Ukrainian president Volodymyr Zelensky hesitated quite some time before signing his country’s new labor law on August 17, 2022. Already a month earlier, the national parliament, the Verkhovna Rada, had passed the bill known by the number 5371. In the sober, deceptive language of bureaucracy, it is supposed to simplify relations between employers and employees. In reality, it implies a complete flexibilization of the labor market, to the detriment of workers.
Zelensky’s hesitation may have owed to pressure from Ukrainian trade unions as well as from abroad. Even the International Trade Union Confederation, which unites more than 200 million workers worldwide, protested against the law. “It is grotesque that Ukrainian workers, who defend the country and care for the injured, sick and displaced are now being attacked by their own parliament,” General Secretary Sharan Burrow said in a statement.
Ukraine’s digital minister, Mykhailo Fedorov, for his part, did not hesitate for long, picking up the pen on July 4. At the Ukraine Recovery Conference in Lugano, Switzerland, he signed an agreement with the mobile and cable network companies Kyivstar, Vodafone, and Datagroup-Volia on the digitization of Ukraine. In the war, he said, there is an opportunity to digitally develop Ukraine into the most advanced state in the world. “It’s an experiment, a revolution. An opportunity for you, your companies, and the whole world!” Fedorov explained.
The new labor law and the Recovery Conference are both indicators of the direction Ukraine could take during and after Russia’s war. Ukraine risks becoming a neoliberal laboratory with as few labor regulations as possible — and with the best possible conditions for private companies that want to profit from reconstruction.
The fact that Zelensky hesitated with his signature also shows that protests by workers, especially with international support, can indeed make a difference. At the last minute, an amendment has been achieved whereby Law No. 5371, contrary to what was originally intended, will remain in force only for the duration of the war.
Individual Instead of Collective
Since Russian president Vladimir Putin and his mafia-style regime opened a full-scale war of aggression against Ukraine on February 24, in violation of international law, hostilities have continued unabated. According to the United Nations’ Office of the High Commissioner for Human Rights, more than 5,300 civilians had lost their lives in Ukraine by early September. The actual number of victims, according to the UN organization itself, is probably much higher.
Workers are particularly affected by the Russian army’s offensive. The International Labor Organization reported in May that the war and its consequences have so far destroyed 30 percent of all jobs. Hundreds of thousands, if not millions, of workers have been put out of work. Yet those who are still at work have seen their rights severely restricted since the war began: currently, strikes are banned and the Labor Inspectorate has almost completely stopped its inspections, meaning that violations of labor law are thus no longer documented.
Former president Petro Poroshenko (2014–19) already pursued a neoliberal path, and Zelensky’s government continued in the same vein. His party may be called Sluha Narodu, Servants of the People. After the 2019 election, however, it primarily served investors and lenders and pushed one neoliberal reform after another through parliament, for example in the health sector.
It is important to note, however, that these reforms do not only come from the government itself. It is aligning its policies with the wishes of foreign lenders such as the International Monetary Fund, on whose loans Ukraine depends. It was also advised by Western partners in drafting the labor-market reforms; for instance, the British Foreign Office organized workshops in which it explained to the Ukrainian Ministry of Economics how voters could be convinced to accept more flexible labor laws.
However, domestic politics have by no means been suspended because of the war. Only a few weeks after the start of Russia’s full-scale invasion, reforms were pulled out of the drawer that had previously failed, not least due to union protests. While Ukrainian workers were defending the country and doing everything in their power to keep things running in gravely difficult times, multiple reforms were pushed through that limited workplace rights. First, a law was passed that relaxed protection against dismissal and increased the maximum workweek to sixty hours. This was followed by a law allowing so-called zero-hour contracts — a radical form of on-call work in which there is no entitlement to minimum working hours and only services actually performed are remunerated. Finally came Law No. 5371, mentioned at the beginning of this article.
It affects all companies with fewer than 250 employees. Such companies employ around 70 percent of all Ukrainian workers. They will no longer be protected by national labor laws. Instead, employers will be empowered to propose extremely flexible individual contracts that undermine workers’ rights, for example with regard to the scope of working hours or protection against dismissal. The law also restricts the influence of trade unions.
While the labor market in Russia was already made more flexible in the 1990s and 2000s, the labor laws in Ukraine date back to the Soviet era. Even though they were often disregarded, workers were able to invoke them in court. The current changes represent a paradigm shift: “Ultraliberal concessions to employers will only accelerate the decline in living standards, not promote the recovery of the economy,” announced left-wing organization Social Movement.
Protesting the law, the Ukrainian trade unions appealed to the president, insisting that it would lead to different wages for the same work and to unequal conditions in terms of vacation regulations and weekend work. The flexibilization ultimately means nothing other than discrimination. Unions were supported by international bodies, including the International Trade Union Confederation, the International Labor Organization and the Social and Economic Committee of the UN. These organizations warned that the law could violate international labor standards. For the time being, however, it will now come into force. Whether it will then be withdrawn remains to be seen.
Green, Digital, Neoliberal
Signs of what Ukraine might look like after the war do not only come from labor legislation. The first outlines emerged, early in July, at the Ukraine Recovery Conference held on the idyllic shores of Lake Lugano in Switzerland. Major heads of state demonstratively stayed away from the conference — German chancellor Olaf Scholz and French president Emmanuel Macron preferred to meet in Paris to discuss Ukraine at a joint dinner. But the presence of numerous Eastern European heads of government and the largest Ukrainian delegation abroad since the start of the war showed the importance that those directly affected attached to the conference.
