Kyiv vs Budapest: What`s going on in Ukrainian-Hungarian relations?
The relations between Ukraine and Hungary are a textbook example of the crisis, in which neither party considers actions to be acceptable, while both overestimate their capabilities and underestimate the risks and losses associated with the conflict. For more than a year there are sharp controversies, the trigger for which was the new Law on Education, which was adopted by the Ukrainian parliament on September 5, 2017. The Hungarian reaction, which initially concerned the protection of the rights of the minority and the territory of Ukraine to receive education in the Hungarian language, quickly spread to the questions of Euro-Atlantic integration of Ukraine, citizenship and political cooperation. The conflict has reached a high level, it has acquired signs of scandal and, seems, it has the potential for further deepening. It is precisely to be said that both countries should prepare for a long cooling period and mutual distrust. What's gone wrong? “Collision of Identities” or “Modus vivendi” The relations between Hungary and Ukraine had much better time. Neighbors, united by common issues and challenges in the area of security, geography and history, have long remained friends. Hungary was one of the first to recognize Ukraine's independence, and subsequently became one of the key regional partners. Political cooperation deepened after Hungary joined NATO and the EU, and Ukraine made European and Euro-Atlantic vectors a priority in its foreign policy. However, at some point the situation began to change. Hungarians began to concentrate additional attention on the rights of ethnic minorities in neighboring states; Ukrainians began to develop a national identity against the backdrop of Crimean occupation and armed conflict in the eastern part of the country. In both states, speculation on the historical and national themes began to be used high demand; while in the region of Eastern Europe the right political ideas and forces have intensified. The low level of economic interdependence and trade was due to: the benefits of hostility dominated the existing benefits from cooperation. Hungary as a member of NATO and the EU received additional levers of pressure on Ukraine, which made membership in both organizations a priority of their foreign policy. Even without any “Kremlin hand” there were enough motives for both sides to raising rates. Escalation occurred quickly and predictably. Following the adoption of the Law on Education in new edition by the Verkhovna Rada, which narrowed the right of ethnic minorities to acquire education in their native language, Budapest promised to block Ukraine's further rapprochement with NATO and the EU. A practical step in this direction was the obstruction of the work of the NATO-Ukraine Commission (NUC) at the highest level. Subsequently, the Hungarian government scheduled the appointment of “an authorized minister responsible for the development of Transcarpathia and develop kindergartens in the Carpathian basin”, which provoked strong protests from the official Kyiv. However, the loudest scandal for today was the distribution of Hungarian passports in the Consulate of Hungary in Berehovo, which got on the video. After this incident, which was described by Deputy Minister of Foreign Affairs of Ukraine V. Bondar as “that Hungary behaves like Transcarpathia is its territory”, Ukraine sent out a Hungarian consul, and Hungary replied symmetrically. The distribution of Hungarian passports in Transcarpathia lasts at least since 2011, but it is the peculiarities of the current perception of the parties that exacerbate the situation. Of course, the reactions of both parties are conditioned by the logic of the already existing confrontation, and each step is perceived to be extremely hostile, while the actions and intentions of the other party cause the maximum suspicion. In this atmosphere of mutual distrust, the next crisis moment remains a matter of time. Today, relations between Hungary and Ukraine are in a state of crisis, and in the near future this crisis will deepen rather than be resolved. Budapest reaction was resolute, demonstrative and well thought out to Ukraine's adoption of the new edition of the Law on Education. Ukraine's response to the rhetoric did not slow down, and very quickly the parties came to a standstill of mutual accusations and threats. Can Kyiv and Budapest afford the luxury of a long-lasting conflict in the current geopolitical situation? It looks like they can. You can even benefit from it if you have certain skills. Confrontation with neighbors is a powerful and cheap factor for internal mobilization, which will be pleased to use by Hungarian and Ukrainian politicians who are prone to populism. However, the weakening of the international positions of both states will be a price. For Ukraine, such a relaxation looks more undesirable, as in general, Ukraine's position in the conflict with Hungary