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21 January, 2013  ▪  Margarita Ormotsadze

Difficult Times for White Collar Workers

In 2013, the Ukrainian workforce expects redundancies, while enterprises are preparing for the large scale optimization of personnel

Olesya Hirska, an analyst at one of Kyiv’s holdings, together with three other colleagues from her department, was made redundant in early December 2012, following a three-month delay in salary payment. The redundancy came about as a result of the optimization of expenses. She never did receive most of her back-pay. This is just one of thousands of instances of the large-scale personnel “cleaning” process at Ukrainian enterprises, begun towards the end of 2012. According to data compiled by the State Statistics Committee, demand for employees at Ukrainian companies fell by 10% in October 2012, compared to October 2011 and more than two-fold since the “black” October of 2008. Experts forecast that these trends will intensify. However, in their view, some companies could deliberately disguise their true need for workers, in order not to attract the attention of tax authorities.

Global trends testify to the deep recession in the Ukrainian economy, which will last at least until the third quarter of 2013. Changes on the domestic labour market are not always in line with the situation that has emerged in the entrepreneurial environment. “The fluctuation in unemployment levels is not really connected to the actual fluctuations of business processes. Companies often prefer to formally maintain employees, working reduced hours, etc,” confirms Oleksandr Zholud, an analyst at the International Centre for Policy Studies. However, he feels that because of pessimistic economic forecasts, employers will be forced to continue optimization.

Employees also feel the negative trends: 23% of the people surveyed by the hh.ua international career portal are convinced that there will be relatively insignificant redundancies at their enterprises in 2013. The same percentage of respondents expects mass lay-offs. Olena Hryshchuk, Director of the Forsazh recruitment agency, feels that there is no point in counting on the dynamic development of new projects and thus an increase in vacancies, bearing in mind the absence of foreign investment and the overall economy of companies in 2013. Currently, we are only seeing isolated cases of business expansion, accompanied by an increase in vacancies in these spheres,” states Ms. Hryshchuk. Clearly, the companies this pertains to, belong to pro-oligarchic and pro-government structures. The rest will have to tighten their belts.

CONCENTRATION OF FEUDALISM

According to official data, unemployment in Ukraine is at a level of 399,000, of which 243,000 are women. However, the figures cited by experts are somewhat different – nearly 2mn. The differences in statistics are explained by the fact that most employees find themselves in a “grey” zone – on forced vacations or not registered at job centres. A further million people are working a two-three day week and four hour work schedules on the request of employers. The government estimates that the shadow employment market numbers 4.7mn or 23% of all able-bodied citizens. Enterprises are ever-more often transferring people from legal positions, to employment without any documentary agreements. It is characteristic that in Latin American countries, qualified specialists “strike” against the black labour market, rejecting enterprises which do not offer an official employment contract. Ukrainians, on the other hand, have even learned to be pleased to be hired illegally: they feel that by not paying taxes in full, they are creating problems for the government.

Formally, in Ukraine, the government takes care of global employment market issues. Already in the autumn of 2012, it approved a comprehensive employment program covering the period until 2017. Its declaration includes: “the expansion of opportunities for the realization of the right of citizens to worthy employment, increasing their income by means of creating conditions for increasing the employment level of the population, encouraging employers to create new jobs, the maintenance and development of labour potential, etc”. The document provides for state facilitation in the development of priority sectors of the economy: the mining industry, energy, the chemical industry, oil refining, transportation and communications, etc. In other words, nearly all the major directions of government oversight pertain to the sphere which is under the influence of the local oligarchy, which merely strengthens society’s feudal status.

IT technology, the representatives of which are constantly in demand on the labour market, is possibly the only branch that is not under the influence of the oligarchy. However, the most highly qualified IT specialists prefer to execute orders for foreign companies at home, or actually move to more developed countries. Herman Ovcharko, Director of the Superjob.ua portal feels that “programmers, sales specialists and pharmacists will have no need to worry about getting a job in 2013”. Accountants can also remain optimistic, since demand for these specialists is of primary importance to business under any conditions.

SALARY “SEESAWS”

In 2013, even the representatives of “deficit” professions are not likely to aspire to a significant earnings increase. The most optimistic forecast regarding salary growth is provided by the international HayGroup. Its calculations were conducted on the basis of an analysis of the actual salaries at Ukrainian companies. It has concluded that in 2013, employee salaries will increase by 10%, which exceeds the expectations of any European country. In the Eurozone, average salary increases are expected at a level of 3.3%. Other experts anticipate a fairly restrained salary growth rate, since enterprises have already passed maximum salary possibilities. More specifically, by tasking specialists with the responsibilities generally conducted by several employees, which was traditionally accompanied with increased salaries. But this limit has almost reached its maximum value for the current economic situation. “Realistically, 2012 salaries increased by 13–14% in comparison to 2011. Part of the reason for this was its increase in the budget sphere on the eve of the election. But because of this, in view of the economic situation, we will already see a significant decline in salary increases at enterprises as early as in 2013”, – notes Oleksandr Zholud.

However, white collar workers prefer not to notice unfavourable trends and, as if living in a parallel reality, continue to wait for increased incomes. The above-mentioned unemployed Olesya Hirska feels that she will find a good job with a better salary next year.  Her expectations are not the exception: according to a hh.ua portal survey, 27% of Ukrainians are counting on increased salaries in 2013, while 38% feel that at the very least, salary levels will not decrease. However, there are no realistic reasons for positive forecasts among specialists in most spheres, and such hopes can only be explained by people’s irrational optimism.

In any case, it is clear today, that all the intentions of the Ukrainian government regarding the “improvement” of conditions on the labour market are mere declarations, while enterprises are gradually losing the capability to ensure a due salary level. The level of competitiveness among companies themselves, in view of the total monopolization of all spheres of the economy, is in decline. In such realities, it is futile to count on worthy employment based on professional qualities – corrupt ones take precedence, and for the most part, at pro-oligarchic monopolies. Under conditions of the deepening of such trends, Ukraine risks reliving yet another large-scale migration of specialists abroad. The consequence of this will be a critical decline in the efficiency of society.

A VICIOUS CIRCLE

Ukraine's labour market is suffering a mismatch of edu­cation and jobs. According to official statistics, almost 3.5mn people with higher education work as technical staff. This is first and foremost the result of the gap in the numbers of university and vocational school gradu­ates. The former are too many while the latter are too few, as people try to get a university degree just for the sake of it en masse. The lack of specialists with voca­tional training generates great demand for blue-collar workers, hence numerous blue-collar job offers. This mismatch is typical both for Ukraine and many Euro­pean countries. Those who are reluctant to work as technical staff go to seek a job abroad, yet mostly get jobs that do not meet their degree.


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