Re­shap­ing the la­bor mar­ket:

What in­dus­tries gen­er­ate new jobs as over­all em­ploy­ment is on the de­cline

The Ukrainian Week - - CONTENTS - Olek­sandr Kra­mar

Em­ploy­ment in Ukraine com­pared to pre-Maidan years

From early 2016, Ukraine’s econ­omy has re­turned to growth that is slowly gain­ing pace. At the same time, the me­dia buzz about in­tense la­bor mi­gra­tion to Ukraine’s EU neigh­bors. What is be­hind this trend? Is it caused by a sharp de­cline of em­ploy­ment af­ter the Maidan, as the crit­ics of “bro­ken eco­nomic ties with tra­di­tional mar­kets” lament, or other fac­tors? Did em­ploy­ment in key in­dus­tries start plum­met­ing in 2014? How has the restora­tion of the econ­omy in the past years af­fected em­ploy­ment in Ukraine’s econ­omy over­all and its in­di­vid­ual sec­tors?

The first prob­lem in at­tempts to fig­ure out the em­ploy­ment sit­u­a­tion in Ukraine is the rel­a­tiv­ity of statis­tics. Some of it is drawn by the State Statis­tics Bureau on the ba­sis of assess­ments, not spe­cific num­bers. Prob­a­bly the most ac­cu­rate in­di­ca­tor of trends in Ukraine’s la­bor mar­ket is the data on changes of staff em­ployed in the econ­omy and by in­di­vid­ual in­dus­tries.

The over­all num­ber of staff em­ploy­ees in Ukraine went from 7.845mn in De­cem­ber 2015 to 7.630mn in De­cem­ber 2017. This was a 2.7% de­cline over two years. In Q1’2016, an eco­nomic re­vival be­gan that still lasts to­day af­ter the near col­lapse of 2014-2015.

This de­cline of em­ploy­ment statis­tics has come mostly from Donetsk and Luhansk oblasts which had 613,000 staff in De­cem­ber 2015 and 505,000 in De­cem­ber 2017. This loss came up af­ter the of­fi­cial statis­tics dropped en­ter­prises in the oc­cu­pied ter­ri­tory that had been ac­counted for in it up un­til March 2017, as these busi­nesses had for­mal reg­is­tra­tion in Ukraine.

With­out Luhansk and Donetsk oblasts, the de­cline of staff over the two years of re­newed eco­nomic growth was 107,000 peo­ple or 1.5%. This, too, is a gen­eral num­ber as some in­dus­tries lost jobs while oth­ers cre­ated new ones at a dif­fer­ent pace.

A num­ber of in­dus­tries have gen­er­ated new jobs over the past two years. In trade, the num­ber of staff went 5.5% up, from 668,000 to 705,000 peo­ple, over 2015-2017. The staff of ground and pipe­line trans­porta­tion in­dus­tries has in­creased by 7.7%, from 246,600 to 265,700 em­ploy­ees, even as sev­eral thou­sand jobs were lost in these in­dus­tries in Luhansk and Donetsk oblasts af­ter March 2017. Air trans­porta­tion shows the best dy­nam­ics, even though the num­ber of staff there is not too high, go­ing up 23.5%, from 6,800 to 8,400 em­ploy­ees, over 2015-2017.

The in­dus­trial sec­tor is not as gloomy as pro-Rus­sian lob­by­ists com­plain as they lament about mass lay­offs as a re­sult of Ukraine’s as­so­ci­a­tion with the EU and bro­ken eco­nomic ties with “tra­di­tional” mar­kets. The pro­cess­ing in­dus­try did see a sig­nif­i­cant de­cline of jobs over the past two years, go­ing down 3.6%, from 1.3 to 1.25mn peo­ple. But this came en­tirely from Donetsk and Luhansk oblasts where staff in this in­dus­try shrunk from 156,800 to 107,400 peo­ple. In the rest of Ukraine, em­ploy­ment in the pro­cess­ing in­dus­try has some­what in­creased, even if only slightly.