seems weaker. We are certainly bigger, but Hungary can effectively use its membership in the EU and NATO as a tool of pressure. If things are going to continue, then further deployment of events can be conventionally called “collision of identities”. It will be less scale than in the clash of civilizations, but in all other parallels will be justified. Identities will be based on symbolic elements, opposition to neighbors, mythologization and heroism of their own history. As a result, it will expand cultural divides, reducing the chances of a future dialogue. Ukrainians and Hungarians are at risk of speaking shortly in different languages - not only in linguistic but also in meaningful terms. To a certain extent, both countries have become hostage to regional processes, in particular the growing influence of nationalism as a political ideology. The region of Eastern Europe was in the center of mood and emotion, inherent in the period of a century ago. Then the collapse of the empires and the emergence of new states provoked the race for identity: the countries of the region created national myths and overcome the severe consequences of the First World War. This then formed new identities in Eastern Europe, mainly by ethnosymbolism with a rate on language, history, and symbols, which eventually led to the boundary between rational civil nationalism in the west and mystical irrational and ethnic nationalism in eastern Europe. Today, the challenge is to find ways to avoid identity collisions and to implement a more optimistic scenario under the so-called “modus vivendi”. Such a scenario would provide for the possibility of coexistence with differences, dialogue from different positions and a joint search for mechanisms to protect each other's interests. Battle of syndromes As it often happens, the situation is complicated by historical factors. Both Ukraine and Hungary have a difficult past, full of dramas and injuries, and the past has a strong influence on the ways of forming and developing national identities and perceptions of relations with neighbors. Briefly, this effect can be called a “battle of syndromes”. In Hungary, this syndrome is called “Trianon”. After losing World War I, Hungary under the terms of the Treaty of Trianon of 1920 lost more than two-thirds of its territory and more than half of the population, and Hungarians ethnic minority with a total of more than three million people found themselves within the borders of neighboring states. Within Hungary, the difficult conditions of peace were perceived as a national tragedy, which greatly contributed to the formation of a revanchist foreign policy between the World Wars. After the end of the Second World War, the territory of Hungary as a whole was preserved within the framework defined by the terms of the Treaty of Trianon. And although the “Trianon syndrome” today should not be compared to what was in the 1920s-1930s, when the state flags dropped to mourn for the signed agreement, but it continues to exist in the public consciousness and, most importantly, used by political forces for easy and quick conquest of public support. Ethnic minorities of Hungarians in neighboring countries - and most of them are 1.5 million minority in Romania - are an important part of the “Trianon syndrome”. In the modern world, where the review of the state borders is an extremely expensive, ineffective, rare and dubious matter for frank and cynical revisionists, the protection of the rights of ethnic minorities becomes the main instrument of ethnocentric politics, a kind of contemporary analogue of irredentist. The concept of “great Hungary” during the period between the World Wars envisaged the gathering of territories; today, instead of it, there is the option of a state policy of active support for national minorities in neighboring states. Ukraine has its own syndromes. They do not have such an obvious historical point of origin, but they are also related to historical memory, the struggle for statehood and the construction of national identity. Perhaps, at the moment, such syndromes as Crimea, Donbas or even Budapest, under the name of a well-known memorandum, are being formed, which in the future will affect Ukrainians' perceptions of history, neighbors and their own destinies in Europe. One way or another, these syndromes affect the decision both within the state and in relation to neighbors. The development of national identity on the basis of ethnosimvolism - with the use of linguistic, religious markers and historical symbols - with the heroization of certain periods of history and rethinking of historical mistakes - poses additional risks of exacerbating relations with neighbors. And if these neighbors also take decisions under the influence of historical memories, then such risks are doubling. What to do? Both countries lose the continuation and exacerbation of the conflict. Ukraine receives absolutely unnecessary problems on its western frontiers and additional