TWN Info Service on Sustainable Agriculture
15 April 2022
Third World Network

Ukraine: Rural labour markets negatively impacted by the conflict, says FAO
Published in SUNS #9556 dated 14 April 2022

Geneva, 13 Apr (Kanaga Raja) – The current war between Ukraine and Russia will pose additional threats and negatively impact the rural labour markets in Ukraine, potentially affecting the livelihoods of rural households and populations through multiple pathways, the UN Food and Agriculture Organization (FAO) has said.

In an Information Note released recently, the FAO said that since 2014, the armed conflict in the Eastern areas of Donetska and Luhanska has resulted in a humanitarian crisis in Ukraine, affecting the livelihoods of the people living in these areas, those displaced by the conflict, as well as those living in other areas of the country.

Economic opportunities and labour markets have been strongly affected by the conflict, with the conflict-affected regions presenting the highest unemployment rates in the country since 2015 (15.7 percent in Donetska and 16.6 percent in Luhanska, against 10.3 percent nationally in the second quarter of 2021), as well as the COVID-19 pandemic, said FAO.

FAO said rural employment remains important for a significant share of Ukraine’s population. Even though the share of population living in rural areas has been declining in Ukraine over the past years, about 30 percent of the country’s population still live in rural areas (around 13.6 million people), it added.

“Rural employment thus remains an important source of income and livelihoods, providing about 31 percent of the country’s labour force (around 5.7 million people).”

FAO said rural labour markets were thus before the onset of the war between Ukraine and the Russian Federation an important source of livelihoods and income for a non-negligible share of households in Ukraine.

Rural households were working in different sectors, mostly in the services (47 percent), followed by agriculture (27 percent) and the industry (25 percent) sectors, it added.

FAO said that agriculture also provides employment to about seven percent of workers in urban areas, adding that rural and urban households working in the agriculture sector will thus also most likely be severely affected through the multiple impacts of the war on these sectors and rural labour markets.

Furthermore, it said an important share of households and individuals in rural areas was already in a situation of unemployment before the conflict, increasing their vulnerability.

Unemployment rates in rural areas and urban areas were relatively similar (9.4 and 9 percent, respectively), said FAO, stressing the importance of addressing unemployment in both rural and urban areas as well.

Vulnerable groups face significant challenges related to decent work and employment in rural areas. Unemployment rate is almost two times larger for youth than for adults in rural areas (17 and 9 percent, respectively), said FAO.

It noted that youth labour force participation is also higher in rural areas (36 percent against 29 percent in urban areas), which suggests that rural youth are constrained to joining the labour force earlier on than urban youth.

FAO said rural women also face challenges in rural labour markets. While the unemployment rate for rural women is slightly lower than the unemployment rate for rural men (8.4 percent vs. 10.3 percent), the share of women Not in Employment, Education, or Training (NEET) (22.5 percent) is larger than the shares of rural men (13.5 percent) and urban women (18.9 percent) in NEET.

This stresses that rural women are more likely than their urban and male counterparts to be out of employment and not in education and training, which may indicate that they may be undertaking a larger share of unpaid care work, it added.

Rural households are also more inclined to resort to child labour than urban households. Twenty-five percent of children aged 5-17 were in child labour in rural areas in 2015, against 3.6 percent in urban areas, said FAO.

“Disaggregating by sex, 27.6 percent of male children and 22.6 percent of female children were in child labour in rural areas.”

A significantly larger share of youth aged 15-17 was also found in child labour in rural areas (37.4 percent against 4.3 percent in urban areas), said FAO.

“The share of children in hazardous work was also higher in rural areas than in urban areas (25.1 percent against 3.5 percent, respectively), for both male (27.6 percent against 4.5 percent in urban areas) and female children (22.5 percent against 2.6 percent).”

