Two recent articles in Open Democracy report responses from Ukrainian trade unions to the “Lugano Declaration”, which came out of a conference between high Western and Ukrainian officials in Switzerland last week and sets out plans for economic reconstruction “after the war is over” by the Ukrainian Oligarchy* and its major imperial sponsors; the U.S., UK and EU.
This exposes the way that Ukrainian Oligarchs are ruthlessly using the war to entrench their position against the working class.
Natalia Zemlyanska, head of Ukraine’s Union of Manufacturers and Entrepreneurs commented,
No representatives from Ukrainian trade unions, nor our social partners from the employers’ side, were invited to help develop the reconstruction plan.
Thus, Ukrainian unions are not considered by their ruling class to be a significantly valuable part of their nation to deserve any voice in discussions about helping shape its future economy. This is not new. As Zemlanskya noted, the principle of social dialogue
died in Ukraine long before the Russian invasion.
Its worth bearing in mind what the pre war baseline they are “reconstructing” was. Overall, Ukraine was a country in structural crisis and decline. In 2019 the population was down 10 million from the level of 1993, declining at about half a million a year. Its GDP was lower than it was in 1989, with an aging population despite a low life expectancy of just 71.76 years (67 for men) and the shortest healthy life expectancy in Europe. Unemployment was consistently around 9%. It was 88th out of 189 countries on the Human Development Index–well below Russian and Belarus, just below China, Ecuador and Azerbaijan; and just above the Dominican Republic, Saint Lucia and Tunisia.
The reconstruction planned at Lugano will entrench these trends by consolidating the liberalisation of labour legislation that has accelerated since the Maidan events in 2014–which has now been entrenched by emergency wartime regulations–to further squeeze the space for trade unions to operate, to give employers a free hand,and remove state oversight of the labour market.
This has been supported by countries like the UK for some years. Alongside the military training delivered since 2014, in 2021 the UK Foreign, Commonwealth and Development Office funded a propaganda project to make labour deregulation popularly acceptable; in a clear demonstration of what making “development” subordinate to foreign policy imperatives looks like.
This highlights something that at first sight looks paradoxical. While seeking EU membership, Ukraine is moving sharply away from EU labour standards. In October 2020, eighteen months before the Russian invasion, the joint report of the Ukrainian unions and the European TUC , noted that obligations to enshrine “international labour norms in law and in practice, ensure freedom of association and collective bargaining in particular, strengthen social dialogue and capacities of social partners, and gradually align its legislation with the EU Acquis in the field of employment, remuneration, social policies and equal opportunities” were just not being done. As they noted, “no reasonable progress has been achieved“.
Now that the EU powers like Germany and France, which previously might have aimed for a modus operandi with Russia, both militarily and economically, have been brought to heel by the U.S. and will be paying the economic price both for increased arms expenditure and being forcibly weaned off relatively cheap Russian energy supplies, negotiations on labour standards with Ukraine could well be used by neo liberal forces in the EU to leverage a weakening of its own current levels as an unaffordable luxury in straightened times–in an odd mirror image of the downward pressure exerted by the UKs trajectory of a post Brexit race to the bottom.
Before the war, wage levels were already among the lowest in Europe, with one quarter of the population receiving an income lower than the actual living wage, fuelling a persistent and massive exodus of younger workers in a search of better pay in the EU, particularly in the neighbouring countries, and avoiding being conscripted to fight in the Donbass at the same time.
It has got worse since. Employers are now able to suspend employment contracts: so employees do not receive wages, but are still considered employed. And this is being widely used. By 1 April, roughly five million citizens had applied for income loss benefits–16 times more than the 308,000 registered number of unemployed at the end of May.
This gives carte blanche for ‘shadow employers’ who do not employ people officially. The state now no longer monitors wage debts–a long term problem in Ukraine.
In response to the war Parliament has further suspended parts of workplace protections and collective agreements, put forward legislation to take employees of small and medium-sized enterprises–70% of Ukraine’s workforce –outside of the scope of current labour legislation and given employers the right to terminate employment contracts at will.
Wages fell by an average of 10% in May, compared to the pre-war period. Wages in raw material extraction, security and manual labour have almost halved.
