Replacement of mobilized employees and pressure from law enforcement: the Chamber of Commerce and Industry spoke about the main problems of business

Today, Ukrainian business balances between the needs caused by wartime and the necessity to work and generate profit. Does the government listen to Ukrainian entrepreneurs? Does it understand their needs? And how does business overcome today's challenges – UNN discussed this with Rostyslav Korobka, Vice President of the Ukrainian Chamber of Commerce and Industry.

- The issue of mobilization's consequences for various sectors of the economy is acute. Many are reporting a critical situation. Where do you see the biggest problems, in which sectors?

The labor shortage today is about 2.1 million workers. Mostly these are blue-collar workers – lower and middle-level. This is already critical for sectors such as construction, agriculture, and logistics. As for logistics, this affects the transportation of grain to ports, which impacts exports. That is, there is transport, but no drivers, because this is the category where the most people are taken.

In construction, it's a disaster, and there is a need to talk about attracting workers from other countries, such as China, Moldova, possibly India, and Turkey. But there are two problems. We cannot attract workers from Uzbekistan, from former USSR countries that are unfriendly to Ukraine. The Security Service of Ukraine and border control do not allow such workers to enter. But with them, it is at least somewhat possible to communicate without an interpreter. Chinese, Indians, Bangladeshis, and others – the main problem is the language barrier. They are cheaper, but the problem is that communication is difficult. And in construction, this involves drawings, projects that need to be read from a professional point of view.

- The issue of the reservation procedure is constantly being discussed, with ongoing talks about changing approaches and nuances of the procedure. Have there been any changes recently? And are employers satisfied with these changes?

Changes are constantly happening; amendments are continuously being made to Resolution No. 76 ("Some issues of implementing the provisions of the Law of Ukraine 'On Mobilization Training and Mobilization' regarding the reservation of conscripts for the period of mobilization and wartime" - ed.). These are various changes across economic sectors. For example, the defense-industrial complex (DIC) has now been given the opportunity to reserve 100% of its personnel, without specifying the number of employees. This is done for the operational execution of state defense orders.

In other sectors, there are constant limitations on the number, meaning you have to specify the number of employees you want to reserve. But changes (in the approach to reservation - ed.) are constantly happening. And everything is done to reduce the leeway for businesses in reservation. However, when there is a discussion between business and government on this issue, business has very few arguments, because it concerns the potential collapse of the front due to a lack of soldiers. And when we hear these arguments from the General Staff, from the military, it is very difficult for us to weigh war and business. There will be no business if we do not protect the country.

From the first days of the full-scale war - already 4 years - we hold meetings between business associations and the military, especially the General Staff of the Armed Forces of Ukraine. And they give us figures on the shortage of reserves, the necessary monthly replenishment of reserves, huge losses. And when they explain this to us, and you sit and listen, you have almost no arguments. Although business defends its interests. But in general, the situation with booking depends on the situation at the front, and the General Staff knows it, not us, civilians, who just say what is convenient for us.

- But are some proposals from businesses still taken into account? 

Of course, they are taken into account. You know, it's a pleasure to work with the Ministry of Economy and other government bodies when they sense this delicate balance and allow people to reserve employees so that businesses can operate, especially for defense.

- How is the problem of staff shortages being solved? Attracting women to typical male professions, retraining, training, process optimization…

Businesses have to save themselves. Therefore, of course, women are being recruited and retrained, particularly in logistics. But there are areas where it is difficult for women to work, for example, on construction equipment. However, more women are being recruited; there are companies that open schools to train women for their needs, for example, Volvo, there is a company in Nemishaieve that trains for work in the agricultural sector. These processes are ongoing and will not stop, and the percentage of women retraining for these professions increases by at least 20% each year. And this market works. That's the first thing.

Secondly, it's the attraction of foreign workers. This happens in various ways, both legally, when companies obtain official permits and pay taxes for these workers, and through other means. But these processes are also ongoing. Many Chinese workers are already working in the Lviv region, and we know such facts. They are working and will continue to arrive.

Thirdly, retraining. This is not a quick process, but vocational and technical institutions have become increasingly active in working with companies that finance and order categories of workers for their needs.

Fourth, workers under 25 and over 60 are being recruited.

And in general, let's be frank, business will use all opportunities, all available potential and resources to preserve its production capacity. This includes attracting veterans, people with disabilities, and sometimes even those who have gone AWOL. Workers are needed, and every business in its industry deals with this issue daily. This is one of the main issues. That is, if you survey businesses and ask what problems they face in their activities, the first is the lack of labor, and the second is pressure from law enforcement agencies.

- Can we say that this pressure is systemic?

Let's start with the fact that Ukraine is a post-socialist country, and it inherited all those negative phenomena and structures that worked and continue to work. This is a system that needs to be changed, and this phenomenon is systemic.

Moreover, in Ukraine, the mentality and psychology of people, including business, unfortunately, is that "money loves silence." That is, it is better to work quietly, calmly, and always negotiate, rather than make everything public. This is related to the mentality and the regulatory legal framework, which does not allow working "in the white." Of course, if we all worked "in the white" and paid taxes, it would be better than finding ways to save money somewhere.

