Экономические науки/ 5.Управление трудовыми ресурсами

К.ф.н. Савицкая Л.В., Харечко Ю.

Харьковский национальный экономический университет

THE UNEMPLOYMENT PROBLEM IN UKRAINE AND WAYS OVERCOMING

Important area of government regulation in terms of socio-economic development is employment. It is one of the basic vital needs and characteristics of social welfare and well-being of society. Today Ukrainian labor market is only formed as an important development and implementation of employment policy, where the key target of Ukrainian society is to reduce unemployment among young people.

Young professionals are the pride of any developed country, the rate of economic growth and stability. But nowadays due to the difficult economic situation, young professionals cannot find a job and it leads to disbelief in decent future. That's why the chosen topic seems to us relevant.

The unemployment problem is discovered both Ukrainian and foreign scientists. Among them: L. Valneva, S. Elkin, A. Sen, D. Goddess, A. Grishnova, N. Nyzhnyk, Terence G. and others.

The aim of this publication is to outline the causes and extension of unemployment problem in Ukraine, disclosure unemployment consequences and identify methods overcoming in current economic conditions.

This phenomenon characterizes macroeconomic instability. It has a cyclical nature, the policy of any state aimed at addressing this urgent problem today. However, no matter how tactful would be the actions of states to reduce unemployment, none of them can’t confidently declare that their citizens can easily find the work that will bring maximum profit raise the status of man and make it financially independent. In coming years, according to experts from the International Labor Organization the unemployment rate is 10% and not possible to eliminate it completely.

Verkhovna Rada of Ukraine adopted two basic laws, in 1991 "On Employment" and in 2000 "On compulsory state social insurance against unemployment", to guarantee the unemployed rights. They form the legal base for solving the unemployed social protection problems, providing unemployed with some financial and other assistance, as well as creating work conditions [1].

According to Article 2 of the Law of Ukraine "On compulsory social insurance against unemployment", unemployed are recognized as able-bodied citizens of working age, who, because lack of work, have no earnings or other legal income. They are registered at state employed centre as job seekers ready and able to take up a suitable job. Disable people are also recognized as unemployed, if they have not reached retirement age and are not registered as job seekers [2].

According to International Labor Organization (ILO) unemployed are people aged 15-70 years registered and unregistered at state employed centre. They have to correspond the following conditions:

1) They were searching for a job or trying to organize their own business for the

past 4 weeks preceding the survey;

2) They didn’t have any job (any income);

3) They are ready to start the job in two weeks [3].

To understand the essence of unemployment phenomenon, it is important to consider theories about its causes and ways overcoming. According to classical theory, unemployment is not a serious economic problem because its cause is very high wages in a free market and it cannot be for a long time. Nowadays the most common theory is Keynesian theory. According to this theory the cause of unemployment is insufficient aggregate demand for goods. Representatives suggest contacting the government, because government incentive to stimulate effective aggregate demand is the best way overcoming this phenomenon. Therefore, the simple method of fighting is labor market self-regulation, e.g. wage reduction to economic equilibrium.

Tables 1 and 2 indicate the level of unemployment in Ukraine in 2011[4].

TABLE 1. Registered unemployment rate in Ukraine in 2011
(average for the period, in % to the economically active population

according to age group)

	Total	Including age groups, years						People in working age
		15-24	25-29	30-39	40-49	50-59	60-70
The entire population	7.9	18.6	9.2	7.3	6.4	5.1	0.1	8.6
Women	6.8	18.7	8.2	6.1	5.7	4.2	0.1	7.8
Men	8.8	18.6	9.9	8.4	7.0	6.0	0.0	9.2
Urban population	8.0	20.2	9.2	7.3	6.2	5.2	0.1	8.6
Rural population	7.5	16.1	9.1	7.3	6.7	5.0	0.0	8.5

Having analyzed this table, we noted that the highest rate is among men. It is 8.8% to the quantity of economically active people. The urban population is 8.0%, the rural - 7 5%. The lowest unemployment rate recorded among women. It is 6.8%.

Table 2 indicates the dynamics of registered unemployed quantity in 2011. The calculation is made by the State Statistics Committee of Ukraine [4].

