Ukraine needs to revise its labor laws and redouble efforts to privatize thousands of companies to fix its economy, its president’s economic advisor has said.
Alexander Rodnyansky, an adviser to President Volodymyr Zelenskyy, said the war-torn country needs to speed up its industrial reform efforts as it seeks to rebuild after being invaded by Russia.
Rodnyansky told the Guardian that the Ukrainian government must “lay the foundations for rapid economic growth” while funding the conflict.
Ukraine faces a debt crisis and inflation in excess of 20% as the country bears the cost of the Russian offensive.
Rodnyansky, who is also an economics professor at Cambridge University, said: “Getting more foreign aid is the easiest way to fund the war”; However, efforts have been made to cut spending, collect taxes and issue debt to fund his efforts.
He said Zelenskyy and his top team are also examining priorities for rebuilding the economy, including progressive efforts launched before the war to overhaul 50-year-old labor regulations. “We have major problems with our Labor Code, developed in the 1970s, which needs to be revised.
“We will try to emulate a more liberal approach like Denmark with a flexible labor market because we have to catch up.”
Rodnyansky said there were “peculiarities of our post-Soviet system” that fueled bureaucracy. “If you want to let someone go on vacation, you have to deal with four pages of bureaucracy.
“There are also more conventional things to reform: ease of hiring, ease of firing, severance pay, flexible hours and contracts, and fixed-term contracts.”
Unions have expressed concerns over workers’ rights amid the Ukraine government’s labor liberalization, which included a vote in favor of legalizing zero-hour contracts earlier this year.
Rodnyansky said he was also in favor of reviewing minimum wages, with a view to abolishing them in some industries where it doesn’t increase employment. “We have to make sure it’s not too high because our economy is collapsing and we have to make sure that doesn’t lead to an increase in unemployment,” he said.
A group of leading economists said last month Ukraine’s government must overhaul its tax and spending policies or risk an economic crisis that could “cripple its ability to sustain the war effort.”
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Rodnyansky called on Western nations to expand sanctions imposed on Russian companies and individuals and to sell their assets to fund Ukraine’s reconstruction. “The UK has done a lot but it hasn’t been exhaustive,” he said.
The government of Ukraine, the European Commission and the World Bank have estimated the cost of rebuilding and restoring Ukraine to nearly $350 billion (£310 billion) and counting.
Rodnyansky was promoted to chief economic adviser earlier this year after two years in government. His father is a film producer who helped Zelenskiy become a household name as an actor.
Russian attacks on Ukrainian power plants, including the Zaporizhzhia nuclear site in south-eastern Ukraine, have raised nuclear safety concerns.
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