POVERTY AND THE LABOR MARKET IN UKRAINE AND IN THE EUROPEAN UNION COUNTRIES

The purpose of this article is to analyze the relationship between poverty and the labor market in Ukraine and European Union countries and to identify government policies that would help to resolve poverty-related issues utilizing the labor market. Factors that lead to an increase in poverty include unemployment, low or unsustainable income, and seasonal or part-time employment. At the same time, high unemployment and the informal sector, that covers a large part of the labor market, leads to a substantial drop in state budget tax revenue and an increase in budget expenditures, such as unemployment benefits and social support. These days, employment and unemployment play an important role in the welfare of residents of Ukraine and EU countries. Therefore, effective government measures and reforms can play a critical role in advancing social welfare. In recent years development of the labor market in Ukraine — in comparison with other categories, such as the macroeconomic and political environment — has been at a high level. The domestic labor market is attractive to foreign investors due to a highly skilled and relatively cheap labor force. At the same time, the large difference in labor income between Ukraine and EU countries leads to a continuous increase in labor migration and loss of human capital in Ukraine. Unlike in many EU countries, the unemployment rate in Ukraine historically has been relatively low and stable even during the times of economic and political crisis. Youth unemployment, as in most EU countries, is high and requires attention from the government. The main causes of youth unemployment in Ukraine are lack of high-quality jobs, low wages, imbalance between the supply of recent university graduates with particular specialties and the demand for their occupations in the labor market. Employment in the agricultural sector in Ukraine remains relatively high in comparison with developed EU countries. Agricultural jobs are low-wage and labor-intensive, and therefore an increase in agricultural productivity and a transfer of workers to the industrial sector would have a positive effect on their income. This requires state support of human capital development, such as additional funding for retraining workers. It would also be beneficial to implement subsidized employment programs that provide the population with relevant work experience and decrease long-term unemployment. Such programs would contribute to a more stable labor income and would also bring more of the inactive labor force to the labor market.