Future Faking?
Right now, under the impact of the war, six million people, mostly women, have left the country. In Europe, many of them are now living in countries where wages are higher, laws are largely obeyed, and housing and Nurseries are affordable. Their return en masse gets less likely the longer the war goes on, and, after the end of martial law, which forbids men under the age of 60 from leaving the country, many who can will leave the country to join them. A long war will create tensions on this front too.
In the immediate term the state wants to develop microbusinesses to relaunch the economy: which amounts to lending to micro-entrepreneurs or training people in IT skills. This will be hampered by the destruction of
Ukraine’s infrastructure, low purchasing power and general instability which present small businesses with enormous problems in setting up supply chains or finding customers.
The Lugano Declaration rests heavily on ‘A Blueprint for the Reconstruction of Ukraine’, published by a group of international economists in April, which aims to:
- Introduce more flexible employment contracts and eliminate labour legislation that precludes the development of liberal economic policy;
- Provide government subsidies for foreign companies;
- Large-scale privatisation, including Ukraine’s biggest banks;
- Priority credit support for export sector;
- Use of low-skilled and labour-intensive public works to fix infrastructure;
- Establish a technocratic agency that will distribute international aid.
The kind of future society envisaged here is quite clear.
And this is beginning to generate tensions. As Vitaliy Dudin notes,
Ukrainians were ready to endure any difficulties in the immediate aftermath of the Russian invasion. But as the tide of the war has changed, not everyone thinks the current situation–where business has advantages over workers–is fair.
The extent to which this finds expression remains to be seen. This is a very important perception. “As the tide of the war has changed”. A spirit of unquestioning national unity might be viable in the immediate shock of an invasion, or when it looked, briefly, as though the Russian withdrawal from Kyiv might be the prelude for a general victory for Ukraine in the short term. But, the longer the war drags on, and the more Russia advances, the more the class contradiction on the Ukrainian side is likely to find expression.
Dudin’s argument that an alternative based on state investment to create secure, sustainable jobs, with popular engagement and trade union involvement, skills training, proper state scrutiny and regulation of employer practice because, as he puts it post-war Ukrainian society needs integration, and that will be ensured by the development of state-owned and cooperative enterprises that do not make profits to the detriment of society and environment, and this requires policies of redistribution through taxation and the confiscation of surplus wealth from Ukraine’s richest people runs counter the interests of those running the state–who are precisely “Ukraine’s richest people”–and contrary to the kind of society they are fighting the war for; in alliance with the most predatory imperialisms on the planet.
Achieving a programme like Dudin’s won’t be done with the Oligarchs in power, nor with NATO backing them. Zemlanskaya’s argument that “The most important thing is to win–and then to see in what form Ukraine has ended the war, and what the future will look like,” is declaring a class truce while the war lasts–a truce that is not being respected by the ruling class. It also begs two questions
- Is the neo liberal dystopia the Oligarchs and NATO have in mind worth fighting and dying for?
- When and in what circumstances will the war be over, and what interest do the working class in Ukraine have in the circumstances in which that happens? The U.S., UK and the gung ho wing of NATO are for fuelling it for as long as possible, years not months; and are quite insouciant what might be left of Ukraine at the end of it. They are pre-emptively opposing diplomatic negotiations.
This is also a question for the international labour movement, being hit increasingly hard by the economic blowback from the war itself and, more severely, the sanctions the U.S. has imposed to pursue it by other means. None of us has an interest in this war continuing.
Arguing against negotiations on the grounds that this would “reward” Russia should bear in mind the consequences for all concerned if the war continues. And that peace on the Russian terms–Crimea and Donbass not part of nationalist Ukraine, Ukraine not in NATO, Mutual Security arrangement (or even long drawn out negotiations around them)–would be better than a resolution on NATO’s terms–forcible reconquest of Crimea and Donbass, Ukraine fully integrated into a triumphant and triumphalist NATO with rapidly increasing military budgets, readying its new 300,000 strong strike force for interventions further east against countries they would consider ripe for plucking.
*Ukraine, we should note, had more politicians named in the Pandora Papers than any other country; 38, twice as many as Russia’s 19. President Zelensky was one of them.