brakes in further rapprochement with NATO and the EU. Hungary also runs the risk. The sanctions against Budapest, which are discussed within the EU, are extremely unlikely, but the image of a country lacking European values will not benefit Hungary in the future. At the same time ethnic minorities - Hungarians in Ukraine and Ukrainians in Hungary - instead of the most complete protection of their interests, they receive additional risks. To overcome the logic of confrontation, complex and non-standard decisions are required. Simple formulas, such as “to leave history for historians” from a similar Ukrainian-Polish conflict, will not work. Conflicts of this kind contain too many politics to rely on historians. It is unlikely that the hopes for interdependence will be justified, that is, the common economic interests will prevail over the motives behind the escalation of inter-ethnic confrontation. Hungary's share in Ukraine's foreign trade is about 3%, while Ukraine's share in Hungary's foreign trade is roughly halved. Therefore, the formula for a successful solution should be based on a political component. One of the possible ways could be the creation of a wider regional context. If we realize that Ukraine and Hungary are part of a single region, establishing cooperation and maintaining a common consent in which could significantly expand the capabilities of both countries, then the level of escalation of the conflict can be kept under control. The regional level can open new horizons for both states if they can get out of captivity thinking only by today's categories. In Ukraine, you often hear references to the “Kremlin hand” and the fact that Ukraine's conflicts with its neighbors are in the interests of Moscow. Such an argument is unlikely to be convincing for Budapest: only 6% of Hungarians consider the threat of possible escalation or expansion of the Russian-Ukrainian conflict. It is best to bet on the argument that a bilateral conflict undermines the potential of Hungary and Ukraine itself. It is also important to understand what interests are behind the stated positions of the parties. Sometimes such interests are simple enough, but they are often complex. The fact that the other party aspires, it is better not to guess or speculate, but to know. In the open dialogue on these issues, both Kyiv and Budapest are interested. Expansion of communication, explanation of own motives, timely informing of intentions can strengthen bilateral trust, even in the context of crisis in relations. In addition, understanding the interests of the opponent opens the way for mutual concessions. The discovery of nuances will turn the black-and-white conflict between “good and evil” into a half-tone full picture. This, in turn, will allow you to look at the possibilities of mutual concessions not from the positions of the game with a zero sum, but with the desire to find common solutions. An additional useful step could be something like an informal agreement on the non-use of anti-Hungarian and anti-Ukrainian rhetoric in the internal narratives of both countries. It is obvious that national issues in both countries have become a means of mobilizing the electorate and will remain for a long time. National slogans, historical myths and ethnic symbols are much easier to apply in a political struggle than unpopular and complex reforms. Nevertheless, it makes sense to make national rhetoric as popular as possible. The boundary between patriotism and xenophobia or ethnic hostility must be pursued. Both countries could look for opportunities to implement joint projects in areas of significant interest to them: energy, regional security, ecology, and the fight against transnational threats. If it allows elites to earn more political points than they do with aggressive rhetoric, then there will be a chance to get out of the most likely way to “collision of identities” and implement the “modus vivendi” scenario. The strategic partnership will still be far away, but the crisis phenomena in relations will be much less. Conclusions Conflicts between neighbors on the basis of ethnosimvolism - languages, minority rights, interpretation of history - the phenomenon is dangerous and difficult to regulate. In such conflicts, the logic of “zero - sum games” acts and in the end they often become a game with a negative amount, in which all lose. Both Ukraine and Hungary are losing out of delaying the current crisis. They are losing time, opportunities, image and prospects. Probably, Ukraine loses more, but it is unlikely that it can become a satisfying pleasure in relations between potential partners. Both Kyiv and Budapest have experienced many sad and painful historical lessons that would have suggested that besides the interests of national selfishness, there are also regional security interests as well as an even broader transatlantic context. From overcoming the obstacle to cooperation, you can win much more than you have to pay for them.
