ALFRED NOBEL UNIVERSITY

DNIPROPETROVSK, UKRAINE
BA PROGRAMME IN INTERNATIONAL MANAGEMENT
MIDTERM ASSIGNMENT: ESSSAY (1)

MODULE

LABOUR ECONOMICS AND SOCIAL RELATIONS

TYPE

CORE

LEVEL

SEMESTER

COHORT

MEK-12-a

ID-NUMBER

WEIGHTING

25 %

FIRST MARKER

Dr. Kristina Novikova

SECOND MARKER

DNIPROPETROVSK
2015

RESULTS OF LABOUR MIGRATION IN LABOUR MARKET IN

UKRAINE
INTRODUCTION
A labour market is the important constituent of all market system. Before
defining its socially-economically essence, it is necessary to consider an economic
category market. A classic political economy distinguishes four directions in
determination of market.
The first direction is presented by scientists, under which the market is
understood as a space, place, sphere of sale of commodities. The representatives of
the second direction determine a market as totality of salespeople and customers,
third as totality of commodity-money relations, method of co-ordination of actions
of participants, or as a form of connection of commodity producers. The scientists
of fourth direction see in a market mechanism the technology of realization of
exchange and distribution of commodities.
Therefor, it is possible to draw conclusion from higher resulted, that a
market is totality of economic relations concerning the purchase-sale of
commodities, possessing economic independence, freedom in the choice of market
(salespeople and customers) subjects, free pricing in the conditions of competition
environment.
LABOUR MARKET AND LABOUR FORCE DETERMINATION
Going across from the study of market concept to essence of labour market,
it should be noted that today determination of labour market mainly remains
debatably, from its insufficient learning. The researchers of problems of labour
examine mainly the separate aspects of labour market and express often
diametrically opposite on maintenance an idea. Largely it is explained by different
interpretation of concept of labour market.
Nowadays, there are four directions of approaches near determination of
labour market (labour force) :
Representatives of the first group examine the market of labour force as a
sphere of appeal of specific commodity "labour force" in the economic
commodity-money system.
2

The second group of scientists gives determination of labour-market through

its component elements - demand and supply. For example, definition: "Supplyand
demand on labour force is a labour-market". On my opinion, such simple and short
definition do not expose essence of labour-market as an economic category.
The representatives of the third, most numerous group of scientists,
examine a labour-market through the prism of public relations. They consider that
labour market is the totality of economic relations, forms and methods of
concordance and adjusting of interests of the direct producers and employers,
related to organization, use and remuneration of hired labour (Karl Marx, 1990).
However, from my point of view, it would be wrong to take a labour
market only to the sphere of exchange. A labour market plays an important role in
providing the continuity of process of production of such important commodity for
society as labour force. Economic essence of market processes consists exactly
herein. Therefore, on my opinion, the most successful is definition of labour
market is given by the representatives of the fourth direction:
A labour market they understood as the difficult system of economic
relations on the exchange of individual capacity for labour on the fund of the vital
goods necessary for reproduction of labour force and placing of worker in the
system of public division of labor on the laws of commodity production and
appeal.
Also, it is necessary to focus on the terminology of "market of labour force"
and "labour market", to find out if these concepts are identical or different. Is it
possible to use them as synonyms, reflecting essence of the the same phenomenon?
In order to answer this question, it is necessary to consider such economic
categories, as labour force and labour.
Labour force is the complex of physical and mental capabilities of a human,
that is used by him/her during production of any consumer cost.
Labour force comes forward as a commodity in next situations:
1) The human is independent and can freely dispose his/her own labour force;
2) The owner of labour force is separated from resources of production and
3

cant use his/her labor force in order to earn money for the living.
Labour is a purposeful activity of people , in order to create goods and
services necessary for satisfaction of necessities of every individual and society
altogether.
Accordingly, "labour" and "labour force" are not identical notions. But,
because of the situation that in the market of labour the capacity of man is bought
only for labour (labour force), a worker "advances" it to the employer on condition
of payment for it through a certain period, and a calculation is produced for the
executed concrete work of certain quality, a concept "Labour market" and "market
of labour force" can be used in parallel.
The labour market is formed as organic link of the market system. The
market system is the system of markets, where such markets are distinguished : the
market of capital goods, market of consumption, market of finances, market of
services, market of technologies, market of information etc. The Indicated types of
markets are not identical on the meaningfulness. There is opinion, that the market
of capitals stands at the head of the market system, as it is the money equivalent of
all resources, and it determines the state of affairs of all commodity markets.
In my opinion, labour market - is the independent, complex system in a
market economy, that, on one hand, depends from other markets, on another affects them.
Thuswise, I can say that labor migration , as the labor market issue, strongly
depends on the different categories of market, consequently on the economics. But
let me first give the definition of the labor migration (Freeman, R.B., 1987).
LABOR MIGRATION AND ITS RESULTS IN UKRAINE
Labour migration is the type of migration, that means the territorial moving
of people, related to employment and looking for a job. Labour migration can be
caused by aspiration to change both the parameters of own workplace and, in
relation to the place of inhabitation, external terms: sociocultural, domestic,
ecological, natural and climatic and others. According to that parametrs labor
4

