In the shadow of war, Ukraine slashes workers’ rights to welcome transnational capital

The Ukrainian and Russian models for wartime development mirror one another in refusing workers’ rights

Ukrainian authorities claim that maximum freedom for business and a minimum state is a universal way to prosperity – and have just deprived a large group of workers of basic security guaranteed by the Labour code. And while many states are supporting Ukraine in the war, nobody is going to tell Kyiv leaders to give up their liberalisation plans. In fact, European and international business is celebrating.

Vladimir Mitev: Welcome to Cross-border Talks. 

At the end of May, we published an article which gained a lot of attention about the intentions of the Ukrainian state to modify the labor legislation in the sense of taking out rights from the workers. And now these intentions have finally been put into practice and we are having Malgorzata Kulbaczewska from Katowice to comment on those issues. What is your take on the introduction of this law, Malgorzata? What does it show about the current situation of Ukrainian society and plans for reconstruction?

Malgorzata Kulbaczewska-Figat: Well, hello, everybody. I would be very happy to say that the bill 5371 was dropped. Like many Ukrainian workers, the Ukrainian trade unions had hoped until the last moment for a better resolution. But unfortunately, this is not the case. 

The bill that was only a project by the end of May when we published our analysis has been voted on. That happened on 18-19 July 2022. So a couple of days ago, Ukrainian workers employed in enterprises that have less than 250 personnel basically lost the guarantees that the Labor Code offered to them. According to the new bill, the employer and the employee are to negotiate the work contract between each other. Each worker is going to negotiate his working conditions with the employer. The trade unions have nothing to do here. The trade unions cannot even defend their members from being fired. And the employer can suggest basically everything in this work contract. As I said, for the small and medium enterprises with less than 250 workers, the provisions written in Ukrainian labor law simply will not work. 

Well, according to the Dmytro Hetmantsev, who is the head of the Finance Committee in Ukraine’s Verkhovna Rada or the Ukrainian parliament, this is a positive change because the state is not needed when employers and employees negotiate the working conditions, as he put it, the state should not intercede in these free market regulations in this free market negotiations. The problem, however, is that the employees or the working class have always been in a weaker position in the labor market, for those are employers who look for people to work, who have capital, while the workers are looking for somebody who buys their physical work from them and who gives them an opportunity to gain money for living. So the position of workers will always be weaker. And if the workers are not allowed for collective negotiations, or if the state does not give them basic guarantees, then this position becomes desperately weak. 

And let us remember, we are talking about a war torn country, about a country which now has 7 million of refugees, I mean, refugees inside their own country, people had to leave their place of residence before 24 February. And even more Ukrainians are now abroad. So we are talking about a place where people are struggling for survival and now most of them are deprived of the very basic guarantees that the labor law gave them so they can lose jobs easily. They can be exposed to employer’s demands and they can be threatened with loss of a job if they don’t fit into these new demands. 

And let me just remind that this is not the first change in the Labor Code, not the first change in the Labor legislation which is very vehemently anti worker for over during the war. The Verkhovna Rada has already passed a bill that allowed the employers not to pay for some time just to suspend the work contracts. So, not to fire people, but not to pay them either. And they also introduced zero hour contracts, zero hour contracts that are being fought against by trade unions in Western Europe are now appearing in Ukraine as a good advancement that will help to get economic growth, which is nonsense. This is just one more measure that weakens the position of working people.

Ukraine is a candidate for EU membership and it has to undergo a recovery, economic recovery and reconstruction following this war which is taking place. How is that going to take place in the near future, bearing in mind that such policies are being applied.

Well, the Ukrainian government made it quite clear with Yuliya Sviridenko of the Ministry of Economy article in Ukrainska Pravda, one of the leading Ukrainian newspapers and news portals who published a text on the 8 July explaining what kind of economy will be rebuilt in Ukraine. Basically, it is a scary read for people from Eastern Europe. It is scary for everybody who lived in any post socialist country under the transition or who knows from his or her family experience how traumatic the transition was. So Mrs. Sviridenko is suggesting that only full economic liberalization and the minimum state can guarantee economic progress. She says that we must lower taxes, we must liberalise the economy, we must give the business maximum freedom so that the national product grows and the state perhaps will be able to afford basic social services. 