Macroeconomic Indicators for Autumn 2018 - ICPS Forecast
The International Center for Policy Studies (ICPS) has prepared another analytical publication “Economic analysis and current trends” for September 2018. It contains a detailed analysis of indicators of the manufacturing sector, prices, financial markets and the forecast for 2018-2020 for the development of the Ukrainian economy. According to the analytical document, the beginning of the autumn 2018 was characterized by the following facts: - the harvest of early cereals decreased significantly compared to the previous year due to the lower level of yield; - the yield of late crops has grown substantially, so that the yield of corn and sunflower should be much higher than in the previous year; - at the beginning of autumn, industrial production declined by 0.5% y/y; - estimate of GDP growth in the second quarter of 2018 increased to 3.8% y/y; In turn, in the forecast part it is stated that: the forecast for economic growth in 2018 remains at 3%; in case of non-receipt of IMF financing, growth rates may be lower; in the baseline scenario, GDP will increase by 2.5% in 2019; The material is available in Ukrainian as well as in English. Contact ICPS for more information, ordering, previewing the release, and getting acquainted with the terms of subscription: e-mail: office@icps.com.ua тел. (044) 253-22-29, (068) 831-94-69
Expert Dialogue: Ukrainian-Hungarian Relations. Webinar 1
The International Centre for Policy Studies, with the support of the International Visegrad Fund launches the project “Ukraine and V4 countries: promoting better understanding”. ICPS experts together with partner organizations such as the Institute of International Relations and Trade (Hungary), the Institute for Economic and Social Reforms (Slovakia) and the Bronislaw Gemerek Foundation (Poland) discussed the issues of Ukrainian-Hungarian relations within the framework of the first webinar. Since 2017, relations between the two countries are in constant aggravation. The trigger for the conflict with Hungary was the adoption of the Law of Ukraine on Education which linguistic article caused a sharp critique of the Hungarian government and subsequently led to the blockade by the official Budapest of a number of initiatives in the Ukraine-NATO relations. Recently, the situation has escalated after the scandal with “Hungarian passports” for residents of Transcarpathia and mutual diplomatic threats between the official Kyiv and Budapest. During the ICPS-initiated online webinar, the experts discussed the causes of misunderstandings between Ukraine and Hungary, the existing differences in the policy of good neighborliness, and also highlighted the possible scenarios for the development of relations between Ukraine and Hungary in the future. Currently, Ukraine's relations with western neighbors are characterized by two important factors - asymmetry and hierarchy. The asymmetrical nature of relations is determined primarily by the fact that the role of the western neighboring countries for Ukraine is much more important than the role of Ukraine for them. And as a result, the price paid by Ukraine for deteriorating relations with its neighbors is much higher than the one that potentially will have to pay to neighboring countries for the crisis in its relations with Ukraine. The hierarchy factor is related to the place and role of the "Ukrainian question" in the internal or foreign policy agenda of the western neighbors. For any of the neighboring countries, Ukrainian problems do not have priority, and soon become an additional component of other more important issues. Meanwhile, the region of the Eastern Europe was captured by regional processes associated with the growth of the nationalism influence. The chain reaction of constructing national identities leads to mutual hostility, historical and linguistic controversy, the struggle for the loyalty of national minorities and other similar processes. As a result, the potential for regional cooperation between countries is decreasing, and the contradictions are only rising. Taking into account the possible undesirable consequences of existing trends, the main purpose of conducting expert discussions with ICPS is to seek common, effective mechanisms for the normalization of relations and good-neighborliness between Ukraine and the member-states of the Visegrad Group. First of all, experts recommend the following steps to be taken towards the implementation of the Neighborhood Policy and the improvement of the relations between Ukraine and Hungary: creating a wider regional context and understanding that the above countries are part of one region, cooperation that could expand opportunities for both countries; an open and honest dialogue on the interests of the different positions of the countries on a given issue; refraining from anti-Ukrainian or anti-Hungarian rhetoric in the internal discourses of both countries; search for opportunities for joint projects in the field of energy, regional security, ecology, combating transnational threats. Execution of such top-priority recommendations will help to reduce the number of crises occurring between Ukraine and Hungary, witnessed by which society continues to be in its second year in a row. The International Center for Policy Studies thoroughly deals with the topic of Ukraine's relations with its European neighbors, with relevant developments available at the following links: What is happening in Ukraine's relations with its western neighbors Ukraine and its neighbors: analysis of regional trends The project also plans expert discussions on relations with other countries of the Visegrad Four. Launching a dialogue at an expert level will foster the development of constructive ideas and solutions and minimize possible challenges for regional cooperation. Project materials: Presentation