migration can be divided into is internal labour migration - within the limits of one
state and international - with crossing of state boundary. Internal labour migration
is regulated by a national legislation acts and labour laws.
International labour migration can carry permanent character, i.e. it is related
to the move into permanent place of inhabitation from one country to another.
Temporal character is carried labour migration on contracts, limited in time (in this
case the term "guest workers" is used, from germ. gastarbeiter); seasonal
migration; migration of border-line workers (Robert E. B. Lucas ,2006).
International labour migration is regulated by Convention about the protection of
rights for all worker, accepted by the General Assembly of the UNO in resolution
45/158 from April, 18th 1990, that determines a term "working migrating
person" as a person that will occupy, occupies or carried on a pay activity in the
state where he or she is not a citizen.
There are several reasons of international labour migration. The are:
differences of world economic development; inequality of profits and possibilities
in different countries, in particular situaation between the industrially developed
and developing countries; disbalance of population, showing up in surplus of
labour force in developing countries and in her defect in certain industries in the
developed countries and other (A. Kovalchuk, January, 2015).
Nowadays, Ukrainian labour force have more reasons to migrate. One of that
unpleasant reason is current terroristic conflict in the East of Ukraine. Moreover,
devaluation of the national currency reduced purchasing ability of the population.
As a result labor demand falls and unemployment rate grows. Let me describe
current labor market situation in figures and details (Edward P. Lazear and Paul
Oyer, 2004).
According to the data of the research conducted by the international skilled
portal of "HeadHunter Ukraine", for past six months 48% of white - collar
worker" had their level of salary saved ,actual on October, 2014. Canvassed in
January-February, 2015, 1817 respondents took part in it. Increasing in salary, from
data of HeadHunters, was awarded every fifth employee. 29% of asked had more
than 20% increase in salary. In a range 11%-20% the salary was increased for 34%
5

of respondents. About 20% of asked had the salary increased in a range 6%-10%
and 16% of respondents declared that that the increase in there salary was about
5%. Moreover, reduction of salary for 14% of the respondents remains at the
constant level the position requirements, while 3% notices the decline of profit at
parallel reduction of volume of work. The delta of reduction made mainly near
20%. In a greater degree reducing of salaries affected consulting sphere, motor-car
retail and oil and gas industry. As evaluated by the head of "Renault Ukraine"
Yana Minenko, an automarket fell down for the 78%. Conflict in east of country
influenced on the negative dynamics of sales, devaluation of national currency, and
as a result in a fall-off of purchasing power", - she explains.
From my point of view, there is strong dependence between labour market ,
level of salaries and the labor migration. According to the data provided by UNO
Agency in matters of refugees, about 1.4 million of Ukrainians moved from eastern
part of Ukraine to other regions. Most able to work migrants chose the new
inhabitation place in the capital of Ukraine Kiev, and western areas - Lviv,
Ivano-Frankivsk and Chernivtsi regions (A. Kovalchuk, July, 2014).
"Salaries for migrants objectively must be higher, than for locals, because
for them higher charges are necessary to lease an accommodation", - Sergey
Marchenko, Director on development of main web-resource for the unemployed
people Work.ua, claims. Unfortunately, such approach is an exception rather
rule. At a middle salary on Kyiv in 6480 hryvnias a middle salary that is offered to
the migrants is 6560 hryvnias. Thus, in Odesa a difference between the salaries
offered by employers to the locals and migrants made about 1000 hryvnias in
behalf on the last. As Marchenko marks, in spite of existing in society stereotype
about "watchful" attitude toward migrants, near 90% of employers declare a
willingness to hire employees that are internal migrants. From 636 employers, that
took part in questioning, only 13,2% do not plan to hire workers-migrants. It is
impossible to say that there are no cases, when the migrants get watchfull attitude
to them, as it is, nevertheless, the competitors at the market of labour."
Marchenko said.
In a current situation, every tenth person, looking for a job in a network
6

resource Work.ua is a migrant. According to statistics of Work.ua, from 33 760

CVs, created from February, 18th, 2015, 3114 noted as a CV of the internal labor
migrant. Among professions that are offered to the migrants there are Sales
manager, Salesman-consultant, Trade representative, Customers Manager, Callcenter manager, etc.
CONCLUSION
Situation, described above, brightly explains the reasons why Market of
employers started to develop in Ukraine. The number of applicants for each
position, for the past six months, grew from 3 people to 6. While ,at meantime, the
number of vacancies reduces due to reduction of purchasing ability of the
customers.
Specialists of labour market noticed, those, who hurries from the east of
Ukraine, are often the representatives of working professions. Therefor, it is
obvious, that it is difficult to estimate the level of competition between employees
in this market segment of labour, because those people are almost not registered in
any companies at all. Gradually skilled employees that yet a few months back were
not ready actively to examine new vacancy propositions, disembogue in the rows
of migrants. As far as toughening of battle actions have place, a skilled personnel
shows more readiness to labor migration.
Summarizing all above-mentioned issues, I would like to emphasize on the
dependences of labour market on external economical and political issues. As we
can notice labor migration causes changes in labour market demand for the labor
force. So, all in all, labor force is can both depend on and affect the labor market.

Reference list:
1. Freeman, R.B., 1987. "Labour economics," The New Palgrave: A
Dictionary of Economics, v. 3, pp. 7276. ;
2. A. Kovalchuk, January, 2015 How devaluation of national currency and
labor migration from Donbass influenced Labour market in Ukraine ,
Forbes.ua [Online] , available at: http://forbes.ua/business/1390611-kakskazalis-na-rynke-truda-devalvaciya-i-migraciya-s-donbassa;
3. A. Kovalchuk, July, 2014 Market of the employers in Ukraine,
Forbes.ua [Online] , available at: http://forbes.ua/business/1375829-vukrainu-prishel-rynok-rabotodatelya ;
4. Edward P. Lazear and Paul Oyer, 2004. "Internal and External Labor
Markets: A Personnel Economics Approach", p. 104-112;
5. Robert E. B. Lucas , 2006, International Labor Migration in a
Globalizing Economy, p.56-72.
6. Karl Marx, 1990, "Labour-power, a commodity sold by the worker
himself", p. 1002-1021 ;