Numerous representatives of major international corporations were also present: tech companies such as Google, agricultural giants such as Syngenta, commodity traders such as Trafigura, payment service providers such as Mastercard, and consulting firms such as PricewaterhouseCoopers had all come to Lugano to discuss the reconstruction plan for Ukraine, presented there for the first time.
The plan is divided into three phases: first, direct emergency aid is to be provided during the war, then the destroyed infrastructure is to be renewed, and, finally, long-term goals for reforming the state are to be implemented. More than three thousand experts are said to have been involved in the development of the plan. As the Ukrainian outlet of the business magazine Forbes announced before the conference, one of the prominent advisors is no less than Francis Fukuyama, who proclaimed the end of history after the collapse of the Soviet Union.
According to the magazine, the text was drafted by the Reform Delivery Office, which has been in existence since 2016. The group of experts is intended to support the government in its reform efforts, and is cofinanced by the EU Commission and the European Bank for Reconstruction and Development. However, the plan also incorporates the ideas of a group of renowned international economists, such as Kenneth Rogoff, who presented a “blueprint for reconstruction” with a whole raft of liberalization measures in April.
The Lugano conference opened with a video link to Zelensky in Kiev. Russia’s attack is not a war “somewhere in the east” but an “ideological confrontation,” he said. “The terrorist state hopes that such destruction will prove the inability of the democratic system.” Accordingly, he said, reconstruction is not just a local project but a task for the entire democratic world. And certainly to its benefit, “The EU as well as NATO are firmly united thanks to us.”
After Zelensky, EU commissioner Ursula von der Leyen announced that the EU and Ukraine had agreed on a course of action for reconstruction. It is true that Brussels will set up a coordination platform in which states, international organizers, and private investors can participate. “But Ukraine will have the lead,” von der Leyen promised. “Build back better!”
The Ukrainian representatives repeated this motto like a mantra in Lugano. The country is not just to be rebuilt but reinvented out of the war. In the future, Ukraine should be greener, more digital and socially open, and a better partner to investors and corporations. The descriptions sometimes sound less like a state and more like a start-up.
What this means in concrete terms can be illustrated by the example of the electricity market, or, more precisely, the handling of nuclear energy. In early June 2022, the Ukrainian state nuclear authority, Energoatom, signed a deal with the US firm Westinghouse. According to the agreement, Westinghouse is to build nine new nuclear reactors and exclusively supply the Ukrainian nuclear power plants with fuel rods. This is intended to minimize dependence on Russia, from where the reactors have been sourced to date.
Ukrainian energy minister Herman Halushchenko has no safety concerns about the technology, as he explained in a conversation on the sidelines of the Lugano conference. “Today’s US technology is much more advanced than that of Soviet nuclear power plants. So a reactor accident is almost impossible.” He sees a great need to export nuclear power to the EU: “We synchronized our grids with the EU after the war started, and now we have the ability to export electricity.” But the doors would also be open for renewable energy developments, Halushchenko said. “My goal is to convince everyone that Ukraine is suitable as an experimental laboratory for the best new technologies in the energy sector.”
In Lugano, Ukrainian prime minister Denys Shmyhal estimated the cost of reconstruction at $750 billion. However, because the war continues unabated, the costs are likely to be many times higher. The Ukrainian representatives also have a clear idea of who is to pay for the reconstruction: “the aggressor.” The assets of Russian oligarchs should be frozen and confiscated worldwide. Shmyhal repeated this several times, including at the final press conference with Swiss foreign minister Ignazio Cassis, a representative of the banker-friendly Free Democratic Party. Yet Shmyhal’s demand fell on deaf ears. Cassis instead launched into a defense of property, which, he said, “is a human right.”
“Every citizen must be protected from the state!” Apparently, even if, like most Russian oligarchs, he has shamelessly enriched himself from collective property.
The Railroad as a Model
Writing in Jacobin, Peter Korotaev has pointed out that the Ukrainian government continues to rely economically on a neoliberal dogma in its defensive struggle against Russia. This is all the more astonishing, he argues, because, in times of war, states usually rely more heavily on state intervention in the market and collectivization of production in order to mobilize as many resources as possible in the resistance.
In Lugano, Infrastructure Minister Oleksandr Kubrakov described the Ukrainian government’s experience in this regard. Asked whether the railroads and trains should be privatized, as planned before the war, he said, “It seems better to me if the railroads remain close to the state.” Unlike private road maintenance companies, he said, the railroads could be relied upon so far: they are the crucial means of transport for people and goods during the war.
So far, however, there are no signs that experiences like this will actually lead the government to deviate from its course. On Independence Day, on August 24, it launched a campaign entitled “Advantage Ukraine.” With advertisements in Great Britain, the United States, and Germany, global corporations are to be motivated to invest in Ukraine. The talking slogan against a blue and yellow background: “We are free. We are strong. We are open for business.”
Ukraine’s defense against the Russian invasion protects a democratically constituted state against an authoritarian, nationalist, reactionary regime. Yet it is also important to keep in mind the domestic political sphere. For also already posed is the question of which forces will prevail within Ukraine: the unions and social movements, or a government that sees its country as a neoliberal laboratory.
This is also why it is necessary to see Ukraine as more than a geopolitical plaything batted between Western states and Russia. Rather, it is necessary to understand the economic and social conditions in Ukraine and to support solidaristic and progressive forces in the country. And it is equally important to take the argument to Western governments, and consistently push for Ukrainian debt relief so that international lenders can no longer apply the same pressure for neoliberal reforms.