The Cabinet of Ministers of Ukraine plans to adopt changes to the rules for reserving conscript-eligible employees by the end of the week; a final decision on revising quotas for certain sectors of the economy has not yet been made. Despite the fact that some of the most controversial provisions have already been removed from the draft resolution, businesses continue to express concern over the possible negative consequences of the innovations. Entrepreneurs emphasize that the constant changes to the rules complicate activity planning, threaten to create a personnel shortage, and may negatively affect the operation of strategically important sectors of the economy, UNN reports.
The government is preparing a final decision: what changes remain in the draft resolution
Earlier, Prime Minister Serhii Koretskyi reported that the Cabinet of Ministers of Ukraine plans to adopt a resolution updating the rules for reserving conscript-eligible employees by the end of the current week. At the same time, discussions regarding a possible reduction in quotas for certain sectors of the economy are still ongoing.
According to Dmytro Kisylevskyi, Deputy Chairman of the Verkhovna Rada Committee on Economic Development, lawmakers discussed the situation with Minister of Economy and Environment Oleksandr Kravchenko.
The current status is as follows: the Cabinet plans to adopt the resolution on updating the reservation system by the end of the week. As of today, the provision stipulating that employees who have a deferment from mobilization should not be included when calculating the reservation quota has been removed from the draft resolution. The discussion on revising quotas for certain sectors of the economy has not yet been finalized
Earlier, the possibility of reducing quotas for enterprises in the defense-industrial complex and the energy sector from 100% to 85% was discussed, while for the municipal sector the quota could be reduced from 75% to 60%.
According to the lawmaker, the government plans to retain in the resolution a provision on establishing a Coordination Center for organizing the reservation of conscript-eligible employees. It will have the status of an advisory body under the Cabinet of Ministers.
The newly established center will verify the validity of the criteria under which enterprises receive critical-importance status and recommend their revision. However, final decisions will remain the responsibility of central executive authorities and local administrations.
It should be noted that business representatives continue to insist on the need for clear and transparent procedures that will not create additional administrative obstacles for enterprises in obtaining critical-importance status and reserving personnel.
Businesses demand stable rules and warn of possible enterprise closures
Anna Derevianko, Executive Director of the European Business Association, said in a comment to journalists that the changes proposed by the government had caused serious concern among both Ukrainian and foreign companies.
Entrepreneurs had the most questions about the establishment of the Coordination Center and the proposed revision of the basis for calculating the reservation quota. Businesses do not have a sufficient understanding of how the new procedures will work and what consequences they will have for enterprises' staffing.
Companies are very concerned and have reacted with alarm to these changes proposed by the government. Two points caused particular concern. The first is the creation of the Coordination Center, which it is unclear how and within what time frame will issue decisions on reservations and critical-importance status. The second important change that was announced is the change in the calculation base for calculating the 50% quota
According to her, enterprises fear that the new restrictions could lead to the loss of qualified employees, a revision of production plans, and an overall reduction in operations. Some companies have already warned the Association of the risk of shutting down if the strictest provisions are adopted.
We understand that 100% of businesses will not survive a change in the rules
The European Business Association also believes that the powers of the new coordinating body are insufficiently defined and create corruption risks.
However, the business community’s main complaint concerns not only individual changes, but also the constant revision of the reservation rules themselves. Companies are forced to plan production, investments, contract fulfillment and personnel policies amid constantly changing mechanisms for retaining key staff.
Business says that we need some predictability; we need less chaos in the adoption of these decisions, because we also need to plan. We understand that a strong army is necessary and that this is not up for discussion, but in order to have a strong army, we also need a strong economy
Not only defense enterprises, but also related industries may be at risk
The potential consequences of revising the reservation rules extend far beyond the enterprises for which the government is directly proposing to reduce quotas.
The operation of the defense industry, the energy sector and other strategic sectors depends on an entire network of related enterprises that supply them with materials, equipment, components, transport and technical services, while, for example, not manufacturing weapons.
This concerns, in particular, mechanical engineering, metallurgy, the chemical industry, logistics, transport, the aviation sector, and repair and service enterprises. Some of these companies may not belong directly to the defense or energy sector, but in practice ensure the continuity of their operations.
For example, an enterprise that manufactures components for the defense industry may formally operate in another sector of the economy, and the share of government contracts in its operations may not be 100%. However, the loss of critically important specialized professionals may disrupt production chains and affect the deadlines for fulfilling defense orders.
The situation is similar in transport and logistics, on which the supply of equipment, cargo transportation, humanitarian operations and the functioning of other strategic industries depend. Specialized enterprises are particularly important, as training qualified workers there takes years, and replacing them quickly is virtually impossible. It should also not be forgotten that companies pay taxes and return foreign-currency earnings to Ukraine, which helps replenish the budget.
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Therefore, assessing the consequences of changes to the reservation rules solely by the number of employees who could potentially be mobilized is insufficient. It is also necessary to take into account the role each enterprise plays in the economy, how closely its operations are linked to the country’s defense capability, and what consequences the loss of personnel will have for related production and the state as a whole.
The Cabinet of Ministers should look for a mobilization reserve among those evading mobilization
Oleh Hetman, coordinator of the expert groups of the Economic Expert Platform and an associate expert at CASE Ukraine, said that representatives of 16 economic analytical centers had already warned the authorities about the risks of the proposed changes in a joint appeal. According to him, removing the provision concerning employees with lawful deferments is a positive step that indicates that some of the expert community’s comments were taken into account.
But the issue of the powers of the Coordination Center remains open. Hetman is convinced that the new body should not have the tools to independently block or revoke the status of critically important enterprises.
Overall, in its current form, the resolution is significantly better than the previous version. That is, certain comments were taken into account, and this is important. However, the problem with the Coordination Headquarters (Center — ed.) remains. We believe that its functions should be minimized as much as possible, leaving it exclusively with an advisory role
At the same time, the expert drew attention to a contradiction in the Cabinet's approach to revising the reservation rules. In his view, the government is trying to increase the mobilization pool primarily at the expense of officially employed citizens who ensure the operation of businesses and tax revenues for the budget. At the same time, attention is being diverted from conscription-liable individuals who are wanted and avoid official employment.
According to available estimates, around two million people are wanted and do not have official employment. A significant number of such people work in the shadow economy and avoid formal employment so as not to draw attention to themselves through employment relations with a particular enterprise
He is convinced that the state's priority should instead be working with those who evade mobilization.
It is precisely this area that the government should focus on first and foremost. Ways must be sought to involve in the mobilization process people who are outside the official sector of the economy, rather than creating additional risks for enterprises that operate transparently, pay taxes, and provide employment
He added that reservations may be exclusively a mechanism for finding additional mobilization resources. Their purpose also lies in preserving production capacity, jobs, and budget revenues, from which, in particular, the needs of the army are financed.