How Ukraine can move from brain drain to brain gain
In many cases, 0.01% of everything may seem like a negligible and insignificant portion. However, in an economy that struggles to recruit and retain top talent, the 20,000 Ukrainians, or 0.01% of the country’s total labor force, who are considered highly skilled workers working abroad are one of the factors why Ukraine consistently lags behind its neighbors.
According to the World Economic Forum’s Global Competitiveness Index, Ukraine’s ability to retain talent ranks 129th out of 137 countries presented. The continued failure of government and business to recognize and invest in people as Ukraine’s main economic driver is leading to a current crisis of highly skilled migrants. Simply put, the best and the brightest go.
With over 10% of the country’s roughly 20 million workers working abroad at any given time, it’s easy to see why the flow of Ukrainian migrant workers has caught the attention of businesses, policymakers and the general public. . According to World Bank data, low-skilled labor migration contributed significantly to the $ 16 billion in remittances that entered the Ukrainian economy in 2019. While highly skilled Ukrainians represent a relatively small share of migrant flows in Ukraine, their departure creates a Western-style deficit. best talent.
There are a number of key factors behind these departures, including macroeconomic and political uncertainty. For example, in the past six months alone, local wages have deflated 18% in US dollars due to a declining exchange rate, while the president of the National Bank of Ukraine has resigned due to pressure. policies. There is also a deficit of small and medium-sized enterprises (SMEs) capable of creating a competitive remuneration market and attractive positions compared to neighboring economies.
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In February 2020, the Zelenskyy administration gave the green light to a loan program for SMEs. This program has allocated UAH 2 billion to provide affordable loans to Ukrainians living abroad who wish to return home or to people residing in Ukraine who are planning to start a business. Aiming to stem the problem of mass emigration while boosting the entrepreneurial spirit of Ukrainians, the program offers loans of up to 1.5 million UAH (around 55,000 USD) with annual rates of 5 at 9% over a period of up to 5 years.
It is a welcome initiative. However, critics claim that the loan amount and interest rates are not attractive enough to be given serious consideration by those looking to develop midsize businesses that would provide the greatest economic value. In addition, the economic pressure of the pandemic has created conditions in which risky behaviors are adopted and entrepreneurship is suspended. In order to increase the number of SMEs, the government must diversify its strategy of retaining, growing and attracting highly skilled labor through innovative projects and partnerships in the public, private and NGO sectors. .
There is fierce competition between Central and Eastern European countries to attract top talent from each other, with many countries like Estonia, Lithuania and Poland publicly funding recruitment initiatives targeting neighboring professionals. Often their initiatives work by targeting talent on social media through paid ads and redirecting users to websites with easy relocation guides, government-backed business funding programs, job offers. employment, consultations and document processing.
To remain competitive with its neighbors, Ukraine needs to follow suit and allocate funds within its national investment agencies such as UkraineInvest or the National Investment Council to replicate the success of these programs. Ukraine has the opportunity to target entrepreneurs and tech companies from Central and Eastern Europe looking to set up satellite offices. The proximity to Ukraine allows regional entrepreneurs to maximize business efficiency and reduce costs without sacrificing jet lag, cultural differences, easy communication and profitable travel. This could attract new investment while helping to retain the highly skilled IT talent that is currently leaving in droves.
The government should also seek to take innovative measures at the national level and launch a program of career development loans in partnership with banks such as PrivatBank to offer reasonable interest rates to professionals wishing to improve their skills in employment. foreign. Currently, the income levels of young workers do not allow the savings necessary to self-finance the pursuit of vocational training. It is common in North America for students to take out loans to partially finance their education in combination with their savings. Allowing the same in Ukraine could significantly increase the supply of trained professionals in the West.
In the private sector, Ukrainian companies should launch internal professional development programs to motivate employees, build loyalty, increase productivity and support management succession planning. Naturally, companies can be skeptical about investing large funds in the development of a single employee. Many will fear that the employee will stay in the country of the educational institution or leave for a competing company after graduation. However, best practices show that organizations can mitigate risk by signing and enforcing contracts stipulating a return of funds if the employee no longer wishes to stay with the organization.
To popularize the concept throughout the private sector, local business associations such as the American Chamber of Commerce, the Association of European Businesses and others should engage in a special awareness campaign, showcasing successful cases to abroad as well as local leaders who are currently implementing these practices.
Collaboration between the public sector and international donor organizations offers a promising springboard for the further development of the growth and retention of highly skilled talent and the creation of value for government. The establishment of programs in which there is a tripartite agreement between donors facilitating scholarships, large public enterprises in preparation for privatization and candidates ready to enter post-graduation training could prove to be beneficial. particularly effective. Candidates could use their future employer for different practical case studies.
For now, charities and international development are bridging the gap by offering scholarships. Nevertheless, these programs have a limited capacity to meet the educational ambitions of Ukrainian students wishing to obtain the best qualifications and return home. Developing national management institutions so that local talent does not have to seek greener pastures abroad means collaborating with leading educational institutions and bringing their knowledge and talents to their soil.
Nationally, the Kiev School of Economics (KSE), which is widely regarded as Ukraine’s premier business school, recently secured a permanent campus thanks to a generous donation from Dragon Capital, the leading investment bank in Ukraine. Ukraine. This donation will ensure that KSE has stable operations and can focus on creating a quality business education product for the local people. Another good example is the Ukrainian Academy of Corporate Governance, which has established relationships with one of the best business schools in the world, INSEAD, to offer its executives training certifications in corporate governance. company in Kiev by bringing professors to give lectures. This format has led to the certification of 264 Ukrainian senior managers.
Ukraine’s future holds the promise of economic growth, but the speed and efficiency of that growth depends only on the highly skilled talents that drive it. The current Ukrainian administration and those that will follow must meet this challenge in the long term. They should foster cross collaboration between international donors, the private sector and national institutions. Refocusing the strategy on retaining, growing and attracting highly skilled talent from Ukraine will still pay much higher dividends than the current inbound remittances sent by the 0.01% who are currently working at the Ukraine. foreign.
Anton Waschuk is the Manager of the SEED Grants Program and the Coordinator of the Economic Leadership Program at the Western NIS Enterprise Fund. Andriy Kamenetskyy is an Account Manager for Ukraine, Azerbaijan, Belarus and Georgia at Microsoft, and a WNISEF SEED Grant recipient and MBA graduate from UCLA.
The opinions expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff or its supporters.
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