The Union of Ukrainian Entrepreneurs (SUP), the European Business Association (EBA), the Federation of Employers of Ukraine (FEU), the Ukrainian Agribusiness Club (UCAB), the IT Ukraine Association, Business 100, CEO Club support the efforts of the President, the Government of Ukraine and local governments to implement the quarantine measures to counteract the spread of the disease which is recognized by World Health Organization (WHO) as a COVID-19 acute respiratory disease caused by the SARS-CoV-2 coronavirus. We completely agree that this is an extreme threat to the citizens of Ukraine and maximum measures to protect human health are necessary.
At the same time, we believe that the introduction of a state of emergency with the shutdown of most non-strategic enterprises is premature and could have catastrophic consequences for the Ukrainian economy. Thus, if most companies are stopped, millions of Ukrainians will lose their jobs and the budget will lose a large part of the income. The social consequences will be very negative, a big number of people having no savings and having lost livelihood may go out in protest with despair, and there will be much less financial and organizational resources to fight the virus in the state. Accordingly, the effects of the pandemic will be truly critical.
In a comparative analysis of measures to prevent the proliferation of COVID-19 in Ukraine and other countries where the virus has become much more widespread, it becomes evident that on March 22, 2020 Ukraine has already implemented a set of tougher measures than the rest of the countries (prohibition of international and intercity traffic, significant restrictions of urban traffic, closure of public facilities including catering, concert venues and retail chains). Countries where the number of patients per million people exceeds the figures in Ukraine hundreds of times (Germany – 286 patients / million people, the Netherlands – 246 patients / million people, Sweden – 191 patients / million people etc.) use only part of the measures implemented in Ukraine. At the same time a new significant expansion of the range of measures is being planned in Ukraine, that is comparable only to the measures implemented in the most affected regions of Italy and China, in particular the ban on the activities of enterprises which are not on the critical infrastructure list is planned. In result there will be a loss of millions of workplaces and significant budget cuts at various levels.
Other countries are launching multi-billion economic support programs because of the losses associated with the COVID-19 anti-proliferation measures. For example, in neighboring Poland it is estimated that 212 billion zł (1.37 trillion hryvnias) will be spent on measures stimulating the economy. Ukraine does not have sufficient financial reserves and if an additional set of quarantine restrictions is introduced and a large number of enterprises are stopped without a proper economic support program, it will lead to a deep economic crisis and difficult social consequences that are difficult to foresee.
Leading experts say that in the case of quarantine extension for several months Ukraine’s GDP will fall by 9% in 2020 and the hryvnia exchange rate may reach 35 UAH/USD. If only strategic enterprises remain the consequences can be even more critical. Of course, it takes more time to estimate them in detail but the benchmark for actual loss may be estimation of China’s GDP by 40% in the first quarter of 2020 comparing to the previous quarter, reported by American investment bank JPMorgan Chase & Co.
Companies, members of SUP, EBA, FEU, IT Ukraine Association, UCAB, Business 100, CEO Club have a good sense of social responsibility and take all possible measures to prevent the infection of their employees by:
- introduction of home-based work (for workers who can work distantly);
- provision of personal protective equipment;
- explaining the danger of a pandemic.
That is why the business community believes that in the present conditions it is necessary to focus on the following:
- prevent significant job losses;
- fulfill the obligation of the State to the IMF as soon as possible and to adopt the necessary laws to get funding, including the law on the impossibility of returning banks to the former owners;
- immediately reduce budget expenditures (stop financing state programs etc.) and direct the released funds to combat the pandemic;
- provide quick and efficient verification of recipients of pensions and social payments and benefits which will identify non-existent recipients and reduce the state budget expenditures;
- centralize the use of funds in the local and state budgets to control their use only to combat the pandemic;
- the State must provide tax-free minimum income to the employees affected by the implementation of quarantine measures;
- suspend the imposition of any financial sanctions on all business entities that have loans in banking and financial institutions.
Taking in consideration the above mentioned the business community appeals to the President of Ukraine, the Cabinet of Ministers of Ukraine and the Verkhovna
Rada of Ukraine requesting:
- immediately involve the business community in the development of step-by-step actions to reduce the negative effects of the pandemic on the economy both at the state level and in the regions;
- make and implement decisions only after discussing and agreeing with the business community.
The business community is well aware of the complexity of the tasks, which Ukraine is facing today, and is ready to cooperate with the authorities. We are also responsible for the well-being of millions of our employees and demand from the State to do everything to prevent business stoppage which will lead to more complex consequences and leave much of the country’s population without livelihoods.
A comparative table of the COVID-19 prevention measures.
The comparative analysis of the COVID-19 anti-proliferation measures shows that Ukraine takes tougher measures having better epidem iological status and more vulnerable economy.
