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November 9, 2018 www.intellinews.com I Page 2
Flood of Ukrainians leaving to work
in EU countries reaches its peak
caused by the violent change of government.
The International Monetary Fund (IMF) recently called Ukraine the “poorest country in Europe” – behind even little Moldova – with a gross domestic product per capita in current prices in US dollar terms of $2,964 in 2018, according to October's update of the multinational lender’s World Economic Outlook. That puts Ukraine behind Moldova ($3,226), Belarus ($6,020) and Russia ($10,950).
At the same time Central and Eastern Europe (CEE) is booming and suffering from an acute labour shortage, with jobless rates across the region falling to record lows. The boom CEE has been enjoying for the last four years has reached its peak as countries in the region start to run up against their structural limits, but wages in Po- land, a favourite destination for Ukraine’s Gastar- beiters, are still four times higher than at home.
The trickle turned into a flood after President Petro Poroshenko won a much-desired visa-free travel deal between Ukraine and the European Union (EU) in November 2016. The deal doesn't give Ukrainians the right to work in the EU, but countries like Poland, desperate to fill empty shop floor bench places, quickly put in place special work permit schemes that do grant limited right to work permissions. Millions of Ukrainians left their homeland, although typically most go for an average of three months to make some extra cash before they return home again.
Remittances to Ukraine soared. The National Bank of Ukraine (NBU) calculated that between 2015 and 2017 the expats sent home $7bn in 2015, $7.5bn in 2016 and $9.3bn in 2017. But it seems the growing remittances have now peaked and the
Gastarbeiters are expected to send home around $9bn this year — more or less the same amount as last year.
“The increased wave of migration from Ukraine to Poland, which began in 2014, is slowly beginning to decelerate. This migration is still mainly temporary in nature, and it is difficult to assess
to what extent it may become fully residential. Probably over the passage of time, the current circular migration model will stop attracting
new people. However, Poland remains the main EU country in, which Ukrainians work, because of several competitive advantages: extensive migration networks, a liberal procedure for legalising residence and work (for short periods). In addition, despite the fact that the salaries migrants earn in Poland are small compared
to countries in the west of the EU, the low
living costs allow for regular and relatively high remittances to Ukraine,” Marta Jaroszewicz, an analyst with the Poland-based OSW, said in a report entitled “Migration from Ukraine to Poland: the trend stabilises” released in October.
Empty seats
Emigration is a problem for Ukraine, which badly needs to rebuild its own economy. With the brightest and hardest working members of the workforce overseas, that will hamper the economic recovery that has begun in Ukraine.
It is hard to say exactly how big an impact labour migration will have on Ukraine’s growth or to what extent it is already affecting growth, but the Ukrain- ian economy is already performing under par.
Sergei Nikolaychuk, the director of the NBU’s Department of Monetary Policy and Economic Analysis, said in February that work migration creates problems for the local labour market and is likely to influence GDP for the next few years. He believes that the drop in the workforce due to emigration led to a 5-8% loss in the number of employees in 2017. Previously the government projected a loss of 3-4%, so the correction is significant.