This is a recipe for economic growth that was sold to Poles, Bulgarians, Romanians, everybody in Eastern Europe after the fall of the Soviet Union. And well, you can ask anybody in this part of the world if really the result was an economic miracle, it was not. Our countries were turned into a reservoir of cheap workforce, into a place where factories from the West are relocated because there is an obedient and desperate workforce waiting here for any kind of jobs and everything seems that this road will be repeated by Ukraine, and this road is also actively advised to Ukraine by Western based think tanks and the organizations that have connections to Western neoliberal economic advisers. 

I could just say that the bill 5371, so the bill that we discussed in the first part of this talk was actively advocated by the Office of Simple Solutions, which is a think tank once headed by Mikhail Saakashvili, which is openly neo liberal. And these solutions were advocated by them a couple of years before the war. At that time, however, it was obvious to the Ukrainian government that people would go to the streets as weak as the Ukrainian trade unions are, they would anyway mobilize to defend workers rights. So it was impossible even to try passing that legislation. Now with the war, everything is of course, different. 

Everybody is focused on survival and defense of the country, physical defense of Ukraine. So it becomes easier for the Ukraine government to introduce ultra liberal measures. I would say that, again, measures that did not work in any country of Eastern Europe when they were introduced at the beginning of the nineties. 

 Now Ukraine is now positioned as a candidate for the European Union. Unfortunately, in the European Union, there is nobody. There is no force that will stop Ukraine from going into this neoliberal way. It is like everybody in the West was rather happy. I mean, capital in the West was happy that a new field of investment, a new field of workers exploitation and a new field of easy profits is opening up. And as the European Union has a neoliberal face, it is not stopping Ukraine from going into this disastrous road or even worse, as I mentioned, that the neoliberal Western advisor suggests that only a total liberalisation will bring economic growth. Let me just give one more quotation from Mrs. Sviridenko’s article. Let me just find the place. She suggests that Ukraine after the war, would be a free steppe. A free steppe for business where the businessmen will be authorized to do everything that does not deprive others of freedom or that does not pose a danger to a society as a whole. So everything else would be basically allowed for a businessman. Well, in a country where there are millions of desperate workers, people fighting to get any job, people who have no stability. This can only bring more exploitation to people who are already experienced by the transition period and by the corrupt and kleptocratic economy of Ukraine.

So finally, what are your comments about the fact that Ukraine seems to be opening a lot to the international capital while Russia does exactly the opposite? Russia also has a similar advancement of capital, but it’s the national capital which is advanced there.

We basically can see two models of modern capitalism and each one is destructive for the working people. For Russia’s businessmen, Russia’s oligarchs, people who profited from the transition after the fall of the Soviet Union are basically those people who took the wealth produced by Soviet workers in the previous decades for themselves. Those are people who profited from the disastrous transition period, and now they are securing the wealth, the influence over the state for themselves. They are not allowing the multinationals to take the profit from them. Even before the war, they were feeling that the possibilities to exploit, to be parasites in the country, are getting smaller and smaller with time. So they are securing their own monopoly over the country so that nobody else profits from these privatizations they took part in the nineties. 

Ukraine is going the opposite way. It’s opening up the arena for foreign investment. Ukraine is actually actively inviting foreign investment and will do nothing to make them secure decent work conditions. The capital is put clearly as more important than working citizens of Ukraine. Also, the war somehow helped to create these  favorable conditions for business. Many Ukrainian oligarchs who also profited from privatization of the nineties are now losing their property. They are now losing the industrial giants in the east of Ukraine that are being destroyed by the Russian army. The case of privately-owned Azovstal is perhaps the most blatant example. 

Well, so it seems that while Russia is going towards national capitalism, exploiting the workers, Ukraine is heading towards multinational capitalism and also exploiting the workers. So it seems that neither way is actually giving guarantees to working people. And working people are left to struggle for survival.

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