Some sec­tors of the pro­cess­ing in­dus­try demon­strated bet­ter growth, from 12.3% in the phar­ma­ceu­ti­cal in­dus­try (from 21,100 to 23,700) and 7.3% in the light in­dus­try (from 72,200 to 77,500) to 3.6% in wood pro­cess­ing and print­ing (from 66,200 to 68,600). Em­ploy­ment in fur­ni­ture man­u­fac­tur­ing has gone up, al­though the State Statis­tics Bureau mixes it in with other sec­tors. As more for­eign com­pa­nies opened up in Ukraine by 2017, the in­crease of jobs in elec­tric ware man­u­fac­tur­ing ex­ceeded the loss in the oc­cu­pied ter­ri­tory, grow­ing by 4.4% from 47,700 to 49,800 from De­cem­ber 2016 through De­cem­ber 2017. Trans­port en­gi­neer­ing is slightly re­viv­ing em­ploy­ment with a growth of 1.6% from 136,200 to 138,400 jobs.

On the na­tion­wide scale, em­ploy­ment plum­meted by 34.8% (from 121,000 to 78,900) in coal min­ing, 16.8% (from 234,200 to 194,900) in steel man­u­fac­tur­ing and pro­cess­ing, and 10.6% (from 61,200 to 54,700) in the chem­i­cal in­dus­try. In each of these cases, the de­cline oc­curred af­ter the busi­ness lo­cated on the oc­cu­pied ter­ri­to­ries was re­moved from of­fi­cial statis­tics. In Donetsk and Luhansk oblasts, for in­stance, the staff em­ployed in the min­ing in­dus­try went from 95,000 to 58,700 over this pe­riod.

As a re­sult of sig­nif­i­cant changes in the struc­ture of em­ploy­ment, Ukraini­ans have lately shifted jobs be­tween in­dus­tries. The food in­dus­try is now em­ploy­ing far more peo­ple (280,000 staff) than steel­works or coal min­ing added to­gether, or all en­gi­neer­ing sec­tors other than elec­tron­ics and elec­tric ware man­u­fac­tur­ing (252,200 jobs). Given the grow­ing pres­ence of for­eign transna­tional cor­po­ra­tions, elec­tric ware in­dus­try has 49,800 jobs. It will thus soon catch up with the chem­i­cal in­dus­try with its 54,700 jobs.

Coal min­ing (78,900) is al­ready be­hind em­ploy­ment in IT (127,000 based on assess­ments of in­dus­try­fo­cused me­dia) and is about to lag be­hind the light in­dus­try with 77,500 em­ploy­ees in De­cem­ber 2017. Wood pro­cess­ing may soon take over as it of­fers 68,600 jobs

The over­all num­ber of staff em­ploy­ees in Ukraine went from 7.845mn in De­cem­ber 2015 to 7.630mn in De­cem­ber 2017. This was a 2.7% de­cline over two years. In Q1’2016, an eco­nomic re­vival be­gan that still lasts to­day af­ter the near col­lapse of 2014-2015

now. Given the cur­rent dy­nam­ics, the IT sec­tor may out­pace met­al­lurgy and steel pro­cess­ing put to­gether in sev­eral years from now.

WAS IT BET­TER OR WORSE BE­FORE THE REV­O­LU­TION?

One of­ten hears a state­ment blam­ing the col­lapse of em­ploy­ment on the Maidan and the break-up of eco­nomic con­tacts with Rus­sia as a “tra­di­tional mar­ket”. Crowds of job­less Ukraini­ans have moved to work in EU mem­ber-states, crit­ics say. In fact, the staff in most in­dus­tries had been shrink­ing faster in 2010-2013 than it has af­ter the Maidan. And there was no sign of pos­i­tive dy­nam­ics sim­i­lar to that seen in most in­dus­tries over the past two years.

