With a short­age of la­bor, Ukrainian busi­ness has to work harder to find and keep staff

Kyiv Post Legal Quarterly - - Contents - By Luke Smith, Natalia Datskevych luke­[email protected]­post.com [email protected]­post.com

It’s a good time to be look­ing for work in Ukraine. With Ukraini­ans leav­ing the coun­try in record num­bers — 1.3 mil­lion peo­ple in the pe­riod from 2015 to 2017, ac­cord­ing to the State Sta­tis­tics Ser­vice — the job mar­ket has shifted in fa­vor of em­ploy­ees over em­ploy­ers.

Busi­nesses are now in fierce com­pe­ti­tion for a shrink­ing pool of work­ers — of­fer­ing in­creased wages, so­cial ben­e­fits and im­prov­ing their cor­po­rate cul­ture to at­tract ap­pli­cants.

But even this may not be enough.

Prob­lems ahead

The main trend of the la­bor mar­ket is that it is in­creas­ingly dif­fi­cult to find peo­ple to per­form any job, in any sec­tor.

“Top man­age­ment, mid­dle man­age­ment, un­skilled la­bor, young pro­fes­sion­als — with each of these cat­e­gories there will be prob­lems in hir­ing,” said Ser­hii Marchenko, the founder of re­cruit­ment agency Borsch. He pre­vi­ously worked as com­pany di­rec­tor for de­vel­op­ment for re­cruit­ment web­site Work.ua.

With la­bor mi­gra­tion con­tin­u­ing apace, Ukraine is stor­ing up prob­lems for it­self in fu­ture.

One prob­lem will be with highly qual­i­fied staff: Stu­dents are leav­ing Ukraine to study abroad, and most of them won’t come back. Ac­cord­ing to the CEDOS An­a­lyt­i­cal Cen­ter, 72,000 young peo­ple left the coun­try in 2016 and 2017–56 per­cent more than in the 2012 to 2013 pe­riod.

Nine out of 10 of those stu­dents are not plan­ning to re­turn to Ukraine, ac­cord­ing to Tetyana Pashk­ina, an HR­ex­pert at Rab­ota.ua, an on­line re­cruit­ing re­source for more than 50,000 com­pa­nies.

“The lack of young peo­ple could be fa­tal for Ukrainian em­ploy­ers,” she said. “The av­er­age salary in Euro­pean coun­tries is Hr 34,895 ($1,340), while in Kyiv it is Hr 11,400

($440). Judg­ing by the dy­nam­ics of wage growth, for­eign em­ploy­ers need our work­ers more.”

Ex­tra costs

Com­pa­nies are try­ing to hire peo­ple for low wages, but this leads to a large turnover of staff and brings ex­tra costs on train­ing and search­ing for re­place­ment em­ploy­ees, ex­perts warn.

“It seems to me that the Ukrainian la­bor mar­ket is now at the point of re­think­ing the role of wages in the ef­fi­ciency of the en­ter­prise,” said Marchenko.

“The only way to make the work mean­ing­ful for em­ploy­ees is to make the re­ward mean­ing­ful.”

Since 2015 va­can­cies have tripled, ac­cord­ing to the PROHR an­a­lyt­i­cal plat­form, but this has not been matched by the num­ber of job seek­ers, so job seek­ers can shop around for the best of­fer. The num­ber of job re­fusals dou­bled in 2017, while salaries in­creased by 25 per­cent. Com­pared to this time last year, head­hunters have seen an in­crease of more than 30 per­cent in re­quests from em­ploy­ers.

The short­age of can­di­dates is so se­vere that em­ploy­ers and re­cruiters of­ten com­plain that ap­pli­cants fresh out of univer­sity are ask­ing for salaries of $1,000 a month, which is well above what is com­monly of­fered for en­try-level po­si­tions in Ukraine — even in the in­for­ma­tion tech­nol­ogy in­dus­try.

More ex­pe­ri­enced can­di­dates have their own set of prob­lems, ac­cord­ing to An­drey Kri­voko­ry­tov, CEO of Brain Source In­ter­na­tional, a Kyiv-based re­cruit­ing agency.

In past years, ex­pe­ri­enced can­di­dates were of­ten very will­ing to change jobs if ap­proached by head­hunters with a tar­geted of­fer. But now, it’s not un­usual for an ex­pe­ri­enced pro­fes­sional to be bom­barded by of­fers from mul­ti­ple com­pa­nies. Over­whelmed by the op­tions, many sim­ply choose to re­main in their cur­rent po­si­tions.

Greater choices

This short­age is in large part due to Ukraini­ans leav­ing the coun­try for bet­ter op­por­tu­ni­ties abroad. But even for­eign coun­tries can’t ac­quire Ukrainian work­ers as eas­ily as they used to, be­cause Ukraini­ans are not leav­ing the coun­try for the same rea­sons as be­fore.

In 2014–2015, Ukraini­ans sim­ply wanted to get out to es­cape war and eco­nomic cri­sis. Now Ukraini­ans have greater choices at home and abroad.

