Labor market and external labor migrations in Ukraine

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Labor market and external labor migrations in Ukraine

Olena Zelenska, Nataliia Alieshuhina, Yuliia Krasnianska

JEL Classification: J40; J61

Formulation of the problem. Recently, in Ukraine, the active processes of external labor migration have become quite noticeable, which resulted in the loss of our most active, highly educated and highly skilled specialists. A person with its ideas, knowledge and skills is the highest value all over the world among all components of the economy's resource potential. Instead, Ukraine continues to be the supplier of invaluable human capital to highly developed countries of the world, thereby losing the potential of its own growth. Ukrainians are currently creating a product and working for the economic growth and prosperity of other countries, but not their homeland. The reasons of activation of external migratory flows are quite understandable. First of all, these are low wages, lack of non-material stimulation of employees, poor working conditions, severe moral climate in the country as a whole and at workplaces, in particular, a specific system of personnel selection for attractive positions and career growth in Ukraine, etc.

In the context of globalization and integration processes in the global economy, the migration processes are an objective reality. However, the exchange of labor resources with a positive balance of migration, rather than the loss of its own labor potential is a positive phenomenon for the country (which, moreover, suggests the comfort of living in it). Consequently, the domestic labor market requires the reform, modernization and even revision of the conceptual foundations of its functioning in order to solve the painful for Ukraine labor migration problem all the negative consequences of which the country will have to face in the future.

Analysis of recent studies and publications. Evolution and the current state of the Ukrainian labor market and the study of external migratory flows are covered in scientific works by Baryshnikova O. E. [1], Balanovska T. I., Gogulya O. P., Dragneva N. I. [2], Ta- nasienko N. P. [3], Shymchenko L. A. [4] and others. Onikienko V. V. [5], Sidorov V. I. [6], Slobodchuk M. S. [7] and others paid attention to the study of modernization of the labor market in the conditions of globalization and integration of our country's economy. The theoretical basis for the development of effective directions of labor market reform in Ukraine was laid by the scientists of the EU member states, by detailing the ways of modernization in the participant countries of this community. Ritzen Jozef M. M.; Zimmermann Klaus F. [8]; Scarpetta Stefano [9] and others are among these scholars.

Defining previously unsolved aspects of general problem. Despite the considerable number of scientific works, devoted to the study of characteristic features of the Ukrainian labor market development, the identification of urgent problems, the search for solutions to them, the state of the domestic labor market remains unsatisfactory and the flows of external labor migrations even increase. In addition, the deepening of the crisis in political and economic spheres requires a qualitatively new approach to the situation, taking into account all aspects, many of which are not sufficiently highlighted today. Therefore, a further study of this problem, from our point of view, is appropriate and relevant.

The research objective. The article's objective is to study modern labor market trends in Ukraine in the context of individual economic indicators, to compare them with the data of the EU member states, to highlight the problems of external labor migration and to develop practical recommendations for their solution using the experience of the EU member states.

Main material. Beginning from 2014, a clear tendency towards reduction of the share of economically active population can be traced in Ukraine. Thus, the proportion of working population in Ukraine (15-64 years) decreased from 70.5% in 2010 to 68.4 % in 2016. By to the results of the year of 2016, women of working age make up 65.4 % of their total, men - 77.0 %. In urban settlements 72.3 % of the population is economically active, in rural areas - 68.5 % [10; 11]. Such a situation indicates the high level of load factor on the economically active population, which is gradually increasing, that is disastrous for the country in general. Funds provided as a single social contribution are not enough to cover the needs of the Pension Fund of the state, as evidenced by the constant shortage of its financial resources. The critical demographic situation is the main reason for this phenomenon.

In the period of Ukraine's integration into the EU, it is relevant to compare the share of economically active population in our country and in the participant countries of this community. The analysis, carried out using the indicators of the International Labor Organization with a single methodology of calculation, shows that the share of labor force in Ukraine is practically at the level of the average value of the EU member states, which is also related to the demographic characteristics of development of each of them, the birth rate crisis, the far from the optimal gender-age structure, etc. EU countries solve this problem by maximizing the labor productivity of the employed population, minimizing unemployment level and implementing an appropriate socially oriented policy aimed at improving the demographic situation.