Before the conflict, 6.1 million Ukrainian nationals were living abroad, of which 53 percent were residing in the Russian Federation, followed by 6 percent in the United States of America, 5.8 percent in Kazakhstan, 4.7 percent in Germany, 4.4 percent in Poland, and 4 percent in Italy, said FAO.

Using data from the National Bank of Ukraine, it is estimated that remittance flows to Ukraine were greater than USD 19 billion in 2021 and represented 12 percent of the country’s GDP.

FAO said that besides Ukrainian nationals residing overseas, there were before the conflict between Ukraine and the Russian Federation 734,000 internally displaced persons in Ukraine.

According to the FAO, most of these displacements were a result of the conflict in Donetska and Luhanska, which led to an economic outward migration from these regions, leading, in particular, to disproportionate displacement and migration of the younger population to other regions in Ukraine as well as abroad.

POTENTIAL IMPACT OF CONFLICT

The current conflict and crisis will potentially affect labour markets, employment, and working conditions in rural areas, said the Information Note.

FAO said basic infrastructure and the provision of public services will also be affected, while the conscription and involvement of the population in the conflict will affect the rural and agricultural labour force in the country.

“These factors, among others, will affect agricultural supply chains, both upstream and downstream, including through logistical and production risks.”

As of the end of March 2022, it is estimated that about 6.5 million persons were internally displaced and 4 million refugees fled Ukraine, said FAO.

By March 16, 2022, more than half of the adult internally displaced persons were aged 40 or younger (21 percent aged 18-30 and 33 percent aged 30-40).

Most of the IDPs were also coming from the regions (oblasts) of Kyiv City (30 percent), Kharkiv (25 percent) and the Kyiv region (15 percent), it added.

Internal displacement, combined with the conscription and requirement for men aged 18 to 60 years to stay and join the fight, has reduced the labour force availability in rural areas, said FAO.

It said Ukrainian farms have already reported experiencing labour shortages with many of their workers quitting their jobs, further stressing the lack of workers as a concern to resume work on the farms as well.

FAO said these labour shortages, coupled with shortages of other inputs (e.g., fuel, chemicals, fertilizers, etc.), as well as the damages to some farms during the war, will affect the production and performance of farms in the country.

“This will in turn potentially affect their revenues and limit rural on- and off-farm employment opportunities for remaining (potential) workers,” it added.

For instance, smallholders, who are responsible of a large part of the country’s gross agricultural production, are also an important source of local employment and livelihoods, said FAO.

“The impact of the war on their production would trigger negative spillover effects on rural and agricultural local labour markets.”

FAO said both the production risks (e.g., impossibility for farmers to attend to their fields to plant and harvest their crops, overall implications for all agricultural activities) and logistical risks (e.g., disruptions to the supply chains through damage to infrastructure) bear the potential to affect rural livelihoods throughout the food and agricultural supply chains in Ukraine.

For instance, off-farm jobs (e.g., in food processing, transportation, and retail) may also be affected by the war (either directly or indirectly through the effects on on-farm production).

While remittances to Ukraine sent by Ukrainian nationals residing overseas to support their families are increasing, remittances from Russian Federation will most likely be disrupted due to the sanctions while the devaluation of the rouble will affect their value, said FAO.

“The reduction of economic activities in Russian Federation will also affect the employment and income of migrant workers. This can also have an impact on many countries in Central Asia who are highly dependent on remittances from Russian Federation.”

FAO said at the same time, Central Asian migrant workers who were supposed to make their journey to Russia put on stand-by mode their travel plans, while the ones already present in Russia may have already considered looking for more lucrative work opportunities elsewhere, namely in Southeast Asia and the Middle East.

Considering the importance of rural employment and livelihoods in Ukraine, it is critical that policy- and decision- makers adopt policies and strategies that aim at addressing the specific challenges affecting rural employment and provide decent rural employment opportunities to rural households, including the most vulnerable groups, in order to contribute to the economic foundations for the economic recovery and development phase, said FAO.