De­mand for Ukrainian la­bor and spe­cial­ists re­mains strong, but there are fewer peo­ple to fill the va­can­cies. Ukrainian staffing com­pa­nies that fill va­can­cies abroad have be­gun to hire and train in­ex­pe­ri­enced can­di­dates, and coun­tries such as the Czech Repub­lic and Israel are in­creas­ing their quo­tas for Ukrainian work­ers, while Poland is tak­ing steps to sim­plify its work visa ap­pli­ca­tion process.

Ukrainian com­pa­nies are adapt­ing to the new con­di­tions, but aren’t able to solve this is­sue by in­creas­ing wages alone — the mar­ket is just too com­pet­i­tive. In­stead, they are fo­cus­ing on perks and work­ing con­di­tions. These in­clude a good cor­po­rate cul­ture, trans­port to and from work, team build­ing and so­cial pack­ages.

Hu­man cap­i­tal

An­other big mo­ti­va­tor is sta­bil­ity. Em­ploy­ers who can con­vinc­ingly ar­gue that their busi­nesses are likely to weather Ukraine’s re­cur­ring eco­nomic and po­lit­i­cal crises will be more at­trac­tive, es­pe­cially to em­ploy­ees with fam­i­lies.

Busi­ness also adapts by tar­get­ing young peo­ple, who com­pen­sate for their in­ex­pe­ri­ence with ta­lent and drive. It is less ex­pen­sive to hire and train an in­ex­pe­ri­enced can­di­date than head­hunt ex­pe­ri­enced spe­cial­ists. he readi­ness of com­pa­nies to train new em­ploy­ees has “in­creased with colos­sal speed,” ac­cord­ing to rep­re­sen­ta­tives of the Golden Staff re­cruit­ing com­pany. Em­ploy­ers un­der­stand that by de­vel­op­ing an em­ployee, they are also de­vel­op­ing their com­pany.

“The IT busi­ness, like any cre­ative busi­ness, is about hu­man cap­i­tal. There­fore, in our com­pany there are spe­cial ser­vices that help peo­ple learn, ob­tain var­i­ous cer­tifi­cates, in or­der (for the com­pany) to be in a lead­ing po­si­tion,” said Yuriy An­to­niuk, the man­ag­ing di­rec­tor of IT com­pany EPAM Ukraine.

Fa­tal fac­tor

Younger em­ploy­ees are cheaper, but com­pa­nies still have to make an ef­fort to at­tract them, es­pe­cially be­cause they of­ten can’t pay them what they would like.

On av­er­age, they want salaries 10–20 per­cent higher than em­ploy­ers can pay, ac­cord­ing to Ka­te­rina Kryvoruchenko, head of ex­pert-an­a­lyt­i­cal cen­ter Head­hunter Ukraine, an on­line re­source for job search and re­cruit­ment for more than 66,000 com­pa­nies.

How­ever, “the most ef­fec­tive teams are ones formed with spe­cial­ists of dif­fer­ent ages, since they can ex­change ex­pe­ri­ence,” said Kryvoruchenko.

Busi­nesses take sev­eral ap­proaches here. In ad­di­tion to cul­ti­vat­ing “cool” cor­po­rate en­vi­ron­ments, they also of­fer flex­i­ble sched­ules for stu­dents, of­ten stretch­ing to the very the limit of what is fea­si­ble. This is highly ben­e­fi­cial for young peo­ple, es­pe­cially in the IT sec­tor, where em­ploy­ees can get real, well-paid work ex­pe­ri­ence while work­ing to ob­tain de­grees or doc­tor­ates at the same time. Af­ter com­plet­ing their de­grees, these stu­dents usu­ally tran­si­tion to full time at the com­pany they worked at dur­ing their stud­ies.

But for some po­si­tions, only a highly qual­i­fied can­di­date will do. For these, com­pa­nies of­ten turn to spe­cial­ized head­hunt­ing agen­cies, which are see­ing a boom in de­mand. Most large com­pa­nies now al­lo­cate part of their bud­get to head- hunt­ing ser­vices, ac­cord­ing to Prohr.com, in ad­di­tion to hir­ing ex­pe­ri­enced HR to re­tain peo­ple. Essen­tially, they are adopt­ing a more Western model, to com­pete with Western com­pa­nies.

But even with all the ef­forts Ukrainian busi­nesses are mak­ing to adapt, Kri­voko­ry­tov of Brain Source In­ter­na­tional ex­pects the la­bor short­age will only get more se­vere.

“This is go­ing to chal­lenge lots of busi­nesses. And I think for some this could be a fa­tal fac­tor… only the best busi­nesses will sur­vive.”

Em­ploy­ers who can con­vinc­ingly ar­gue that their busi­nesses are likely to weather Ukraine's re­cur­ring eco­nomic and po­lit­i­cal crises will be more at­trac­tive, es­pe­cially to em­ploy­ees with fam­i­lies.

Peo­ple at­tend the Kyiv Post Em­ploy­ment Fair in Ukrainian House in Kyiv on March 31. (Volodymyr Petrov)

Hu­man re­sources spe­cial­ists speak with vis­i­tors at the Kyiv Post Em­ploy­ment Fair in Ukrainian House in Kyiv on Sept. 16. (Oleg Pe­tra­siuk)

More and more of Ukraine's best and bright­est are opt­ing to move abroad for study and work, with the num­ber of young peo­ple leav­ing the coun­try dou­bling in re­centyears.

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