The COVID-19 pandemic hit companies in Ukraine hard. Immediate steps taken by the government since spring 2020, such as providing regulation for work from home, relief payments to companies and adapting an existing short-term work scheme, helped companies to adapt to the unforeseen circumstances. Yet, quickly adapting their workforce to reduce labour costs still remained essential for many companies to survive. However, their ability to do so was constrained by labour law, which needs to strike a balance between the interests of workers and companies.
Companies used several ways of adapting their labour force to the new circumstances and to cut labour costs. Unpaid leave or working time reductions required the consent of workers and were used in relatively small magnitudes. The adapted short-time work only covered relatively few companies. In consequence, the main form of labour market adaption was still to dismiss employees, even though this cannot be done quickly nor cheaply and many companies would have rather retained contractual links with their workers during the temporary crisis. To improve the ability of the labour market to reflect both the needs of companies and workers in crisis, extending the existing short-term work scheme in the spirit of short-time work schemes employed by EU countries should be considered.(more…)