ICPS macroeconomic forecast: positive and negative trends in the Ukrainian economy
The International Centre for Policy Studies has prepared another analytical publication “Economic Analysis and Trends” for August 2018. It contains a detailed analysis of indicators of the manufacturing sector, prices, financial markets and the forecast for 2018-2020 on the development of the Ukrainian economy. According to the analytical paper, the second quarter of 2018 was characterized by the following trends: Growth of GDP accelerated to 3.6%. There were higher rates of growth in agriculture (due to early harvesting), energy sector and passenger transport. In July, after two months of zero inflation, deflation occurred. Annual inflation further slowed down to 8.9%. In July, the rapid growth of the hryvnia balance of loans of the population restored. Residues on household hryvnia deposits decreased. The forecast part states that the second half of 2018 will be characterized by the following trends: Negative Decrease in private consumption growth. A moderate devaluation of the hryvnia will occur. The price of gas for the population will rise significantly. Growth in industries, in particular retail and passenger transportation, will be lower. Positive Acceleration in agriculture should occur due to the high expected yield of late crops. The dynamics in the food industry will be improved. The level of inflation will not be much higher than the upper limit of the target corridor (8%), despite the devaluation and the expected increase in gas prices for the population. The document is available in Ukrainian as well as in English. Please contact us for more information, ordering, previewing the release, and getting acquainted with the terms of subscription: e-mail: office@icps.com.ua tel. (044) 253-22-29, (068) 831-94-69
Battle for State Bureau of Investigations
The creation of the State Bureau of Investigations - a new law enforcement body with colossal powers - continues to accompany with permanent scandals from the selection of the Head of Bureau and his deputies and to the refusal of the Director of SBI Roman Truba to external competitive commission in appointing 27 people to leadership positions in the department. This battle will be strengthened in the context of the elections which create reasonable suspicions about political game between the Presidential Administration and various groups of the People`s Front for the control of the Bureau. Only the intensification of international attention and civil society can help to create at least to a certain extent a transparent law-enforcement institution controlled by the society. A new turn of run-in The cornerstone of the new wave of confrontation was the refusal of the Director of SBI Roman Truba to competition commission to consider the issue of appointing 27 people to the leading positions of the department. Truba`s argument was based on the fact that a number of candidates appear in journalistic investigations and criminal proceedings, in particular regarding state betrayal, and legalization of funds obtained by criminal means. Also, the Director of SBI has accused the foreign competition committee of unlawful destruction of the polygraph results which could give him the opportunity to assess moral, professional and personal qualities of candidates recommended by the commission and sign an order for their appointment. With that in mind, Roman Truba returned all the submissions to competition commission, before having obtained an examination of the legality of his actions by the Institute of Legislation of Parliament and Academy of Legal Sciences which, by analyzing the legislation, confirmed the legality of his actions. Instead the competition commission has already decided at the next meeting regarding reapplying of appeal to Truba for the appointment of 27 candidates for leadership positions in SBI and also appeal to the specialized parliamentary committee with a request to analyze the legality of actions both the commission and the Director of SBI in this situation. It is interesting that even before the decision of the competition commission on the recommendation of 27 people to the leadership positions of the SBI the list of “favorites of authorities” was published in media and the lion's share of them was in the final list. Most of them journalists and experts called the protege of the Minister of Internal Affairs Arsen Avakov and the Deputy Head of the National Police of Ukraine Igor Kupranz. This situation caused a negative reaction in surroundings of the anti-corruption public organizations and the Council of Public Control in SBI. Thus, the anti-corruption activists welcomed Truba`s decision on the rejection of these candidates, calling it a strong step, which gives a chance for the likely independence of SBI from authorities. At the same time, the First Deputy Director of SBI Olga Varchenko stated that the actions of the Head of Bureau are illegal because SBI is a collegiate body and decisions