February 20 marks the World Day of Social Justice. Does Ukraine have this justice? Answering this question isn’t easy. Not so long ago we boasted a high labor potential. Now this assumption is questioned, among others by Yaroslav Zhalilo, deputy director of the National Institute of Strategic Studies (NISD). Is Ukraine’s labor potential adequate to the current challenges? Does it answer the international requirements, considering that it is necessary to build a new kind of economy? Does this country have a consistent policy aimed at maintaining social justice and progress rather than regress and lowering the labor potential?
Trying to answer these questions, one could refer to various trends and facts. I have chosen one that I believe is glaringly apparent. Toward the end of 2012 Ukrainian tax authorities detected 70,000 illegal workers, although the actual number remains anyone’s guess (such violations of labor laws are found in 90 percent of business entities being inspected). Nor does anyone know whether the number of illegal workers increases or reduces, or what to do about those who no longer belong to this category: register them as legal workers, unemployed or immigrants.
There is more to the problem of ineffective use of the labor potential. Zhalilo notes that this social category is formed being influenced by factors such as health care, education, culture, even family. All these factors should serve to enhance and update Ukraine’s labor potential.
Olha Pishchulina, head of the social policy department, NISD, believes that the world’s modern trends serve to form an essentially new kind of socioeconomic relationships, compared to those in Ukraine. The days of industrial relations are numbered. Postindustrial societies have been or are being formed in a number of countries. They, in turn, bring forth principally new market models and [a new kind of] labor potential. She refers to experts saying that postindustrial technologies create almost no jobs. Over the past 40 years demand for manpower per unit of output has dropped more than hundredfold.
Pishchulina says the high unemployment rate in recent years, especially during the economic crisis, has led to changes even in the basic postulates of a welfare state that previously professed the theory of full employment. Today one increasingly often hears about natural unemployment rate. The latest ILO report reads that 55 percent unemployment growth across the world is due to the developed European countries, considering that they make up only 15 percent of global employment. She regards this as an alarming trend; Ukraine may also be part of this global context. The Ukrainian government must provide some mechanisms and opportunities of maneuver because the problem is getting on a fight-poverty or fight-joblessness basis.
In her opinion, another alarming problem is the high rate of paid education: “Europe has started talking about discarding free education and transferring to an elite system… These new trends are exacerbated by Ukrainian specificities, with our labor market registering such polarized trends as manpower shortage and excess, along with the prevalence of informal employment… The labor potential inherited by Ukraine is being used ineffectively and we are thus producing ineffective industries that do not allow us to essentially change the structure of our economy.” Pishchulina believes that among the Ukrainian market trends one ought to focus on deindustrialization and preferential development of services. This is a world trend, but it does not serve to improve the quality of Ukrainian industries and, consequently, its labor potential.
How can these negative trends be prevented? Pishchulina says the state should play a more important regulatory role on the labor market, considering that the “market mechanisms aren’t very effective in regulating this process.” She stresses that, despite the increasing labor market demand, Ukraine should not return to “the path we took when proclaiming the need to create half a million jobs, when this was regarded as en end in itself.” One has to bear in mind the role Ukraine is playing on the international division of labor market; that it is necessary to “create jobs only in those areas that can produce the maximum competitive effect.”
Summing up, Pishchulina stresses that the emphasis on the traditional labor-intensive industries hinders economic growth; that better training, forming a labor force that will quickly respond to hi-tech challengers, is the number one guarantee of improving working efficiency and the productivity of the economy. Reforms on the labor markets are possible and necessary, but only along with reforms in professional education [vocational training], encouraging the employer to help develop the national labor potential.
Vasyl Kostrytsia, national coordinator of the International Labor Office in Ukraine, disagrees with Pishchulina on a number of points. He stresses that the joblessness-or-poverty issue is not on the agenda today. On average, there are two unemployed per vacancy, and that filling these vacancies constituted 43-52 percent in 2006-12: “Do you know where the employment rate is the highest? At the model agencies.” What really worries him is that the effort aimed at developing the Ukrainian labor potential was neglected and then stopped at the beginning or even [sic] at the peak of the crisis: “Today we must remind government agencies that they must resume working out a pertinent strategy.” He is sure that this matter is of the utmost importance in all countries.
Referring to the ILO report, Kostrytsia insists that even if the world economy continues to gradually revive in 2013-14, the number of unemployed in the world will increase by five million every year; that no country can single-handedly overcome the labor market crisis. The Ukrainian government and private businesses should actively invest in job creation, particularly in infrastructure programs. At present, eight million able-bodied Ukrainians are economically inactive. Kostrytsia asks: “Have we lost this potential forever or it can be revived? If it can’t, then it will be a burden on the central and local budgets. This will be a disaster.”
Serhii Kondratiuk, deputy chairman of the Federation of Trade Unions of Ukraine, is even more categorical in assessing Ukraine’s labor potential: “The nation’s intellect and manpower are fleeing Ukraine.” He says the policy of economizing on the development of the Ukrainian labor potential is to blame: “That was a tragic mistake. Over the past 21 years we haven’t narrowed the gap between Ukraine and the developed countries and even failed to show Soviet economic indices.” The trade union leader believes that workers in Ukraine have unprofitable jobs; that they can’t earn enough for the reproduction of labor; that wages and salaries constitute less than 39 percent of their incomes, the rest being various kinds of subsidies. Kondratiuk insists that there is no sense in trying to develop the Ukrainian labor potential without solving the problem of the prestigiousness of labor: “We have all kinds of prestigious things ranging from boxing to soccer to haute couture, save for providing socially necessary goods and services. The existing [political] system is degrading labor in Ukraine… Pay rises would be the best investment in the development of Ukraine’s labor potential.”