In Ukraine, such measures are actually ineffective, which is confirmed by analytical data. Despite the high rates of actual hours worked, labor productivity in Ukraine is much lower than in all EU member states [12], which is related to the low competitiveness of the national economy. But no less important is the situation in the labor market, which is associated with unsatisfactory stimulation of the country's economically active population, first and foremost, material. Wages and salaries are the main sources of population's income in Ukraine. For most people of working age it is actually the only opportunity to meet life's needs. Having sufficient financial resources, citizens actively participate in transactions in the money and capital market, replenish the state budget by taxes and other payments, creating the preconditions for national economy's development.

The minimum wage in our country is much lower if compared to the EU member states. Thus, the value of this indicator in Bulgaria, the country with the lowest minimum wage among the countries of the community, is more than twice as much as the mentioned standard in Ukraine. A similar situation is also observed for the average monthly wage in our country and in the countries of this community [13].

The non-material stimulation of employees in Ukraine also leaves much to be desired According to official data from Nielsen, which conducted a survey on the satisfaction of citizens of different countries with their work, 31 % of Ukrainians are dissatisfied with the working conditions, 43 % - with the balance between working time and rest, 20 % - with the team (one of the reasons of which is an insufficient level of democratization of management) [14].

The main types of non-material labor stimulation used in the professional activity of the respondents include the improvement of working conditions, the image of the enterprise and personal encouragement from the person in command. While the most effective proved to be, in addition to improving working conditions, a balance between working time and rest, a democratic style of management, self-development and career growth. The use of tools for non-material labor stimulation is particularly relevant for Ukraine today, in the period of deepening of the crisis in its economy. Thus, the unsatisfactory state of stimulation of employees is the most important reason for the formation of powerful external flows of labor migration from Ukraine.

Another not less important reason is rather high unemployment rate in the country: according to the ILO methodology, the unemployment rate in Ukraine is 3.2 percentage points (p.p.) more than the average world value and 0.3 p.p. more than the average one among EU member states (28). By the results of the year of 2016, the unemployed population of the working age amounted up to 1677.5 thousand people, which indicates on some stabilization in the labor market after the aggravation of the 2014 economic crisis. In addition, by the results of the year of 2016, 8 % of the average number of employees were in condition of forced part-time employment: 2.1 % were on leave without pay, 5.9 % - due to economic reasons were moved to part-time work [15]. A significant problem was also arrears of wages, which averaged 11 570 UAH per employee.

Unsatisfactory wages, lack of non-material stimulation of employees, unsuccessful job search and wage arrears compel economically active Ukrainians to work illegally or to seek better living conditions abroad.

According to the data of 2016, 15.1 % of the employed were employed informally, among self-employed persons - 74.3 % [15]. Such a phenomenon, besides positive moments, contains negative aspects as for the employee (no work and insurance benefits depending on years of service are accrued, there is no guaranteed leave and hospital payment at the expense of the enterprise, etc.) and for the state as well (shadowing of tax revenues to the budget, "unfair" payment of unemployment benefits, business shadowing, etc.). Most of the informally employed are rural residents, who often have no other way to find work. They are mainly engaged in agriculture, fishing and forestry, whose share in the overall structure of informal employment by types of economic activity is the largest and amounts to 40.8 %. Mainly persons with vocational education, as well as representatives of the simplest professions work illegally (for example, in the construction sector - 15.5 %, wholesale and retail trade, repair of motor vehicles and motorcycles - 20.9 %).

In general, as of June 2012, 1.2 million people worked or were looking for work abroad. The issue of external labor migration of the population in 2014 was particularly acute due to the aggravation of the political and economic situation in Ukraine. According to the UN, only in neighboring to Ukraine countries 388.8 thousand of Ukrainians by August 2015 asked to grant them refugee status. A comprehensive diagnosis of the problem of labor migration of Ukrainians has not been carried out during recent years. Nowadays, one can state the intensification of migration flows of Ukrainian citizens to Poland and other EU member states and the reduction of the share of job search in Russia. Most of the external labor-related migrations are short- and medium-term and a significant proportion of such persons are working abroad illegally [16]. The labor migration of highly skilled citizens who, having no opportunity to realize their potential in the homeland, not getting decent wages, will work for the welfare of another country, while Ukraine will “recruit” foreign specialists for a large amount of money is a special problem for Ukraine. For the purpose of more detailed study of the modern aspects of external labor migration of Chernihiv region population, we have conducted a thematic express poll of 200 respondents. 22 of them (11 %) are currently working abroad. 32 persons (16 %) gave an affirmative answer to the question “Are you planning to work abroad?”, which indicates the tendency to increasing the number of external labor migrants. Those, who planned to work outside Ukraine (32 people), were asked to identify the main reasons for such an intention. The main reasons, as was expected, were low wages (23 persons or 71.875 %) and inadequate working conditions (7 people or 21.875 %). 25 respondents (78,125 %) out of 32 polled are planning to work in the EU member states. The complication of political relations with Russia affected the tendencies of labor migration: only 4 persons (12.5 %) will be probably working in this country. Most of the respondents (23 persons or 71.875 %) are planning to get a job through relatives or acquaintances. Moreover, 29 people (90.625 %) intend to work legally.