The question is not that someone wants to make super-profits – the question is simply about survival. Ukrainian business competes with foreign companies that have access to cheap financial resources, and today we have more than a 20% loan rate in hryvnia, which practically does not allow for development, practically does not allow for working at cost. Plus, we have expensive labor. Plus, we understand that for all employees, minimal taxes must be paid in order to reserve them. All these burdens put enormous pressure on business. And therefore, if business goes for some violations, it is not to make some super-profits. And we are talking about business that works – this is not about schemes, this is not about some tax evasion. We are talking about 80-90% of business being business that produces, generates added value. Plus, we know the situation in energy. We are currently working on generators. And it is impossible to work on generators and have any profit or some low cost. All this increases your cost, and you have to somehow survive.

Therefore, it can be said that there is some consensus between business and government, where the "golden mean" is found regarding tax payments and reasonable management of financial flows.

- And who is most often the object of pressure: small, medium, or large businesses?

There is no such information. But large businesses have their own security service in their arsenal, they communicate with state authorities, and find consensus within the current legislation, I emphasize, within the current legislation, so that the business functions and taxes are paid within the burden that exists. But small and medium-sized businesses are worse off because they cannot afford such lobbying and protection of their interests as large businesses.

As for pressure, it's a vague story. But there will always be a conflict of interest between the SBU, the National Police, and the Bureau of Economic Security, because businesses don't want to pay, and the authorities want to collect the maximum amount of fees and taxes to fill the budget.

- But medium and small businesses can build a dialogue with government agencies, including law enforcement, through associations. To what extent is this dialogue taking place now, and are there any positive examples?

When Ruslan Andriyovych Kravchenko began his term as Prosecutor General, meetings on a systemic basis began within the framework of the Ukrainian Business Council and industry associations. This includes practically all industry associations: retailers, builders, farmers, and others. And the dialogue between business and the Office of the Prosecutor General exists on a systemic basis. Practically every month, the Prosecutor General and his deputies answer all questions and deal directly with cases. Business at the meeting talks about some case - this case is immediately taken under control and studied. If there is a violation, they work on it, and if not, the criminal proceedings are closed. Even if the pre-trial investigation is conducted by the National Police, the SBU, or other pre-trial investigation bodies.

It is encouraging that they at least try to do something so that legitimate businesses see and understand that work is being done.

- Can you talk about specific cases?

It would be incorrect for me to do so. I can unequivocally say that active work is being carried out to combat, in particular, the illegal circulation of excisable goods and the illegal sale of smartphones.

- What is the current interaction with the BEB, which is the profile body for business, especially after the change of leadership?

In general, the interaction has improved; they have become more open since the new head, Mr. Tsyvinsky, arrived. He began meeting with businesses to understand approaches to work. This is already a positive development, but the process of BEB's reboot is ongoing. And mostly, this concerns regional units and the re-attestation of employees. And this is a lengthy and economically costly process. Therefore, frankly, we, as businesses, are currently watching with great caution how it will work and what approach they will take to what they declare.

The most important thing is not to punish businesses and make them close down. The most important thing is preventive measures and the effectiveness of tax payments, and the fight against the shadow economy. The functions of the BEB include working with tax evasion, excisable goods, grain, and much more. We understand that with those budgets and the number of employees, they cannot cover everything, but we expect that the principles and approaches to work will change. And we, for our part, will analyze and provide our information and analytics.

- Has business provided any recommendations, for example, to the Prosecutor General? Or to legislative bodies regarding stopping pressure from law enforcement agencies?

Of course, it has, it does, and it will. We meet with various parties and factions of the Verkhovna Rada to convey these changes. 

- How do you assess the Prosecutor General's initiative to launch the "Stop Pressure" platform? Are you aware of any appeals from business representatives through this platform?

Kravchenko presented this platform ("Stop Pressure" - ed.) at a meeting of the Ukrainian Business Council. We consider it a very positive step towards interaction with business. There are cases where people apply - it works, and the Prosecutor General's Office reacts to public cases and to this platform. This is a very positive story.

- There are many complaints from businesses about the actions of the tax authorities: pressure, being classified as risky, blocking tax invoices. Are there any positive changes in this area?

The team is changing, the style of communication with business is changing, openness, meetings are held, systemic communication with business is ongoing, problematic cases are being resolved. But there is a problem – regional tax authorities – regional tax administrations still do not reach the level of openness of the central apparatus. There is still much to work on.

- Overall, how do you assess the communication of state authorities, is it sufficient in wartime conditions?

You know, even the very communication in wartime conditions, when bomb shelters and specialized premises are needed for this communication, is already positive. Ordinary businesses will say it's not enough. But if you compare the trends before the war and now – this communication is increasing.

And as a result, it leads to businesses staying in Ukraine, working, and somehow developing. Therefore, the government also understands that those who stay here need to be protected. But this must be legitimate business that pays taxes. Because there is indeed a lot of evasion and schemes.

And there is such an issue as the introduction of value-added tax for individual entrepreneurs, which the head of the International Monetary Fund raised as a condition for allocating funds during her last visit. This shows that there are many problems: payment fragmentation, optimization of hired employees, and so on. Therefore, we had a meeting with the Ministry of Finance to find common ground even regarding the minimum tax barrier - not one million hryvnias, but at least we want two.