Labor migration has reoriented toward the western direction
"The topic of migrants is a serious cause for concern for us, because on the scale we are currently observing, it will undoubtedly affect our potential GDP," warns Serhiy Nikolaychuk, Director of the Monetary Policy and Economic Analysis Department at the National Bank of Ukraine. Ukrainian media write with alarm about the growing emigration from the country. "For Ukraine, emigration is already taking on a dangerous character," points out, for example, the publication "Vesti Ukrainy."
However, as Deutsche Welle notes, some European experts see things differently and conclude that the benefits of mass labor migration of Ukrainians, particularly to Poland and other EU countries, outweigh the harm to Ukraine and its residents.
Salary in Poland is four times higher than in Ukraine
One such expert is Matthias Benz, a correspondent for the Swiss newspaper Neue Zürcher Zeitung on Ukraine and Eastern European countries, and an adjunct professor at the University of Zurich. Unlike most of his Ukrainian interlocutors, he himself concluded that "ultimately, large-scale emigration has obvious advantages for Ukraine, giving people, firms, and the state great opportunities." He presented the results of his research on May 2 at a conference at the Berlin Center for East European and International Studies (ZOiS).
The main reason for emigration is the extremely low standard of living in Ukraine, which is among the poorest countries in Europe. According to data from a group of advisors to the German Ministry of Economics that consults the Ukrainian government, the average salary of Ukrainians last year was about $300. In Poland, for comparison, it was nearly $1,300, in Romania $1,130, and even in neighboring Belarus $465, that is, one and a half times higher than in Ukraine.
Which Ukrainians are leaving and where
No one knows exactly how many Ukrainians have left the country in search of a better life, as they do not deregister from their passport records. Therefore, there are only estimates. For example, Anna Vakhitova, an expert at the Kyiv School of Economics, whose data Matthias Benz cites, gives a figure in the range of two to four million people, that is, from 5 to 10 percent of Ukraine's working-age population.
In recent years, both the structure and geography of Ukrainian labor migration have changed. As Robert Kirchner, deputy head of the aforementioned group of German advisors, said at the ZOiS conference, while previously the main destination for Ukrainians going abroad for work was Russia, now that country has become Poland, where, according to the Polish government itself, there are currently one and a half million Ukrainian migrants. It is said that in Wrocław, 10% of the city's residents are already Ukrainian citizens.
Until 2013, mostly women (67%) and people over 36 (71%) went to Poland. Starting from 2014, there have been more men (58%) and young people aged 18 to 35 (65%). In 2018, Ukrainians working abroad sent home the equivalent of $10.9 billion, which is 8.3% of Ukraine's GDP. In 2019, according to forecasts, this amount will increase to $12.2 billion. At the same time, according to Kirchner, the flow of money from Poland is increasing every year ($1.3 billion in 2015, $2 in 2016, $3.1 in 2017), while from Russia it has become almost three times less than from Poland ($1.8 billion in 2015, $1.4 in 2016, $1.3 in 2017).
Ukrainian migrants in the role of refugees?
Ukrainians are attracted to Poland not only by salary. This country itself experienced years of mass exodus – about two million Poles left for Germany, the United Kingdom, and other EU countries. Now Poland's economy is growing, unemployment here, as in the Czech Republic or Hungary, is at a record low, there is a shortage of labor, and the place of the departed Poles is now taken by Ukrainian labor migrants.
Geographical and mental proximity, the kinship of languages also play a role, as well as, Matthias Benz noted, the fact that the new wave of Ukrainian emigration coincided in time with the migration crisis that erupted in the European Union.
Poland does not want to accept refugees from Arab Muslim countries, Benz pointed out, "but white Christian Slavs are a different matter." Moreover, he added, the Polish government used Ukrainian migrants as an alibi – when Germany and other EU countries began to call on Poland to take on its share of the migrant burden. We, they say, are accepting Ukrainian refugees, Warsaw demurred.
Earn in Poland, spend in Ukraine
Matthias Benz and Robert Kirchner see benefits from mass labor migration of Ukrainians to Poland and other EU countries for several reasons. One of them is the improvement in the standard of living of the migrants themselves and their relatives and friends left at home.
According to Kirchner, the funds received from family members who have gone abroad for work are spent, in particular, on consumption (31.7%), construction or purchase of housing (19.4%), medical treatment (8.7%), and children's education (6.9%). Thus, the expert stated, Ukrainian labor migrants, although they work abroad, still contribute to the growth of domestic consumption in Ukraine, which benefits the national economy.
Another reason or the flip side of the growing shortage of personnel in Ukraine itself is the careful attitude of Ukrainian enterprises towards their employees. The head of the Swiss company Vetropack, which produces glass containers near Kyiv, told a Neue Zürcher Zeitung correspondent that "he has to fight for every employee." The same was told to him at a bank in Lviv.
According to Benz, this situation, firstly, gives those remaining in Ukraine a chance to find decent employment, and secondly, leads to a significant increase in wages – by 25% in 2018, and an estimated further 20% in the current year. “If something is in short supply, its price rises,” he explained. “In this case, wages are rising.” Even if in real terms, that is, adjusted for inflation, this growth turns out to be less rapid. According to Kirchner's calculations, it amounted to 15% in 2018, and this year it will be around 10%.
Impetus for modernization of Ukrainian firms
But perhaps the greatest benefit of mass labor emigration of Ukrainians is the incentive for enterprises in Ukraine itself to increase labor productivity. “The emigration of workers leads to higher wages, and higher wages force firms to increase production efficiency, force innovation, and make automation and digitalization of production processes more profitable,” Benz explained.
In his assessment, the situation in Ukraine, as well as in Poland and the Czech Republic, is completely different from that in Western European countries, where automation and digitalization are viewed rather skeptically, due to fears of eliminating a large number of jobs and, consequently, rising unemployment.
Finally, the vast majority of Ukrainians working abroad have not left forever. According to Anna Vakhitova, about 80% are firmly determined to return. “This is not like in Ireland in the 19th century,” Benz recalled, “when half the country boarded steamships and set off across the ocean.”
Returning after a few years, he believes, Ukrainian labor migrants will bring back invaluable experience, including experience in modern management, which, according to Benz and Kirchner, is what the Ukrainian economy needs most.