Over the past decade, Lviv has become one of Ukraine’s greatest economic success stories, an achievement attributed to the city strategy adopted in 2008. Now, city planners are looking into the future, and developing a new strategy focused on human creativity.
Despite official statistics showing a reduction in Lviv’s population by 500 people since 2015, to 757,900 people in 2017, migration to the city is in fact increasing every year, according to Andriy Moskalenko, Lviv’s deputy mayor for development issues.
The 2008 plan was developed by Lviv’s city government in partnership with Monitor Group (now owned by Deloitte) and focused on developing the information technology and tourism industries.
“Ten years ago, we realized that the city would have to compete in the fields of information technology, science, outsourcing and tourism – these were the areas where we could create new jobs and open up new industries,” said Moskalenko.
“There was a lot of resistance” in the beginning, says Alexander Kobarev, the director of Lviv City Institute, a policy planning group controlled by Lviv City Council.
In 2008, Lviv had just 3,000 IT workers, and around 400,000 tourists annually – and not all policymakers wanted to strategize around what were then two relatively minor sectors of the economy.
Despite opposition, Monitor Group’s transformative recommendations were adopted. The plan worked.
Today, Lviv has 30,000 IT workers and 2.5 million tourist visits every year, according to Moskalenko. Every visitor brings $400 to the local economy on average. About 15 different professions are involved in the plan, and as these areas of the economy grow, new jobs are created.
Currently, Lviv city administration has several projects to stimulate the IT sector. For example, there is a special program to provide a free area for housing construction for IT specialists.
“We’re showing IT workers that we want them to be in Lviv. We’re also working on a new city strategy for the next 5-10 years, which focuses on the creative industries – education, culture, technology,” said Moskalenko.
In addition, the city plans to start this year to support young scientists and startups through a system of grants of Hr 25,000 (or just under $1,000).
The planners next identified other strengths and how to build on them.
“Our greatest resource is our creativity,” says Kobzarev.
Tourism is one of the areas where Lviv’s creativity really shines and was a big inspiration for the new strategy.
As Kobzarev points out, the most popular restaurants in Lviv “don’t just sell food, they sell impressions.”
Lviv’s unusual restaurant scene is hugely popular with tourists, and includes a craft brewery with a live brass band, an anti-Soviet partisan themed bunker, a secret “masonic” bar, the medieval-themed First Lviv Grill Restaurant of Meat and Justice, and even an S&M themed bar, Masoch, where staff whips customers on request.
But there’s more to being a creative city than having an interesting restaurant industry. The key is to attract creative individuals and make sure it’s easy for them to participate in civic life.
On the entrepreneurial side of this equation, Lviv IT Cluster works on bringing IT talent to the city, and coordinates its activities with the city council.
Stepan Veselovsky, the CEO of Lviv IT Cluster, talks with journalists as he presents a model of a real estate project, IT Park, at a tech conference in Lviv in June 2017. (Courtesy) (Solopchuk)
“We have very good synergy,” says Lviv IT Cluster CEO Stepan Veselovskyi. Veselovskyi worked for the City Institute prior to joining Lviv IT Cluster.
Veselovskyi describes himself as an “evangelist” for Lviv.
The word is apt, because while he engages in a range of activities, most have the same aim of promoting Lviv. The IT Cluster projects have largely been successful, and the number of programmers in Lviv is growing steadily.
In fact, the influx of IT workers has been so great that the city’s infrastructure can’t support them all. So in June, the ground was broken at the city’s IT Innovation Park. The project has garnered $150 million in investment and will create a massive new area for Lviv’s programmers to live and work, including 95,000 square meters of office space and even a kindergarten. Already, 60 percent of the offices have been rented.
Veselovskyi hopes to see Lviv continue to attract new types of creative, high-skilled professionals, both from Ukraine and abroad. Ukraine’s relatively low tax rate makes it a very attractive destination for freelancers, many of whom could base themselves in Lviv.
Education is another possible boom area, both in IT and in healthcare. Lviv’s universities could attract international students, especially from Asia, because of their high quality and relatively low cost.
Quality of place
Urban planning experts refer to the characteristics that make a city a desirable place to live as “quality of place.”
This term refers not to the city’s economic output or the number of available jobs, but rather to what the daily experience of living there is like. A city with a high quality of place attracts talented workers who contribute to the city’s development.
So the quality of place is a prerequisite for growth, and not just a consequence of it. According to Gallup, the qualities most attractive to creative people are openness (a welcoming atmosphere), social offerings (places to meet, and a spirit of community), and aesthetics (natural beauty, including parks and green spaces).
At issue is not just the number of creative people in a city, but that they live and work in proximity to each other and have a sense of community. Open spaces contribute to this, as they provide meeting areas, as does making the city bike-friendly and easy to get around. Lviv is currently working on improving both of these aspects. In addition, the City Institute sponsors sustainable incubators, where entrepreneurs can gather and exchange ideas.
Lviv is improving its quality of place, but there is still work to be done. Polling data from the Rating Sociological Group shows that over 27 percent of Lviv Oblast’s population would move abroad if they had the chance.
Those who have already worked abroad can see the areas where the city falls short. Alexander Skakunov, an IT developer and the founder of the online education platform Zero 2 Hero, lived in Denmark from 2012-2016 years before settling in Lviv.
He moved back to Ukraine with his wife and two kids as he found the quality of life in Lviv satisfactory.
“It’s really close to Europe, it’s really cheap to live here… it will develop by itself because it has all it needs,” Skakunov said.
Plus, you are always a stranger abroad, he adds. “You haven’t watched their cartoons; you don’t know their culture. You’re studying it actively, but you’re still a foreigner there,” he added.
According to Skakunov, Lviv’s unreliable public transportation impacts livability, as do the city’s constant traffic jams, lack of disability access, and sometimes depressing architecture left over from the Soviet period.
Despite that, on balance, Skakunov is optimistic about Lviv. In fact, he feels Lviv is so attractive that he is not certain that a specific strategy to bring people to the city is
needed any longer.
Other former residents are returning too. Valeria Glotova, an English teacher from Creative International School for Children, returned to Lviv in 2016. She went to Brazil in 2010 and worked as an English teacher in a language school.
“I stayed much longer (than planned), worked in several language schools, traveled across Latin America. In principle, I had everything for a comfortable life, but homesickness
tortured me and I finally decided to return,” said Glotova.
The disruption to business caused by Russia’s war on Ukraine in the Donbas has started to subside, including at ELEKS, one of the top 10 IT software engineering and consulting services firms in Ukraine.
“I think it was an issue, especially when the war started in 2014,” said Andriy Krupa, chief compliance officer at ELEKS.
“A lot of people didn’t know what to expect. A lot of companies had business continuity plans, moving the core of their teams abroad. But we’ve seen people coming back now.”
Krupa says that quality of life for IT people in Ukraine is actually quite good.
“The IT community kind of lives in its own shell,” he said. “They still have income nominated basically in foreign currency, so all of the fluctuations, the economic situation doesn’t burden the IT community that much in general.”
Only about 2 percent of those who work in the industry are leaving to work abroad now, Krupa estimates. According to him, IT businesses in Ukraine are now starting to compete against each other for the best-qualified staff, rather than competing with companies abroad.
They now have to work out “how to keep best people, and offer them whatever they want,” he said.
“The opposite is happening now – we’re getting people from IBM or ABB now who went to work for IBM in Poland in 2014.”
