Many Ukrainians are working abroad, and while the Ukrainian government wants to change that, they have not been very successful in the past.
Ukraine’s population has shrunk by 28 percent since the collapse of the Soviet Union, where millions of Ukrainians have left the country to pursue a better life abroad. Some sources say that up to 100,000 Ukrainians are leaving every month – some temporarily and some for more extended periods, and many send money back home to their family.
The World Bank estimates that 10.3 percent of the Ukrainian GDP comes from remittances from its citizens working abroad. While it, on one side, benefits the Ukrainian economy, it is also an issue for the development of the country, which the country’s politicians have talked about for years. In 2017, former deputy prime minister Gennady Zubko called migration “one of the greatest threats facing Ukraine,” and most Ukrainians see emigration as a threat to the country’s future.
Oleksii Lyubchenko, the current economy minister in Ukraine, recently said that he also sees emigration as a problem for Ukraine, according to UBN.
“We are leaders in Europe in terms of the number of able-bodied people working abroad… We must replace the phrase ‘I want to leave’ with ‘I want to return,” Lyubchenko said and pointed out that the adult population in Ukraine can be divided into three parts.
Around 11 million people are officially employed in Ukraine, about 11 million are paid cash in hand unofficially, and another 11 million are on state support such as a pension. Lyubchenko said that something had to be done to make sure that they pay taxes, but also to make sure that more people stay and work in Ukraine so that the welfare system works.
“One person cannot work for two,” he said.
It has been tried before
The question is how to get Ukrainians to stay in Ukraine. Lyubchenko is far from the first Ukrainian politician to express concern about the problem, and he will not be the first one trying to solve it. Moreover, Ukraine is the biggest recipient of remittances in Eastern Europe and among the poorest countries in Europe, making it favorable to work abroad.
Years back, the government introduced a five-percent tax for freelance workers in the IT sector, proving successful in keeping Ukrainian IT workers in Ukraine. However, the tax is much lower than the standard 18 percent, and while it has been successful, critics say that the tax is way too low and not sustainable for other sectors.
When Covid shook the world in early 2020, Ukrainian President Volodymyr Zelensky and Prime Minister Denys Shmyhal said it was an opportunity for Ukraine to keep returning workers at home and developing the economy. They introduced cheap loans, among other things, hoping that it could convince workers to stay in Ukraine and open a business.
“We want to try to leave people in Ukraine, and we will do our best for this. There is a lot of work in Ukraine, too,” Shmygal said back then, according to Censor.net.
However, as borders reopened again, many Ukrainian workers again returned to work abroad, showing that Covid-19 wasn’t enough to keep them inside the country.
Ella Libanova, an expert at the Institute for Demography and Social Studies in Kyiv, previously told NBC News that around 3 million Ukrainians are working abroad at all times.
“The people leaving are mostly working age, making the loss especially poignant. It’s the age when people are at their professional peak, and also when they have children,” she said.
Something can be done
Some experts have pointed out that there is no quick fix to the problem and that Ukraine needs to fight corruption, attract investments and increase living conditions to keep Ukrainian workers in Ukraine. Anton Waschuk is the economic leadership program coordinator at Western NIS Enterprise Fund. Together with Andriy Kamenetskyy, who is an Account Executive for Ukraine at Microsoft, he has tried to look at the problems in Ukraine.
In Atlantic Council, they previously wrote about the problem of brain drain from Ukraine. They wrote that the “failure by government and business to recognize and invest in people as Ukraine’s biggest economic driver is leading to an ongoing high-skilled migrant crisis.”
They wrote that other countries in Europe are setting up several recruitment initiatives to attract workers from other countries such as Ukraine.
“To remain competitive with its neighbors, Ukraine must follow suit and allocate funds within its national investment agencies such as UkraineInvest or the National Investment Council to replicate the success of these programs. Ukraine has an opportunity to target Central and Eastern European entrepreneurs and tech companies who are looking to set up satellite offices. Ukraine’s proximity allows for regional entrepreneurs to maximize business efficiency and reduce costs without sacrificing on time-shifts, cultural differences, easy communication, and cost-effective travel. This could attract new investment while at the same time helping to retain highly skilled IT talent which currently departs in droves,” writes Waschuk and Kamenetskyy.
They argued that should take steps to help career development among Ukrainians but that the private sector has a role. Companies need to make sure to have development programs to keep employees motivated and loyal.
“Ukraine’s future offers the promise of economic growth, but the speed and efficacy of this growth is only as good as the highly skilled talent driving it. The current Ukrainian administration and those that follow must address this long-term challenge. They must foster cross-collaboration between international donors, the private sector, and national institutions. Refocusing strategy on retaining, growing, and attracting Ukraine’s highly skilled talent will always pay far higher dividends than the current inbound remittances sent home,” they write.