% – there are already 401,000 people officially unemployed. As for unofficial unemployment, the number of those who lost their jobs, but for various reasons did not go to the labor market, is estimated at 3 million people. And, most likely, the numbers are not final. The NBU predicts that this year the unemployment rate will be measured in double digit “percentage”, which has not been the case in Ukraine since 2002.

The rapid growth of unemployment and, consequently, the impoverishment of the population threaten major social upheavals. The government hopes that the program aimed at largely attracting the unemployed to large construction facilities will save the situation, at least considerably reduce their critical mass. Hope the success of these strategies. As a reminder, Ukrinform is continuing a series of publications on the problem of unemployment during the coronavirus epidemic. The first part focused on anti-crisis changes in the registration and assistance process for the unemployed (see – HERE), the second – on the mechanism of partial unemployment (see – HERE).

The army of the unemployed, unfortunately, “arrives”

During quarantine, which lasts the second month, the level of real unemployment in Ukraine doubled. According to estimates by the Chamber of Commerce and Industry, during the first two weeks of quarantine, the number of unemployed increased from 500 to 700,000, and in the following two weeks – in April -, 500 to 600,000 additional people were added. And in general, today at least 2.5 to 2.8 million citizens are unemployed in Ukraine.

“According to estimates by the Ukrainian Chamber of Commerce and Industry, the unemployment rate today is 13.7 to 15.4%. It is the highest rate in the past 15 years,” said Gennady Chizhikov, President of the Ukrainian Chamber of Commerce and Industry.

Unemployment in Ukraine is rising - how to deal with the state

Gennady Chizhikov

The ICC notes that, first, those who worked informally in industries whose activities were suspended during quarantine lost their jobs. There were also migrant workers who returned to Ukraine after losing their jobs abroad. Today, all of these people are at a crossroads. Although not everyone is in a hurry to take advantage of state aid.

At the request of Ukrinform, the National Employment Service of Ukraine reported that as of April 16, 2020, the number of unemployed people registered in employment centers was 400.9 thousand people, or 86.5 thousands, 27% more than on the same date. last year (as of April 16, 2019, the number of unemployed amounted to 314.4 thousand).

Since the start of the quarantine, that is to say from March 12, 89.2 thousand unemployed people have registered with the employment service.

Anti-crisis measures – in action!

The increase in state aid requests did not surprise the government. As Ukrinform has already written, a number of anti-crisis measures have been adopted in the country, intended to mitigate the impact of the economic crisis, particularly in the area of ​​employment. Prime Minister Denis Shmygal recalled that the government had simplified the procedure for submitting documents to employment centers. “Therefore, we urge all those who lost their jobs during the quarantine period to register in the future,” urged the head of government.

Unemployment in Ukraine is rising - how to deal with the state

Denis Shmygal

“He instructed the Ministry of the Economy to give all the instructions to the employment centers to speed up the payment of temporary unemployment benefits to people,” said Denis Shmygal on his Telegram channel.

Strategically, the government sees a way out of the situation by largely involving the unemployed in the implementation of major infrastructure projects.

For example, on April 17, during a working meeting with representatives of road construction companies, the Prime Minister of Ukraine called on “road workers” to employ as many Ukrainians as possible. He underlined that during the implementation of the installations (on the plans of the Ministry of Infrastructure for this year – read HERE), it is very important that the contractors involve as much as possible our fellow citizens. “We provisionally agreed that the lion’s share of the specialists involved in the work should be citizens of our state. After all, when so many Ukrainians have returned home, we have to provide them with work. This applies to entrepreneurs domestic and foreign who work or will work on road construction, “said Shmygal.

In general, the course is understandable and has already been tested in history. Recall that providing minimum social guarantees and creating jobs to avoid a “social explosion” was one of the three pillars of the New Deal of Franklin Roosevelt, the man who brought the United States out of the Great Depression in the 30s of the last century. Under his leadership, the state provided minimal assistance to the unemployed, but provided jobs. There were state orders for so-called public works, which included building roads, schools, airfields, electrifying cities, planting green areas, and so on.

How it will happen in Ukraine is still unclear. The Ministry of the Economy, in collaboration with the public employment service, is now starting to inform the population every week of the key problems linked to losing a job, obtaining financial assistance or help in finding a new job. Job center specialists continue to remotely select vacancies for the unemployed.

