British MPs are concerned that a Foreign Office project could help “remove 80% of Ukrainian employees from existing protections” in Ukraine, openDemocracy reports today.

A parliamentary motion by Labour MP John McDonnell responded to the recent publication of a leaked communications plan paid for by a UK Foreign Office aid fund.

The plan advises the Ukrainian government on how to push through reforms to labour legislation, which, the motion notes, could “undermine trade union rights” and remove many employees from secure employment.

Marked with the logo of the British Embassy in Kyiv, the leaked plan noted that the proposed reforms are unpopular and recommended that Ukraine’s Ministry of Economy should “make its messages easier and more emotional” in order to convince the Ukrainian public. The UK Foreign Office has supported a project on “labour regulation transformation” in Ukraine since 2020.

The plan also suggested that the ministry should encourage, via off-the-record meetings, supporters outside of government to make more “emotional” pleas to the public over liberalisation.

In early 2020, Ukraine’s Ministry of Economy sought a radical overhaul of labour laws, which prompted backlash and protests from the country’s trade unions. Now, the Ukrainian government and reform supporters in its Parliament are making another attempt at liberalisation – in an effort, they say, to solve the country’s mammoth undeclared work problem.

Ivchenko, who represents the Federation of Trade Unions of Ukraine in parliament, told openDemocracy that while the country’s labour code “was out of step with the times and needed reform”, any such reform “should take place via a tripartite dialogue between the government, representatives of employers and trade unions”.

“You can’t reform labour laws by brushing aside the rights of working people, ignoring the role of trade unions and the International Labor Organization [...] And that’s exactly what’s happening at the moment,” he said.

A UK government source previously said that the Foreign Office project was undergoing “extensive consultations with a wide-range of stakeholders, including trade unions, to ensure any recommendations are inclusive of different social groups”.

Ukrainian MP Mykhailo Volynets, who also serves as chairperson of the Confederation of Free Trade Unions of Ukraine, said that while the country’s government has claimed it is interested in dialogue with trade unions, “in reality this is not happening”.

“By financing this project, the British authorities are undermining the principle of social dialogue in our country,” he said.

Not an equal fight

Natalia Zemlyanska, head of Ukraine’s Union of Manufacturers and Entrepreneurs, told openDemocracy the leaked communication strategy, though paid for by the UK, was a reminder that the confrontation between trade unions and the Ukrainian government is “not an equal one”.

“Despite all our trade union solidarity, we don’t have the kind of money to go and hire experienced political consultants or communications specialists, in order to resist [labour reform],” she said, referring to the fact that the communications plan was drawn up by international development consultancy Abt Associates.

Zemlyanska also claimed that the UK’s support for liberalising Ukraine’s labour laws is a “direct violation” of the 2020 Political, Free Trade and Strategic Partnership Agreement between the two countries.

According to that agreement, which is meant to structure post-Brexit trade and political relations, neither side shall “weaken or reduce the environmental or labour protection afforded by its laws to encourage trade or investment”.

“It makes me angry that we are being told that a reduction in labour rights is, in fact, their improvement,” Zemlyanska concluded.

The UK Foreign Office’s support for labour liberalisation exposes the challenges of tackling Ukraine’s undeclared employment problem, which leaves people without protections and guarantees – and fewer taxes and pension contributions for the state.

Proponents of liberalisation claim that by simplifying hiring and firing, and focusing employment relations on individual contracts, the Ukrainian government will give employers the necessary motivation to bring more people into official employment – and will therefore award them some protection at work, albeit not at the current levels.

The ‘extreme’ level of protection afforded by current legislation, as well as the burden of human resource documentation, reform-minded government officials claim, discourages Ukrainian employers from officially hiring employees.

Critics, however, claim that liberalisation will severely reduce citizens’ rights and guarantees at work, opening the door to ‘at-will employment’ and ‘zero-hour contracts’.

According to opponents, the reason for the growth of Ukraine’s informal economy lies not in workplace law, but rather the broader problems that businesses face in Ukraine, such as complex taxation, a lack of protection from the courts and corruption.

When openDemocracy asked Ukraine’s Ministry of Economy whether it had studied the potential impacts that labour law liberalisation could have on Ukrainian citizens – whether positive or negative – the ministry said that it had neither “conducted nor commissioned” research on the matter.

In a follow-up request for comment on the rationale behind labour liberalisation, the ministry claimed that in the current economic climate, there is now a greater focus on “finding, training and keeping flexible and energetic personnel, who can operate effectively in unforeseen situations”, “using temporary workers to fulfil needs for new competencies [and] skills], as well as “the quick hiring and firing of talented staff in connection to their superfluous or unnecessary skills”.

It made no reference to solving the problems associated with undeclared work.

Further, the Ministry stated that by simplifying hiring and firing procedures via liberalisation, Ukraine could reach higher positions in world business rankings, such as the World Bank’s Ease of Doing Business or the Index of Economic Freedom.

The Ministry said that improving these rankings could lead to “new, high-tec and well-paid jobs” given foreign investors’ interest in them, and thus greater tax contributions and higher-quality working conditions in the future.

“If MPs and experts believe that liberalisation will lead to more people being officially employed and protected, then why not launch a pilot project in a specific region for three years with clear performance indicators?” asked Zemlyanska.

“If that pilot succeeds, then, of course, let’s implement it,” she said.