should accordingly be taken jointly by director and deputies. She noted that there were no complaints at all up to half of the applicants and they had to be appointed. In addition, according to the law, the commission has no right to transfer the personal data of candidates to anybody and the polygraph data in general is not a ground for refusal to appoint a candidate. That is, the polygraph was only a formal reason not to appoint candidates elected by the commission, but the main motive should be sought somewhere else. Submerged part of the iceberg In order to understand the current situation, it is worth mentioning some important points, about which we wrote in previous releases of IU. First, the election process of the Director of SBI, his First Deputy and Deputy lasted for 1.5 years. The competition commission was created according to the principle: three persons from the president, the government and the parliament. In fact, the commission includes only representatives of the political forces – 5 from the “BPP” and 4 from the “People`s Front”. Secondly, the establishment and election procedure of the SBI leadership indicates the existence of a planned scheme for the provision of external management of this body by appointing a weak leader – representative of one political force (according to media it is “People`s Front”) and the first deputy and deputy of another – “BPP”. At last, “BPP” and “People`s Front” reached an agreement concerning the position of Director on which Roman Truba was appointed according to the recommendations of the NSDC Secretary Oleksandr Turchynov. Olga Varchenko (First Deputy) and Oleksandr Buryak (Deputy), who were previously working at the Kyiv Prosecutor's Office, were elected as Truba`s deputies. Moreover, the long time the establishment of SBI was the question hung in the air and the movement with the appointment of leadership of this body took place after the activation of work of new anti-corruption authorities, because the Bureau can be a good tool to fight against “too self-contained” NACB, having the right to investigate crimes committed by the leadership of both this body and the SAPO. So the current situation became a continuation of the battle of Presidential Administration and various groups of the “People's Front” for the influence on SBI. It seems that in the outlined conflict Truba defends the interests of the NSDC Secretary Oleksandr Turchynov and the MP from “People`s Front” Serhiy Pashynskyi whose proteges were rejected during the competitive selection phase, instead the candidates agreed with Presidential Administration and Minister of Internal Affairs Arsen Avakov have prevailed. The result of such a situation will certainly be the delaying of the start of work of SBI, which has been postponed from September to October. In general, this situation plays into the hands of the heads of the GPO and the Ministry of Internal Affairs, who before the creation of the Bureau retain significant powers in their hands. It is not excluded that the authorities generally decided to block the procedure for starting the work of SBI, because today it has already been possible to find a common ground with the heads of NACB and SAPO. The evidence of this is the “secret” meeting between Artem Sytnyk and President Petro Poroshenko, support from Arsen Avakov and “People`s Front” to the head of SAPO Nazar Holodnytskyi, in particular, during the consideration of his case in the Qualification-Disciplinary Commission of Prosecutors. Although Truba himtself is optimistic and plans to launch SBI in October. For this he decided to appoint, by his order, deputies of territorial units and acting heads of units of the central apparatus, who, according to him, will help to launch the work of the Bureau. The Internal Competition Commission №2 defined 14 winners of the competition for the positions of deputy directors of the territorial departments of SBI. As of September 5, Truba appointed five deputy directors of the territorial departments of SBI. But this is not enough to start the work, because the order to recruit 150 investigators has not been signed yet, and in fact, there is no one to investigate crimes. In addition, the sole appointment of deputies and acting heads of the central apparatus by Truba is questionable from the point of view of the law, which stipulates that such actions must be carried out jointly with his deputies. Roman Truba hopes that in September the Verkhovna Rada will consider a bill that partially solves the issue of appointing candidates for leadership positions and participation of the Director of SBI in this. But given the current political scenarios and the collision of the interests of the main parliamentary players in gaining control over SBI, this bill has practically no chance for adoption, as well as inclusion in the agenda. Thus, it is expected the continuation of the bidding between the main political players, the result of which will determine the future launch of SBI. There is likely to be a political consensus about maximizing delay of the work of this body. The international community and civil society should be more actively involved in the monitoring of the situation with the formation of the “Ukrainian FBI”, since the transformation of this body into another institution of political competition can obliterate all previous achievements, both in reforming law enforcement bodies and fight against corruption.
