Article by Tymofiy Mylovanov, President of Kyiv School of Economics, Advisor of President Zelenskyi Office, Minister of economy Ukraine 2019-2020.
The economy in Ukraine took the first shock and has begun to adapt. Not all companies adapt easily, not all of them do it successfully. Statistics show that about 10-20% of companies have adapted and are in relatively good shape. It means that almost all employees continue to work for them, they pay salaries and have orders for at least a month in advance. Another third of the companies have problems, deep enough sometimes, they have temporarily stopped working, but are thinking about the possibility to start again using the first opportunity. They do not have orders and not all employees are at work, or available for it. And the companies do not have the money to pay full or significant salaries.
Another group of people and companies (about 40-50%) are in the transformation process: some of them have been completely transformed, some of them are going to do it, and others are in progress. Some of them have been relocated, and some of them are looking for new deliveries or orders. Most of them pay salaries, but not always full. Half of the sum, for example. And most of them are only half loaded.
Basically, it is good news. It means that the companies that are in transformation will move, restart, give jobs, pay salaries, and everything will work. But the third of companies that are in a difficult situation need help: both the government and local authorities have to help them adapt to the new conditions.
People react differently, everyone has their own situation, it must be accepted, and there is no need for judgments and assessments. It is a war, everyone does what is possible where it is possible.
For example, the Kyiv School of Economics is a university, generally, we have to educate, and we restored the education process on March 16. It is a big achievement I think. At the same time, we reorganized all our charitable activities in Ukraine and abroad to raise money to buy first-aid kits that are needed in the war. Sometimes we pass the thermal imagers to reconnaissance. We also buy bulletproof vests and other protective equipment. We know how to raise money, pay and deliver quickly. We use this experience and knowledge and do it successfully.
Everyone can change their format. Change one activity to another.
We have the historical experience of other countries where wars happened. It is an absolutely different experience: Germany, Afghanistan, Iraq, Syria, Asia, the Middle East, Latin America, etc. And if we start to analyze it, we’ll see that this experience is not good. Therefore, recovery during and after the war must be taken seriously and such experience must be carefully studied. We can’t just say we will have a Marshall Plan, everything will depend on the details. And we have experience of the war Russia against Ukraine in Donbas started in 2014 and we know the reaction of the economy there.
Let’s remember the history of Noah’s Ark. If in each field we have the working factories, companies, organizations work, even if there are fewer of them, even if they will be repurposed during the war, it will be quite easy to recover them. For example, if we have restaurants, gas stations, retail chains, services and IT campaigns, some factories, it is quite easy to get investment in the existing companies after the war. More people will return to Ukraine and the companies will grow. Everyone will see that these companies survived the war, so they know how to work, they have all the information, skills, connections, technologies that they had before the war, and at the same time, they became even stronger. They will be very attractive to work with.
Just imagine. A company that made orders and payments during the war will absolutely work well after it.
We don’t need to build the structure of each field from nothing. Let’s return to Noah’s Ark. When we have 1-3 companies in each field, we can scale them.
We can not think about this process like “we have to wait until the end of the war and then there will be economic recovery”. We have to recover the economy now. In western Ukraine, in the rear. We need to build new warehouses, new transhipment, and new infrastructure. Step by step, to make everything decentralized and not attractive to be attacked. If you build one large warehouse in Lviv, it can be bombed, but if you build 50 small warehouses, then the Russian occupiers will not have enough missiles for all of them. The same with everything: jobs, houses, etc. We have to create everything now, don’t wait until the end of the war.
The fact that we can build a strong, successful economy should be obvious to everyone. During the war with Russia in Donbass we had economic growth, our minimum salaries became higher than in Russia. So, imagine what the economic situation could be if there was no war at this time.
Visit the EFMD Solidarity with Ukraine section of our website for ways to help.