Is Ukraine a job destination for foreigners?
The Ukrainian labour market is rather peculiar and the standard analytical tools cannot effectively map it out. However, the State Employment Service of Ukraine stated recently that the number of unemployed slightly decreased from 8.4% (І quarter, 2012) to 8% (І quarter, 2013). The declining trend of 7-7.4% is officially provided as a macroeconomic indicator for 2014 (by the Conclusion of the Cabinet of Ministers in Ukraine to the Budget project № 2769, 10.04.2013). It all sounds rather optimistic compared to the European unemployment rate at about 12% and even up to 26-27% in particular EU Member States.
But what’s the quality of those jobs in Ukraine? 80% of the respondents of the survey, conducted by The Institute of demography and social investigation by the National Academy of Science in Ukraine, declared their wish to move for employment to the other countries because of “unsatisfactory low salary rate” (UAH 3212/month (or app. USD 396) in spring 2013. At the same time, according to the National Bank of Ukraine, the volume of private persons’ bank deposits has grown in the second quarter of 2013 by 6.2% that may prove indirectly that people are saving more. So, what’s the balance between these findings? The essential reason was aired both by the external and internal experts. The volume of the black market economy of Ukraine fluctuates in average from 20% of NDP (by IMF, Nov, 2012) to 32-40% (by I. Akimova, Deputy-head of the Administration of President of Ukraine, Dec, 2012). Taking the labour market as an essential component of any economics it is therefore considerably hidden and operates beyond the official statistics area. Consequently, a declining trend of the number of the officially employed foreigners in Ukraine - from 8684 people in 2009 to 6044 in 2012 (according to the State Employment Service) – may reflect several factors: uncompetitive rate of local salaries and peculiarities of official employment and difficulties of running business in Ukraine.
So, what are the chances for foreigners to find a good job in Ukraine? Searching for an answer, we asked around the HR-practitioners and used data provided by the expat community in Ukraine via www.expatua.com.
To start, let’s separate highly-expertised and ad-hoc professional positions from the low qualified. The driving forces of Ukrainian economics, such as agriculture, FMCG, IT and retail, definitely demonstrate their appetite for hiring new staff. Entering foreign markets and facing severe competition, the companies need to adjust their business processes and standards in line with the international ones. Such employers are considerably interested both in the advanced business management culture carriers and technicians, able to handle the modern technologies and production equipment.
Valery Kushnirenko, Director of Human Resources of ‘PZU’ Insurance Company: "We do hire in Ukraine two categories of employees: TOP managers, board members in the Head Office in Ukraine, and also those professionals who it is hard to find here. We have a very specific sector - insurance and investment. In Ukraine there are no experienced actuaries, and to find a specialist for the position of Chief Actuary – is impossible, so we attract foreigners".
He continues “In the banking sphere, the situation is complicated not only due to the nature of the business itself, but also by the structure in the banks. It is necessary to take into account rules within the organization, rules of the National Bank of Ukraine and the Law "About Banks and Banking Activity". For banks which are part of international groups, it is common thing when 99% of foreigners are in TOP management but there are many nuances in hiring a specialist in the bank: in addition to all the permits it is necessary to obtain approval from the National Bank of Ukraine for the candidate and endorse the candidate by Supervisory Board.”
By Expat Ukraine’s data, IT companies, suffering from lack of the relevant specialists of all kinds, look for among the expats the specialists, as they are aware of European and American business mentality and process standards to handle their foreign clientele: Client Accounts and Service Managers, Sales Managers, Marketing Communications and PR specialists.
"It also should be understood that by attracting foreign professionals, the company first of all "buys" international experience, status, knowledge, innovations, contacts. In addition, expats add to any company a certain uniformity and fairness in the relationships - there is usually no office politics involving family members or friendships taking precedence. There are smooth relations with subordinates and management, etc. " - commented Valery Kushnirenko.
If you are not contracted out before coming to Ukraine and your job qualification is out of the top wanted jobs, it’s rather risky to rely on finding a good job upon arriving here. If speaking a foreign language as native is the only professional advantage, you may aspire for a position of a language teacher at a private language school or try to run your own classes as a private tutor. The expats’ asked around by Expat Ukraine state that it's rather easy to find work in Ukraine as an English teacher, but it's much more difficult to find a school that will legally employ you. Copywriting, proofreading, voicing etc. may be considered as the options of part-time job too. For other business areas, it’s heavily recommended to comprehend Ukrainian or Russian languages as locals have very poor foreign languages skills (especially outside the large cities and touristic destinations: Kyiv, Kharkiv, Lviv, Donetsk…). Another one option is to set up your own enterprise, but it’s out of the topic of this review.
