Forecast: Lviv’s employment market in 2010

  • Forecast: Lviv’s employment market in 2010
Issue 20, January 2010.

Ukraine suffered a severe blow across the employment market in 2009. Unemployment skyrocketed, underemployment was rampant, many employees began entering other employment spheres, and a vast number of employees were living in fear that their heads would be next on the chopping block. Those that managed to hang on often saw salary cutbacks, bonuses slashed, shortened work days and wages that were not paid out in a timely fashion. Hard statistics testified to the overall negative trends. Over 2009 official unemployment hovered around 9.1% -10% among people aged 16 to 70. However, since reaching these lows in 2009 the situation has brightened somewhat and it is now possible to offer a guardedly positive forecast for 2010. According to the International Labour Organization (ILO), if the current modest pace of growth in employment figures is maintained Ukraine should reach pre-crisis level of employments within the next 30 months. Surprisingly, these forecasts are even more optimistic than worldwide forecasts where, according to the ILO estimates, it will take between 3.5 to 6 years for the restoration of labour markets worldwide.

Growth in wages
2010 promises to bring back the appealing phenomenon of wage growth. This will be observed in most sectors of the economy except for metallurgy, construction and the banking
spheres, which are still being held hostage to a lack of crediting and an absence of demand. The first quarter of 2010 will be shaky for the employment market due to the presidential
elections, but once the elections are over and normality is back in the air there will be a growth in salaries. This trend will be a positive signal for employees and serve as a warning signal for the employer. Employers will have to begin exercising caution and prudence once more, monitoring wage trends so as not to lose their most important resource, their employees, to their competitors. The Ukrainian labour market remains marked by a distinct lack of corporate loyalty and once wages begin to rise we can expect employees to return to the habit of following the salary trail from one middle management position to the next. It is no secret that being at the top has its pluses and minuses. Top talent, as a rule, demands the highest salaries and when it comes down to the bottom line in a cash strapped economy, the top wagers are usually the first to be cut as more than half of most Ukrainian companies’ operating costs are comprised of salaries. At the same time top talent need not fret as they are the most resilient when it comes to adapting to new employment realities and are typically the first to recover once the job market begins to bounce back.

Wanted: Lviv region vacancies
Lviv is poised to experience an upswing in employment during 2010 due to several factors. Firstly, the traditionally strong IT sector will continue to grow and approximately 10-15% of all vacancies in the region will be allotted to IT specialists. Secondly, tourism will continue to grow stronger and will increasingly become Lviv’s bread and butter, serving as a source of employment and income for many of the region’s population. Last year’s tourism statistics show that more than 1 million tourists visited Lviv alone in 2009 and the figures will only grow in 2010. Lviv will also experience unprecedented job growth as a result of its role as a host city of the Euro 2012 football championships. According to the Lviv regional state authorities, Euro 2012 will bring 1,400,000 visitors to the city over a three-
week period in June 2012. Meanwhile, works on new sites and infrastructure projects and Euro 2012 related projects is expected to create a further 25,000 new jobs in the region.
This is a once-in-a-lifetime opportunity for the capital of West Ukraine to showcase itself to a huge international audience and it could kick-start a local economic boom if handled cor-
rectly.

Lviv’s language barrier
One of the major obstacles facing Lviv in a broader sense remains language training. Although language proficiency is quite strong in the city’s IT sector where most IT professionals speak English at an acceptable level, the opposite is seen in almost every other sector of the economy in the western region of Ukraine. This is an especially gaping problem for companies in the recruitment industry in Lviv where strong English speaking candidates are like needles in a haystack. Although Euro 2012 will bring many opportunities, question marks remain over whether hospitality and service sector staff will reach the required English language proficiency to make a success of Lviv’s host city opportunity to showcase itself. As the city gears up to host visitors whose major language of communication will be English there has been little movement on improving language proficiency. This is likely to turn into a problem for Lviv, which has thus far been able to get by with Polish tourists and other Slavic visitors, but will not be sufficient for a truly international audience. One of the reasons that language training has not been identified as a priority for regional business is that the service sector has a major turnover problem. Service personnel see the profession as a temporary one due to poor pay and low prestige and, as a result, restaurant owners are unwilling to invest in language training for their staff, fearing their investments will be lost due to staff turnover or that their staff will be lured away by their competitors wanting to take advantage of an already trained specialist. The year 2010 promises to bring many changes for the better for western Ukraine and to its capital Lviv. In the coming twelve months we shall see whether the region will be able to capitalize in full on the opportunities coming its way as the Ukrainian economy continues its slow recovery and preparations for Euro 2012 move up several gears.