As of April 1, 2020, the number of vacancies registered in the public employment service amounted to 54,000 units. It is a third less than a year earlier. In January-February 2020, 26 thousand people were engaged in public and temporary works (landscaping, work in social facilities) in January-February 2020.

Create a job or save: the strategies are different respectively, the methods are also

Unemployment in Ukraine is rising - how to deal with the state

Egor Kiyan

Egor Kiyan, expert at the International Center for Advanced Research (ICSPI), is convinced that to really fight unemployment, it is not enough to announce the creation of a certain number of jobs – it is important to create them in key sectors of the economy. He expressed this opinion in an interview with the Apostrophe. “Knowing how this is usually done by our government, it is possible that it all boils down to digging trenches, as they say, by lunchtime,” said the expert.

At the same time, he said, this program can to some extent ease social tensions in the country caused by the crisis and rising unemployment.

“But 500,000 is a drop in the ocean. Furthermore, if these jobs are not created in key areas, but, so to speak, by chance. This will not give the desired result,” explained Kiyan.

Unemployment in Ukraine is rising - how to deal with the state

Olga Balakireva

“If we want to stimulate job creation, it’s a question of investment. And the question of job preservation is the search for compensation mechanisms for employers, interest-free loans granted so that employers do not fire today, but have the possibility of paying them a reduced salary option. Only this level of payments should not be our official minimum, but worthy that the workforce does not “flee”, does not seek other segments, but awaits the restoration of its implementation, “said the Chairman of the Board of Directors of the Ukrainian Institute for Social Research named after Alexandra Yaremenko Olga Balakireva in a comment to the independent Ukrainian Politics Foundation.

Meanwhile, Lidia Tkachenko, a leading researcher at the Institute of Demography and Social Research MVPtukhi of the National Academy of Sciences of Ukraine made interesting observations which, in our opinion, explain a lot about the nature of unemployment Ukrainian. And consequently, they will have an impact on the implementation of national anti-crisis programs in the field of employment.

The scientist estimates that due to the traditionally low level of organization, economic management and a significant part of the economic shadow (today, it is estimated at 30-33%. – Auth.), A situation occurs where crises cause a collapse in GDP and hyperinflation, but do not produce the same catastrophic growth in the army of the unemployed. “During the 2008/2009 and 2014/2015 crises, GDP fell to 15%, inflation reached 40% and the unemployment rate increased by only 2 to 3 percentage points, without exceeding 8 to 10%, ”recalls Lidia Tkachenko. Why Because during a crisis in Ukraine, not only does employment generally decrease, but its relatively prosperous part, but the informal employment segment increases.

Unemployment in Ukraine is rising - how to deal with the state

Lydia Tkachenko

Migrant workers also add details. According to various sources, due to quarantine, 160 to 270,000 citizens have returned to Ukraine, some of whom have lost the opportunity to earn money abroad. “Certainly not the fact that they will immediately start looking for work in their country of origin. Over the years, many have already developed a stable work model where periodic travel and temporary part-time jobs in foreign currency are much more attractive than regular work at the place of residence, ”explains Lidia Tkachenko. It is very likely that the zarobitchites will not immediately enter the national labor market, remaining inactive for some time and living on the accumulated reserves. In addition, the level of income in beneficiary countries will remain much higher than in Ukraine and the shortage of labor, and in particular of cheap labor for migrant workers after the epidemic, will remain with them. And as soon as the borders open, people will try to return again.

And don’t forget social justice

Now, the tactics of supporting the state in employment and reducing the decline in income seem more or less adequate. But now we have to think about how the country should live after the quarantine.

“As long as we have a quarantine situation, I think the government can avoid social unrest, people will spend their little savings, social assistance, borrow money for a certain period. But after the quarantine ends, if the opportunity to make money is not offered, then we can expect social outbursts, protests from those who will demand a change of power at the local level. People will demand the opening of businesses, increasing the guaranteed payments available, ”warns Olga Balakireva.

She recalls that at the beginning of the year, we already had a huge wave of negativity after information on salaries and bonuses that the senior officials designated themselves. “Today, the element of social injustice in the distribution of wages will also be very important. I emphasize that domestic economic inequality will become a factor in the negative assessment of the activities of the current government after the quarantine, “concluded the expert.

Marina Nechiporenko, Kiev

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