TABLE 2. Registered unemployment in Ukraine in 2011

Months	Quantity of registered unemployed at the end of the reporting period			The average amount of unemployed benefits per month, UAH
	Thousands of people		In % to working age population
	Total	People who get unemployed benefits
January	585.6	447.9	2.1	814
February	616.7	466.3	2.2	826
March	613.6	456.4	2.2	810
April	579.9	421.6	2.1	815
May	549.2	406.1	2.0	817
June	506.1	371.2	1.8	838
July	469.5	341.5	1.7	854
August	432.4	310.3	1.6	878
September	404.5	281.1	1.5	885
October	378.9	268.3	1.4	906
November	413.1	298.4	1.5	845
December	482.8	365.3	1.8	879

Having analyzed this table, we noted that the largest quantity of unemployed was in February (616,700 people) and the lowest – in October (378,900 people).

The main components of the labor market is SUPN demand, characterized as the total demand of employers in workforce, and total proposals which cover the whole hired workforce. The demand for the workforce is determined by the quantity and quality of jobs existed in the economy, functioned and needed filling. The supply at the labor market is formed by the quantity of unemployed workers [1].

Table 3 indicates supply and demand data of workforce in Ukraine in 2011.

Table 3. Supply and demand of workforce in Ukraine in 2011

Months	Quantity of registered unemployed at state employment centers, in thousands	The enterprise needs for workers to occupy empty working places and vacancies, in thousand	The load for 10 empty working places (vacancies), persons
January	610.3	68.5	89
February	635.6	72.9	87
March	633.2	92.3	69
April	597.3	89.5	67
May	565.9	95.0	60
June	516.0	90.5	57
July	484.3	89.0	54
August	448.3	93.2	48
September	420.0	87.3	48
October	397.6	82.1	48
November	439.5	73.2	60
December	501.4	59.3	84

According to the table ratio, we can make the conclusion that workforce supply exceeded the demand. This is due to the unstable situation in Ukraine.

On the 1^st of January 2011 610.300 unemployed were registered at state employment centers. This figure is lower compared with the data in February, during which 635.600 people were registered at state employment centers. The lowest ratio was in October 397.600 people. The enterprise needs for workers to occupy empty working places and vacancies ratio was the highest in May 95.000 people, and the lowest in December 59.300 people [4].

On the 1^st of June 2010 434.700 unemployed were registered at state employment centers, among them 243.800 young people, 46.000 redundant workers and 88.700 people not able to compete on equal rights at the labor market. 419.400 had unemployed status. 156.600 people lived in rural areas, 262.800 – in cities. This information was provided by the State Employment Center of Ukraine [4].

Having compared the unemployment rates in 2010 and 2011, we can note that in 2011 this figure has grown greatly. There were 516.000 unemployed registered at state employment centers on the 1^st of June 2011.

Unemployment is more than economic disaster, because, first of all, it’s social disaster. Depression caused by this phenomenon leads to inactivity, which leads to tension in society, drop of certain morality, loss of one’s skills and self-confidence, family disintegration and even suicide. History convinces us that mass unemployment leads to very rapid social and political changes (for example, getting power by Adolf Hitler). That’s why each state is trying to introduce certain reforms that would help to reduce the unemployment rate to save itself and society from social shocks.

Let’s consider the following consequences of unemployment:

1) The emergence of unemployment means open underutilization of workforce as factor of production;

2) Unemployment is always a phenomenon that leads to total or partial loss of skills;

3) The increase of unemployment is always accompanied with disruption of psychological health of the nation;

4) Unemployment causes less cash income for domestic economy; as a result, it reduces consumer’s demand;

5) The state does not receive full-size taxes.

As we can see these are negative effects of unemployment. But there are also positive one, including:

1) Unemployed, who are ready to join the working process any time, perform stabilizing function of reserve labor army;

2) Availability of production capacity is typical for the modern market economy;

3) In the period of temporary unemployment an opportunity to organize retraining of a certain part of workforce or move it to another region of the country appears;

4) Unemployment acts as a factor that helps to improve labor discipline in society without any huge expenses.