Ukrainian migration: what our neighbors should expect?
Emigration has become one of the main tendencies and problems of Ukraine in recent times. This phenomenon has become a consequence of domestic difficulties in the country and a lack of faith in the improvement of economic prospects. In addition, Ukrainian migrants are also affecting the neighboring countries, which may lead to asymmetries in their labor markets and to other negative consequences. Therefore, it is necessary to assess the scale of migration of the Ukrainian workforce and the prospects for such a process, both for Ukraine and for the "hosting" countries. Situation analysis According to the latest information from the Ukrainian State Statistics Service, the number of migrant workers reached 1.303 million in 2015-2017. The share of labor migrants in the total population amount is 4.5%. Compared to the years 2010-2012, this indicator has increased by almost 10%. The main countries that "import" our labor force are Poland (38.9%), the Russian Federation (26.3%), Italy (11.3%), the Czech Republic (9.4%). In general, personnel with vocational education (33.9%) and complete secondary education (30.1%) are leaving Ukraine. Only 16.4% of migrants have complete higher education. 26.8% of the total amount of migrants worked according to the qualification; 29.5% worked in other field than the obtained qualification; 36.1% worked at a job that did not require qualification. It is seen that the percentage of low-skilled labor is rather high: the countries "filled" the niche of low-skilled labor with Ukrainian personnel: 41.6% of migrants are employed in the simplest professions. The percentage of employment in other professions is rather low (exception: skilled workers with tools - 25,9%). It should be noted that the Ukrainian State Statistics Service provides data based on a sample survey of the population (households) on labor migration and figures may differ from the actual ones. What are we facing? The increase of labor migration will have the following consequences: For Ukraine For hosting countries Negative consequences: Negative consequences: • labor market asymmetries, a change in the balance of highly skilled and low skilled personnel • "rising price" for the domestic labor market • importing the labor resources from abroad • additional expenses of the country for the education of new specialists • "aging" of the nation • lower production rates in the country • increased competition with the local population • higher probability of rising unemployment • conflicts, cross-cultural misunderstandings may appear • increased risks of illegal migration • local labor force begins to seek for job opportunities in other countries, asymmetries of the market arise Positive consequences: Positive consequences: • increase of money transfers from labor migrants • reduction of unemployment in the domestic market • part of the workforce returns with new knowledge and experience • the inflow of migrants fills unclaimed jobs • migrants do not need to be educated • "imported" labor force accelerates economic development • foreign workers reduce the average market wages • migrants stimulate consumer demand Under conditions of insufficient growth of production and the existence of unemployment, emigration does not create significant threats. Accordingly, the current shortage of personnel in Ukraine due to emigration is still subcritical: • Labor market is “overcrowded” due to insufficient growth of the Ukrainian economy (correspondingly, due to small supply of jobs). • A significant number of migrants are residents of the eastern regions, in particular from the territories of the ATO, to whom the Ukrainian market and state can not provide the necessary employment. • The share of emigrants who have left Ukraine permanently is covered by immigrants. In particular, according to the State Migration Service of Ukraine, 264,732 immigrants are registered by the end of 2017. • Despite the fact that the scale of migration is quite large (even according to the official data), it should be noted that it has a seasonal nature. The share of labor emigrants in the total population is less than 5%. According to the Ukrainian State Statistics Service, the share of migrant workers returning to Ukraine is 43.2%, the share of short-term migrant workers is 48.5% and emigrant workers is 8.3%. At the same time, although money transfers of migrants only partially cover the losses of our economy due to the outflow of labor force, in the current situation, the transfers of migrants even exceed foreign direct investments in dollar equivalent. According to the NBU, the volume of money transfers to Ukraine decreased by 4.4% in 2017, however it still amounted up to almost $2.378 billion. On the other hand, though basically low-skilled labor force leaves Ukraine seasonally, there is also a sufficient share of highly skilled emigrants. This situation worsens the asymmetry of the Ukrainian labor market and is really critical. Accordingly, the current threat to the Ukrainian economy is the outflow of highly skilled employees. In addition, continuation of the process