The over­all num­ber of em­ploy­ees in 2010-2013, the years of eco­nomic growth, even if slow, went down by 5.6%, from 10.76mn to 10.6mn. Note that this statis­tics in­cluded Crimea and all of Donetsk and Luhansk oblasts. In 2016-2017, by con­trast, the de­cline was 1.5% (Crimea, Donetsk and Luhansk oblasts were not in­cluded as the data from there is dis­torted by the un­sta­ble ba­sis for com­par­i­son in the oc­cu­pied ter­ri­tory). Em­ploy­ment in trade in agri­cul­ture pro­duce went down by 15.5% from 2010-2013, fol­lowed by a 24.4% de­cline in con­struc­tion and 8.1% in the pro­cess­ing in­dus­try. The only sec­tors where em­ploy­ment was grow­ing dur­ing that pe­riod were the phar­ma­ceu­ti­cal in­dus­try (23.5%) and trans­port en­gi­neer­ing (13%). Other pro­cess­ing in­dus­tries saw a more or less rapid de­cline of staff, some­times mea­sured in dou­ble dig­its. The num­ber of em­ploy­ees fell by 5.7% in food pro­cess­ing, 4.7% in wood and pa­per pro­cess­ing, 7.8% in elec­tric ware and elec­tron­ics man­u­fac­tur­ing, 5.9% in other en­gi­neer­ing sec­tors, 11.6% in met­al­lurgy and metal pro­cess­ing, 12.8% in the chem­i­cal in­dus­try, 13.5% in the light in­dus­try, and 30.6% in cok­ing and oil re­fin­ing. The non-man­u­fac­tur­ing sec­tor wasn’t far­ing much bet­ter. Tele­coms saw em­ploy­ment fall from 208,000 to 184,000 un­der the Party of Re­gions gov­ern­ment, fol­lowed by the trans­port sec­tor (276,000 to 272,000) and the ho­tel and restau­rant busi­ness (109,000 to 108,000). The only ex­cep­tions were trade that grew 1% from 902,000 to 911,000 jobs and fi­nan­cial in­sur­ance with a 1.5% growth from 271,000 to 275,000.

IT’S ABOUT BET­TER WAGES

The slow­down in the de­cline of em­ploy­ment over the past two years com­pared to the pre-war 2010-2013 pe­riod shows that Ukraine’s la­bor mar­ket was not ex­actly the key fac­tor in the spike of la­bor mi­gra­tion of Ukraini­ans to the EU. The like­lier mo­ti­va­tions in­cluded the visa free travel regime and the higher loy­alty of for­eign gov­ern­ments to Ukrainian mi­grants. The lat­ter is man­i­fested, among oth­ers, in a sharp in­crease of quo­tas and li­censes given to Ukraini­ans com­ing to work in EU mem­ber-states, es­pe­cially Poland, Lithua­nia and Czechia.

There­fore, the growth of Ukrainian la­bor mi­gra­tion to the EU in the past cou­ple of years can be blamed on eas­ier ac­cess to the Euro­pean la­bor mar­ket and higher salaries, not the de­cline in the num­ber of jobs in Ukraine. An­other fac­tor is the shift of many la­bor mi­grants from the Rus­sian mar­ket to the Euro­pean ones. Still, there has been no sharp in­crease of la­bor mi­gra­tion to the more dis­tant coun­tries that used to be at­trac­tive des­ti­na­tion for Ukrainian la­bor mi­grants, such as Italy, Spain and Por­tu­gal.

All this does not can­cel out high un­em­ploy­ment in Ukraine, es­pe­cially for young peo­ple and the coun­try­side. How­ever, the num­ber of such job­less peo­ple has hardly in­creased over the past two-three years. Quite on the con­trary, it stays un­changed or falls as the gen­er­a­tions change and those born dur­ing the de­mo­graphic gap of the late 1990s and early 2000s en­ter the la­bor mar­ket, while the out­num­ber­ing gen­er­a­tion of the 1950s baby boomers leaves it. Mean­while, the de­mand for em­ploy­ees from Ukrainian em­ploy­ers grows, even if the pace varies by in­dus­try, and many com­pa­nies face more prob­lems in find­ing the staff they need for the money they are will­ing to pay.

THE GROWTH OF UKRAINIAN LA­BOR MI­GRA­TION TO THE EU IN THE PAST COU­PLE OF YEARS CAN BE BLAMED ON EAS­IER AC­CESS TO THE EURO­PEAN LA­BOR MAR­KET AND HIGHER SALARIES, NOT THE DE­CLINE IN THE NUM­BER OF JOBS IN UKRAINE.

AN­OTHER FAC­TOR IS THE SHIFT OF MANY LA­BOR MI­GRANTS FROM THE RUS­SIAN MAR­KET TO THE EURO­PEAN ONES

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