Employers moved to cut costs with layoffs and shortened workweeks as the country struggled to deal with the aftershoks of the global credit crunch compounded by homegrown economic woes
Employers moved to cut costs with layoffs and shortened workweeks as the country struggled to deal with the aftershocks of the global credit crunch compounded by homegrown economic woes.
While Kyiv officials awaited the receipt of a $16.5 billion lifeline from the International Monetary Fund, the country’s workers braced for at least a six-month recession and growing unemployment.
With record declines in global demand and prices for steel, production at the country’s metallurgy factories have grinded toward a halt. The national economy is not expected to come out of its slump until the latter half of 2009.
Last week, the Minister of Labor and Social Policy Ludmila Denisova warned that unemployment among the 12-million-strong workforce could rise to 7.7 percent by the end of 2008.
The State Statistics Committee reported 6.2 percent unemployment for the first half of 2008.
Denisova said that workers in the export-oriented metallurgy and chemical industries are likely the first to be hit by layoffs. She added that demand for labor will remain at current levels in the construction and agricultural sectors.
Ukraine’s three major ferroalloy producers in Nikopol, Stakhaniv and Zaporizhya announced plans to suspend production. The country’s largest steel factory, owned by world giant ArcelorMittal, saw its mills in Ukraine sharply cut production.
Other factories have sent tens of thousands of blue-collar workers on paid and unpaid vacations, pending production rebounds.
The AutoKraz truck manufacturer based in Poltava oblast shortened the work week by one day and announced that it will lay off more than 500 of its 6,800 employees. Locomotive manufacturer Luhanskteplovoz said it is considering shortening the work week for its 7,000 employees from 5 days to 3.
Tougher times lie ahead, according to trade union leaders. The largest fall in industrial output will occur in February and March of next year, warned Mykhailo Volynets, head of the Confederation of Independent Trade Unions (CITU).
“The state must prepare for this,” Volynets told RBC news agency on Nov. 4.
Layoffs have not been limited to blue-collar workers.
Oranta, Ukraine’s largest insurance company, announced plans to lay off over 1,000 employees nationwide. Prior to the IMF talks, experts and media forecasted that financial service employees would be direct victims of the global financial turmoil.
Civil servants will also be hit. On Nov. 4 President Victor Yushchenko’s office announced that one-quarter of his staff will have to look for new work.
Real estate developer XXI Century is cutting its staff by 30 percent. Deputy Kyiv mayor Ludmila Denysiuk said 100,000 blue-collar workers have lost their jobs due to a slowdown in construction within the capital.
“If this continues, [we expect to have] 1 million unemployed people in Kyiv,” said Denysiuk in a Nov. 4 interview on Radio Liberty.
Denisova said that nationwide, 82,000 workers have seen their work weeks cut, while 25,000 have been forced to take unpaid vacations. The total number of unemployed currently stands at 1.4 million, Denisova said.
The Labor ministry also reported that the sum of unpaid wages grew by 22 percent month-on-month in September, totaling nearly Hr 850 million. And more than 290,000 laborers were not paid their wages in September – up by more than 100,000 the previous month.
According to the government’s forecasts, the country is expected to come out of recession in the latter half of next year.
“We need investments in the Ukrainian economy in the form of targeted state programs. In this way we will not simply pay people high wages but will also raise the Ukrainian economy’s ability to compete and avoid inflation,” said Myroslav Yakibchuk, the head of the National Forum of Trade Unions.
He said that with $16.5 billion from the IMF to support the hryvnia, the government should allocate budgetary funds towards the creation of new jobs, the UNIAN news agency reported.