According to the State Employment Service, the leading locations for the foreigners’ legal employment are Kyiv and its area, Trans-Carpathian region (Due to the traditionally strong business rapport with Hungary and Slovakia), Lviv, Donetsk and Rivne.
According to 2012 statistics, by business area, the officially hired non-residents are occupied with:
Retail – 1,624
Construction – 1,308
Processing industry – 1,268
Sport and cultural service areas – 820
Real estate, engineering, business consulting – 759
These figures may not define the situation to the fullest, as the Ukrainian job market is very non-transparent. Whereas top-management and valuable ad-hoc specialists get the official placement contract and relevant social package, the ordinary employees (especially in a private SME) may be put on the job on “cut contract” terms or not contracted officially at all. So-called ‘legal employment optimization’ approach is widely spread in Ukraine as it allows the employers to reduce expenses on their staff salary tax payment (22-30% total).
Registration procedure: rules of the game are changing
Similar to any country experiencing the current financial crisis, Ukraine defends its internal labour market through relevant legislation. Yet all the HR experts, asked around for this survey, say that the Ukrainian system of receiving permits is imperfect and laws and regulations are changing frequently. Most also complained about long periods of time needed to obtain work permits. Though the Resolution of the Cabinet of Ministers of Ukraine No. 437 regarding “Issuance, Extension of the Validity Term and Annulment of Permissions for the Use of Labor of Foreigners and Stateless Persons”, issued in May, 2013, formally simplified the procedure of obtaining a Permit, it left a number of controversial issues that complicates reaching a goal: e.g. nuances for getting medical certificate. (NB The detailed professional expertise on Work permit obtaining procedure, provided by ‘Vasil Kisil & Partners’ Legal Company, may be found by: http://expatua.com/jobs/work-permit#).
The legislation charges an employer to submitting a comprehensive package of documents for obtaining a work permit for its foreign employee. Traditionally the legal department is involved into the process of preparing and collecting the necessary documents to take into account and comply with all the nuances of a foreigner who will have received an education that does not match those in Ukraine… To match all the legal requirements successfully some companies resort to the help of intermediaries – and that requires extra payments. Additional expenses on hiring a foreigner therefore make the employer think twice before considering an expat. A Work Permit is charged at UAH 4588 (2013) and the services providers’ fee fluctuates from UAH 1500-4000 Time and money input is expected to be indemnified with the employee’s loyalty and high work results. But is this worth it?
In addition to the traditional “relocation allowance” an employer also has to meet the expenses of rent, insurance (which can differ depending on the terms of the contract), car rental, mobile phone, compensation of flights home (the number of flights is discussed separately), family relocation, school for children.
All the mentioned factors should be taken into consideration while calculating the total amount of an expatriate allowance, since we are talking about providing relocation. Although the middle-level managers’ income is usually the same in comparison with the one of the Ukrainian colleagues, the payment of housing, “relocation allowance”, etc. makes the total expenses on these specialists higher. In case of top management the basic salary is also much larger than that of the domestic experts.
The approximate salary range per month for the contracted-out non-residents in Ukraine are as follows:
Top-management: USD 10,000 – 15,000 (+ bonuses and a compensation package)
Middle-management: USD 5,000 - 8,000
Line management (e.g. teachers in a language school – in average USD 25 for 90 min).
Note: the salary range varies from one business sector to another. Ad-hoc high-qualified professionals are remunerated by the top rate, especially in the leading fields of economics.
Welcome on board
“Today people are more ready to change, thus relocation for many is a positive and desirable experience” - mentioned an expert, from a local marketing company who wished to remain incognito. In large companies an HR specialist or administrative manager is usually responsible for a newcomer’s adaptation. In case of employment in an SME, an employee may have to rely on local colleagues’ advice.
Regardless of the expat role the importance is the performance of the team in which the new employee is going to work. Many companies have a practice of tutoring: a person is assigned for the “newbie” and helps to integrate them into new environment and to get direction in different issues in Ukraine. Such a function of cooperation usually attracts employees, as they see an opportunity to communicate with a foreigner and to get acquainted with another culture. HR departments also publish various information brochures with useful and necessary contacts to improve socialization and adaptation of their expatriates. In some companies the opportunity to learn Ukrainian or Russian languages is also provided.
The review was produced by www.Expatua.com and ‘Alla Konyaeva & Partners’ HR consulting company.