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27 April, 2015

The Thorny Path to Reform

Member of Parliament Yehor Firsov on how reforms can be both painful and comfortable

Recently it seems that all of Ukraine is talking about reforms. This is encouraging. It has finally become clear to the masses that there is no point in delaying the process, and the population has been asking for change. Now it seems like even grannies and babies are aware of the urgent need for transformation.

Yet at the same time I cannot hide the fact that our reforms are moving slowly, because in the old bureaucracy the potential for resistance is huge. We probably all see it. Sabotage is happening practically at all levels, and there is not a single area in which reforms have been successfully implemented. I once thought of Ukrainian MPs as practically omnipotent demigods, but now, being an MP myself, I am sometimes desperate about the lack of authority. The system will not yield.

What are the main causes of failure? The first is a huge problem: the shortage of personnel. I imagine that even entrepreneurs and managers of small companies understand me. Ukraine has a huge shortage of skilled labor. Finding responsible, educated workers can seem like an impossible task—especially when it comes to civil service jobs with miniscule wages. We need to hire and train new young people without prior experience working as civil servants. We should promise them a future worthy of reward and strive to ensure that their salaries actually increase.

RELATED ARTICLE: Economic reforms in Ukraine

But the current system is simply not ready. And this brings us to the second barrier in the way of reform: lack of will.

No one is eager to go the extra mile to teach beginners or to break the usual corrupt mechanisms. As a result, we have a situation where everyone is working on the principle of “better to take the old tried-and-true thief who will not cause trouble and skillfully create an illusion of intense activity than worry about some young workers that will end up being just as bad”. Unfortunately, even our President’s advisors think the same way and are pushing him to take similar steps. Petro Poroshenko is appointing former Party of Regions members as Heads of district administrations as long as they have adapted to his government and shout “Glory to Ukraine!” when needed. 16 former Party of Regions members were recently appointed as Heads of county administrations in Dnipropetrovsk Oblast. This is far too many. With this approach, of course, there can be no reform. It is high time to abolish the unnecessary county administrations themselves. Instead, they are once again being turned into feeders for former members of the Yanukovych regime.

It will be impossible to build a new life with this old staff, no matter how painful and difficult the process.

The only possible way is a radical reduction of state officials and law enforcement officers and the simultaneous increase in wages for those who remain on staff. Middle tier managers should be paid salaries of no less than UAH 30,000. Only then can we expect that corruption will not be as pervasive and people will really go to work for wages rather than bribes. Public service should be prestigious, recruiting the best people from across the country. But how can you recruit the best while offering a salary of UAH 2,000, an equivalent of about USD 80 a month? It is just impossible.

RELATED ARTICLE: Energy reforms and sabotage

An oblast governor currently receives a salary of about UAH 5,000 or ar. USD 200. Who are we kidding? For the sake of saving some money, we generate corruption that costs us billions. Where does the oblast head live? How does he drive to work? How does he pay his assistants, for example? There is no need to listen to populists. Only decent salaries for law enforcement officers and managers can really make a difference. And society should put pressure on the government to make such decisions.

I support the introduction of Georgian-style liberalization. Less laws - more order, as Lao Tzu stated. We are long overdue to put an end to fire inspections, sanitary stations and other remnants of the Soviet era that have long been machines for pumping money from businessmen. But these structures are reluctant to give up their income. That is why we are seeing a push to halt the process of reform or prevent its introduction altogether. How do they sabotage change? It is very simple. We all know that in Ukraine a fraction of bribes and extortion moves up any authority hierarchy, resting in the pockets of those on top of the pyramid. The factions have even increased recently to make it interesting for those who make decisions at the very top. I don’t know if these bribes and extortion are collected from businesspeople or withdrawn from the old “reserves”.

Another factor inhibiting our reforms is fear. The government is afraid of taking tough decisions and losing the remnants of its approval rating, so it avoids taking any unpopular measures. This always makes things only worse, but the Prime Minister hardly hears that. Therefore, the authorities are still not ready to act radically and tend toward palliative measures. And society as a whole is too afraid of sudden change. Thus, in the end everyone is both passive and unsatisfied.

RELATED ARTICLE: Law enforcement reforms

The first priority today is to get business running—to get the maximum number of people working in the private sector and not worrying about the state. But here we appear to lack reforms as well. Conditions have not improved at all for entrepreneurs, who face the same old bureaucracy, red tape, and flawed tax laws. Yet the recipe is already there in the form of the Georgian experience; we don’t need to reinvent the wheel. It’s not necessary to build some new “Palace of Justice”, as Mikheil Saakashvili did to great effect. We could implement a Georgian-style simplified mechanism for the registration of entrepreneurs with our existing buildings, if we only had the will...

The new system for registering private businesses in Tbilisi takes 10 minutes. The procedure differs little from the process of ordering a meal at McDonalds. I am sure that the implementation of this kind of business registration would cause an immediate surge in business for Ukraine. It is no secret that our country really is not as poor as they say. Real incomes do not correspond to declared incomes. Large amounts of cash flow “in the black” - in envelopes from hand to hand. Legalizing all this money is possible, but only if the process of legalization is made as simple as possible: encourage people to formally execute their business and pay a small tax without any problems. Today, grandmothers who sell pastries in the subway, of course, are afraid of any sort of registration because they do not want to pay bribes to inspectors and sanitation agents. As a result, the pastries are sold anyway, the sanitation agents don’t inspect the grandmothers, and our state budget suffers.

Reforms should not only be painful, but comfortable too. Only then will they make any sense.

RELATED ARTICLE: Sociologist Iryna Bekeshkina on public expectations of change and perception of reforms  

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