Anyways, state needs to create certain conditions and to take urgent measures which help to create new job places and restore domestic production to avoid all the negative effects of such phenomena as unemployment.

We believe that the following measures will be effective to exceed unemployment in Ukraine:

1) Create new jobs, save existing in the same quantity by reducing tax fees for enterprises in order to stop the reduction and dismissal of personnel.

2) Increase the number of special state employment centers, where everyone will be able to take some courses or training, learn about prospective professions and activities, consult with experts on proper usage of their working capacity and skills and so on. It is known that in 2010 specialists with high qualifications, executives, and economists, doctors, accountants, lawyers with the appropriate experience were in demand [5]. According to State Employment Centers data in 2010, 1.958.700 unemployed (among them 50.8% were women, and young people aged up to 35 - 45%) got career guidance services. Career guidance services were provided in about 80% of schools. Under the Law of Ukraine "On Amending Certain Laws of Ukraine to mitigate the impact of the global financial crisis on employment" it was carried out to assist in partial unemployment. This assistance was provided to 23 enterprises. It helped to preserve the employment of 12.500 employees. Expenses were almost 11 million [6].

3) Create an effective system of employment, which will be based on a scientific understanding of legal relations that arise in this area, because Ukrainian citizens have to find those jobs, where they will get decent salary, comfortable and safe working conditions.

4) Create the policy that would stimulate demand for labor.

5) Make economic incentives for youth employment. Create certain firms for young people only. Pay benefits for young people primary employment.

6) Legalize the shadow economy to stop labor outflow.

7) Provide state businesses loans for enterprise expansion and modernization in order to correspond to current market needs.

Growing crises in the national economy of Ukraine has recently resulted in reduction of employment opportunities. In general, Ukrainian labor market reaction to the global financial crisis shows signs deeper and more durable fundamental contradictions which were formed in employment branch during years of independence. The global crisis has only exacerbated factors imbalances in the labor market, which include professional and imbalances in demand and supply of workforce, incomplete usage of workforce, consistently high level of unproductive informal employment, and discrepancy industry structure of employment to needs of innovative economic development [7].

Unemployment is a phenomenon that shows some economic deviation as for involuntary unemployment of working age population. According to American economist I.Ouken, unemployment generates a situation where the labor market does not want to absorb those able to work and those who want to work. In his view, the labor market is imbalance between supply and demand.

Such categories as employment and unemployment take important place in labor market analysis. There are many types of unemployment, but they are all combined into three types: frictional, cyclical and structural. In developed countries, unemployment is the result of high rates of scientific and technological progress growth.

Such economic category as unemployment is one of the biggest socio-economic problem as its high index leads to society moral decay and, consequently, crime level increase. People begin to make unexpected things that eventually lead to dire consequences.

The state has to develop specific measures to fight with such phenomenon, as well as to accept certain laws that would help to reduce social tension in Ukraine.

In our opinion, the ways overcoming unemployment mentioned in the article will help the state to reduce unemployment by increasing jobs, assist youth, increase the number of state employment centers and others. Using such measures, Ukraine can make social protection of population and restore people's desire for continuous self-improvement and self-realization.

REFERENCES

1. Banyk O.B. The problem of unemployment in Ukraine and ways of its solution // Bulletin of the National University. – Lviv: "Lviv Polytechnic". – 2010. –№ 691. – P. 293-298. 2. Law of Ukraine [electronic resource] – Access mode: http://zakon2.rada.gov.ua 3. The problem of unemployment [electronic resource] – Access mode: http://www.refine.org.ua 4.The State Statistics Committee of Ukraine [electronic resource] – Access mode: http://www.ukrstat.gov.ua 5. Measures of social protection of unemployed in January-May 2010 // State Employment center: labor and wages. – 2010. – № 23 – P. 5. 6. Halytskyy V. State protection in case of unemployment // Labor and wages. – 2010. – № 23. – P. 4-5. 7. Lech G.A. Ways overcoming unemployment // Scientific Bulletin NLTU. –2010. – № 20…3. – P. 300-305.