A significant proportion of respondents who plan to work abroad has a complete higher education. Such results of the express poll of Chernihiv region population confirm the existence of a common for Ukraine problem - “brain drain”. Despite the good education of the respondents, only 2 persons (6.25 %) are working / planning to work by their specialty, others - at simple, ancillary works. However, the prospect of obtaining the desired wage level, proper working conditions and the possibility of self-realization attracts the Ukrainian economically active population to migrate in search of such prospects. Out of 32 respondents, 84,375% are not planning to return to work in Ukraine.

Conclusions. The comprehensive diagnosis of the labor market in Ukraine has made it possible to identify a number of urgent problems: the negative dynamics of country's economically active population, the growth of load factor on the economically active population, low level of labor productivity, poor material stimulation for employees, ineffective nonmaterial stimulation, higher than normal for a market economy (5-7 %) unemployment rate, forced part-time employment, informal employment, external labor migration, “brain drain” in particular, etc. Ignoring these problems will become an acute obstacle to Ukraine's integration into the EU. In order to reform and modernize the labor market, as well as to prevent the processes of external labor migration, it is advisable to carry out a number of measures: migration economic educate

- implementation of new and improvement of existing plans for the development of national economy in the context of creating new jobs [17]; state support for private initiatives that will facilitate the implementation of such programs;

- creation of a technical, technological and legal basis for the growth of labor productivity;

- the formation of an attractive business climate for the development of small and medium business in Ukraine;

- providing the appropriate level of monetary remuneration;

- creation of a fair remuneration system, taking into account qualification level, productivity, service period, mobility, etc.;

- effective non-material stimulation: the democratization of management (positive for the employee in terms of development of independence, the possibility of demonstration of initiative, acknowledging self-importance; for the leader - as a method of operative solution of issues by specialists with a deep understanding of their nature), balancing work time and rest (taking into account individual physiological and psychological characteristic features of employees), ensuring self-development of the team, improvement of working conditions by taking into account practical recommendations of ergonomics, periodic fixation of employees' own achievements, etc. [12];

- legal liability for informal employment.

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Zelenska Olena - PhD in Economics, Professor of the Department of Finance and Financial and Economic Security, Chernihiv National University of Technology (95 Shevchenka Str., 14035 Chernihiv, Ukraine).

Зеленська Олена Олександрівна - кандидат економічних наук, професор кафедри фінансів і фінансово- економічної безпеки, Чернігівський національний технологічний університет (вул. Шевченка, 95, м. Чернігів, 14035, Україна).

Зеленская Елена Александровна - кандидат экономических наук, профессор кафедры финансов и финансово-экономической безопасности, Черниговский национальный технологический университет (ул. Шевченко, 95, г. Чернигов, 14035, Украина).

Nataliia Alieshuhina - PhD in Economics, Associate Professor, Chernihiv National University of Technology (95 Shevchenka Str., 14035 Chernihiv, Ukraine).

Алєшугіна Наталія Олександрівна - кандидат економічних наук, доцент, Чернігівський національний технологічний університет (вул. Шевченка, 95, м. Чернігів, 14035, Україна).

Алешугина Наталия Александровна - кандидат экономических наук, доцент, Черниговский национальный технологический университет (ул. Шевченко, 95, г. Чернигов, 14035, Украина).

Krasnianska Yuliia - student, Chernihiv National University of Technology (95 Shevchenka Str., 14035 Chernihiv, Ukraine).

Краснянська Юлія Валеріївна - студентка, Чернігівський національний технологічний університет (вул. Шевченка, 95, м. Чернігів, 14035, Україна).

Краснянская Юлия Валерьевна - студентка, Черниговский национальный технологический университет (ул. Шевченко, 95, г. Чернигов, 14035, Украина).

E-mail: krasnyanskaya. yulia@gmail. com

Zelenska, O., Alieshuhina, N., Krasnianska, Yu. (2017). Labor market and external labor migrations in Ukraine. Problems and prospects of economics and management, 4 (12), 76-82.

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