of other kind of personnel leaving will also affect the country's economic security in long term. Even today, there is a shortage of employees in the sectors of Ukraine that are dynamically developing (where the largest number of vacancies is open and where it cannot be filled by appropriate personnel for a long time). Nowadays, Ukraine needs technicians, directors, managers, skilled workers with tool, personnel for equipment and machinery maintenance, operation and control. The largest number of opened vacancies is in the spheres of sales and trade, service, labor specialties and manufacturing. In turn, the outflow of younger generation, the aging of the nation, and the decrease in the number of economically active population (by almost 6%) are weakening the preconditions (resources) for the future rapid economic growth. At the same time, the Ukrainian economy needs to grow more dynamically, taking into account the chosen course of rapprochement with the EU countries. However, the economic gap is only increasing annually. Thus, it is difficult to break the vicious circle of "migration and the lack of economic prospects" and it will be even more difficult to do it in the future. Is there a way out? According to the Ukrainian State Statistics Service, about 40% of employees receive a minimum wage or near to it today (the minimum wage is formally received by 10% of full-time employees). In confirmation, about 46.2% of the total number of households in the country received subsidies for reimbursement of expenses for housing and communal services in 2017 - this is 10.3% more than in 2016. Accordingly, this is a characteristics of the employment situation in Ukraine. This is facilitated both by the personal qualities of individuals, that influence professional achievements, and the established "traditions" among the employers: non-fulfillment / absence of the norms of social corporate responsibility, the desire to save, underpay, earn quickly and the small share of the employee salary in the price of goods / services. Thus, besides basic, it becomes impossible to meet the other needs. Taking the above stated into account, higher wages, especially in the neighboring countries, stimulate the migration of Ukrainian labor resources. Moreover, foreign companies and countries are interested in attracting the external, especially highly skilled, personnel, because they do not spend money on their education. Meanwhile, there will be no major changes in the labor market and migration processes: all the tendencies will remain the same. The rates of personnel outflow from Ukraine will depend on economic (mainly on wages and purchasing power of hryvnia) and non-economic factors (social, cultural, security factors, etc.). The financial conditions of citizens, their needs, the policy of neighboring countries regarding the employment, etc. will be determinative. In other words, in Ukrainian realities, only economic stimulus is capable of keeping personnel on its territory. According to the NBU's commentary, labor migration will grow several years before wages rise to the required level. At the same time, it should be noted that the growth of nominal wages in Ukraine is significantly overtaking the real: its required level will be difficult to achieve in the near future. Given the growing number of Ukrainian migrants and the possibility of increasing the negative consequences not only for Ukraine but also for hosting countries, we should pay attention to the following: • The idea of signing bilateral agreements on labor and migrants has a great potential, taking into account the diversification of opportunities and experience. In addition, it is likely to reduce the number of "uncontrolled" migration and, thus, countries will be "ready" for changes in the labor market and labor flows. • Under today's conditions, taking into account the main directions of Ukrainian budget expenditures, the labor market and its support remain without attention. Therefore, a clear strategy of the state is necessary, including the stimulation and support of economically active population, the creation of targeted programs for country development, business development, provision of specialists and education of the necessary personnel. • Focusing on products with greater added value, further ensuring economic growth and stimulating wage growth in line with economic growth, increasing the share of labor in product prices, further implementation of corporate social responsibility practices, providing white wages, social welfare packages, re-training, etc. In long term, stabilization of the situation and crisis-free development will allow young professionals and labor resources to feel confident in their country and its support that will slow down the outflow of personnel from Ukraine and prevent negative consequences for the neighboring countries. Unfortunately, at the moment there is no effective strategy and cooperation on labor migration. Instead, only the talks are being heard from the Ukrainian side and active preparations for the elections are taking place.
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