Ukraine must renew its labor laws and redouble efforts to privatize thousands of companies to restore its economy, the president’s economic adviser has said.
Alexander Rodnyansky, an adviser to the president, Volodymyr Zelenskiy, said the war-torn country needed to accelerate its efforts to reform its industries as it wanted to rebuild after the Russian invasion.
Rodnyansky told the Guardian that the Ukrainian government needed to “lay the groundwork for rapid economic growth” while also financing the conflict.
Ukraine faces a debt crisis and inflation of over 20% as the country counts the cost of the Russian offensive.
Rodnyansky, also a professor of economics at the University of Cambridge, said that “receiving more foreign aid is the easiest way to fund the war”; however, efforts were made to reduce spending, collect taxes and issue debt to fund his efforts.
He said Zelenskiy and his top team were also exploring priorities for rebuilding the economy, including the ongoing efforts made before the war to overhaul 50-year-old labor laws. “We have major problems with our labor law, developed in the 1970s, which needs to be revised.
“We’re going to try to take a more liberal approach, like Denmark, with a flexible labor market because we need to catch up.”
Rodnyansky said there were “quirks with our post-Soviet system” that had fueled bureaucracy. “If you want to let someone go on vacation, you have to go through four pages of bureaucracy.
“There are also more conventional things to reform: ease of hiring, ease of dismissal, severance pay, flexible hours, and contracts and fixed-term contracts.”
Labor organizations have expressed concerns about workers’ rights under the Ukrainian government’s labor liberalization that voted to legalize zero-hours contracts earlier this year.
Rodnyansky said he also favored revisions to minimum wages to scrap them in some sectors where employment has not increased. “We need to make sure it’s not too high because our economy is collapsing and we need to make sure it doesn’t drive up unemployment,” he said.
A group of leading economists said last month that the Ukrainian government must review its tax and spending policies or risk an economic crisis that “could hamper its ability to support the war effort”.
Rodnyansky called on Western countries to extend sanctions against Russian companies and individuals and sell their assets to finance the reconstruction of Ukraine. “The UK has done a lot, but it hasn’t been exhaustive,” he said.
The government of Ukraine, the European Commission and the World Bank estimate that the cost of reconstruction and rehabilitation in Ukraine is nearly $350 billion and is rising.
Rodnyansky was promoted to chief economic adviser earlier this year after serving in the government for two years. His father is a film producer who helped Zelenskiy become a household name as an actor.
Russian attacks on Ukrainian power plants, including the Zaporizhzhya nuclear site in southeastern Ukraine, have raised nuclear security concerns.