Zero-hours contracts are set to be legalised and 70 per cent of the workforce exempted from workplace protections.
The Ukrainian parliament has passed two new radical measures on labour liberalisation, prompting fears of Ukrainians losing workplace rights permanently as Russia’s war puts huge pressure on the country’s economy. In two laws passed on Monday and Tuesday, MPs voted to legalise zero-hours contracts and made moves towards removing up to 70 per cent of the country’s workforce from protections guaranteed by national labour law.
The latter measure means the national labour code no longer applies to employees of small and medium enterprises; instead, it is proposed that each worker strikes an individual labour agreement with their employer. It also removes the legal authority of trade unions to veto workplace dismissals. Draft law 5371 had previously been criticised by the International Labor Organization, as well as Ukrainian and European trade unions, on the basis that it could ‘infringe international labour standards’.
Ukraine’s ruling Servant of the People party argued that the ‘extreme over-regulation of employment contradicts the principles of market self-regulation [and] modern personnel management’. Red tape in Ukraine’s human-resources laws, it suggested, ‘creates bureaucratic barriers both for the self-realisation of employees and for raising the competitiveness of employers’.
The Federation of Trade Unions of Ukraine will now ask the president, Volodymyr Zelenskyy, to veto draft law 5371 when it goes to him for signature. But it will not make the same request over the proposed law on zero-hours contracts, the Ukrainian MP Vadym Ivchenko told openDemocracy.
Nataliia Lomonosova, an analyst at the Ukrainian think tank Cedos, warned that the two laws could see an already difficult socio-economic situation for Ukrainians suffering from Russia’s military campaign further deteriorate. According to the latest numbers from the United Nations refugee agency, Russia’s invasion has led to at least seven million people becoming displaced inside Ukraine itself, which has been compounded by a severe economic crisis hitting families and individuals hard. At the same time, the World Bank has predicted that Ukraine’s economy will contract by 45 per cent this year.
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Lomonosova argued that Ukrainians had little choice or bargaining power when it came to employers: the number of available vacancies was vastly disproportionate to the number of people now looking for work in the country. ‘People right now have no bargaining power and trade unions cannot protect them,’ she said. She feared that, as a result of the displacement, ‘many people will find themselves in the situation of Ukrainian migrant workers’ while in their own country—with little choice but to accept poor conditions and to be ever more dependent on their employers.
‘Window of opportunity’
A leading member of Zelenskyy’s party promised further liberalisation of Ukraine’s labour legislation earlier this month. ‘These are draft laws that business is waiting for, draft laws that will protect the interests of all entrepreneurs. And workers, too, by the way,’ the MP Danylo Hetmantsev wrote.
‘A worker should be able to regulate his relationship with an employer himself. Without the state,’ said Hetmantsev, who is head of the Ukrainian parliament’s finance committee. ‘This is what happens in a state if it’s free, European and market-oriented. Otherwise, the country will be travelling with one leg on an express train to the EU, and with another inside a Soviet-era train going in the other direction.’
The Ukrainian labour lawyer George Sandul previously told openDemocracy that MPs had used Russia’s invasion of the country as a ‘window of opportunity’ in which to try to push through drastic changes to labour legislation. Lomonosova agreed, arguing that deregulation and the stripping back of social guarantees had been long-term policies of the Ukrainian government even before the war and were likely part of an effort to attract foreign investors.
Both laws passed this week dated to an attempt by the Zelenskyy administration and the ruling party to deregulate labour legislation in 2020-21. That attempt was beaten back as a result of a protest campaign by Ukrainian trade unions—a prospect now hard to imagine due to the war and martial law, Lomonsova said. The Ukrainian government and ruling party were also now increasingly suggesting that the state could not ‘afford welfare, employment benefits or protection of labour rights’ because of the war.
In contrast to the deregulation trend, Lomonsova identified clear support among the Ukrainian public for social democracy. ‘Year on year, opinion surveys have shown that Ukrainians have strong social democratic attitudes, including in favour of welfare,’ she said. ‘They expect the government to protect their labour rights and offer a complete social package. Not even war can change this.’
Under Ukraine’s new zero-hours legislation, employers who choose the contract option will be able to call up workers at will, though contracts must define the method and minimum timeframe for informing an employee of work and the response time of the worker to accept or refuse. The legislation also says those employed on these new contracts must be guaranteed a minimum of 32 hours work a month and that the proportion of employees on zero-hours contracts at a company cannot be more than 10 per cent.
In its explanation of the law, the Ukrainian government said that individuals involved in irregular work were currently employed ‘without any social or labour guarantees’. Zero-hours contracts—a term the government used—would help ‘legalise the work of freelancers, who mostly work on short-term projects and are not limited to working for a single client’.
The labour lawyer and activist Vitaliy Dudin told openDemocracy that, as a result of the economic crisis caused by the war, Ukrainians were facing ever greater ‘economic risks’ and poverty—and this means that Ukrainian employers would ‘be able to radically reduce labour costs’. The new contracts proposed under zero-hours legislation could also lead to two-tier workplaces, where employers offered secure jobs to loyal or non-unionised staff, while others faced precarious employment or immediate dismissal for reasons manufactured by the employer.
This could affect workplaces with hundreds of workers, including public-sector jobs at risk of austerity policies, such as hospitals, railway depots, post offices and infrastructure maintenance. ‘This is a disastrous step towards precarisation,’ Dudin said. It called into question ‘the very right of Ukrainians who have been affected by the war to get a means of living’.
After the war?
European trade unions have long criticised the growing trend towards labour liberalisation in Ukraine since Zelenskyy and his party came to power in 2019. On July 14th, as rumours of a new vote on draft law 5371 spread, three trade union confederations expressed their concern that the Ukrainian government and ruling party ‘continue to reject the EU’s values of social dialogue and social rights’ with their labour-liberalisation programme. ‘We are strongly concerned about regressive labour reforms continuing after the emergency of war is over,’ the unions’ letter said, claiming the reforms ‘go in the opposite direction to EU principles and values’.
Ukrainian parliamentarians have previously criticised draft law 5371 as a potential danger to the country’s integration into the European Union. Ukraine was granted EU candidate status in late June. Ukraine’s 2014 association agreement with the EU contains provisions to ensure fair treatment of workers.
László Andor, European commissioner for employment, social affairs and inclusion between 2010 and 2014, told openDemocracy this new legislation suggested that Ukraine was going in a ‘completely different direction’ from EU norms on decent work.‘This case is a big dose of opportunism,’ said Andor, now secretary general of the Foundation for European Progressive Studies.
‘Ukrainian lawmakers need to understand better what the difference is between a continental European model and these moves towards a very precarious labour market. Ukrainian trade unions are not being listened to sufficiently. This would be elementary in the European Union.
‘There is an enormous amount of national cohesion in Ukraine, which the rest of the world admires. But these moves, in my opinion, can also undermine national unity—something very much needed for resisting a foreign invasion,’ he said.
Proponents of the law consider Ukrainian trade unions’ efforts to defeat labour liberalisation an attempt to ‘preserve their influence’ and claim ILO conventions on workplace protections are ‘out of step’ with the modern labour market and the needs of small and medium-sized businesses.
While ruling party MPs have suggested that draft law 5371 will be passed as a temporary, wartime measure, the MP Mykhailo Volynets, a member of the same Batkivshchyna party as Ivchenko, argued ‘it is clear that no one will be able to undo this situation later’ in a post. ‘The labour code will no longer apply, collective agreements will be eliminated, and even those mechanisms of employee protection that are in place today will not work. This is a brazen violation of international norms and standards in the field of labour,’ he said.
This first appeared on openDemocracy