Joint statement of the business community regarding the state of emergency

23/ 03/ 2020

The European Business Association, the Union of Ukrainian Entrepreneurs, IT Ukraine, the Federation of Employers of Ukraine, the Ukrainian Agribusiness Club, Business 100, the CEO club support the efforts made by the President, the Government of Ukraine and local authorities in introducing quarantine measures to prevent the spread of COVID-19. The business community fully agree that this is an extreme threat to the citizens of Ukraine and maximum measures are needed to protect the health of people. So, instead of making a list of critical infrastructure that will be allowed to operate, the Government considers creating a list of industries which operations are prohibited as they potentially contribute to the spread of COVID-19 (activities related to public events, sports clubs, food services, except for take-out or delivery, etc.) While minimizing the outbreak risks, it is important to ensure functioning channels for the business, because in case of shutting down of the majority of companies, millions of Ukrainians will lose their jobs and the countries budget will lose a big part of the income. As a result, the country will have very negative social consequences as many people, with no savings and means of subsistence, may protest out of despair, and the state will be deprived of financial and organizational resources to fight the virus. Thus, the effects of the pandemic will be truly severe. In a comparative analysis of the measures against COVID-19 in Ukraine and other countries (where the virus has spread more widely), it is evident that as of March 22, 2020, Ukraine has already implemented a set of much more strict measures than the rest of the countries (ban on international and interurban transportation, significant restrictions on public transport, the closure of public places, including food outlets, concert venues, and retail chains). Countries, where the number of patients per million people exceed those of Ukraine by a hundred times (Germany - 286 patients / million people, the Netherlands - 246 patients / million people, Sweden - 191 patients / million people, etc.), took only part of the measures implemented in Ukraine. At the same time, Ukraine is planning even to extend the existing range of measures, which are only comparable to those implemented in the most affected regions of Italy and China. This, in turn, will result in the loss of millions of jobs and tangible budget cuts at various levels. Other states launch multi-billion-dollar programs to support the economy because of the losses associated with the COVID-19 anti-proliferation measures. Neighboring Poland, for example, plan to spend 212 billion zlotys (1.37 trillion hryvnias) to stimulate the economy. Ukraine does not have sufficient financial reserves, so if an additional set of quarantine restrictions are introduced and a large number of enterprises are suspended without an adequate economic support program, it will result in a deep economic crisis and drastic social consequences that are difficult to predict. Leading experts say that if quarantine is extended for several months, Ukraines GDP will fall by 9% in 2020, and the hryvnia exchange rate may reach 35 UAH / USD. Besides, if only strategic industries remain working, the consequences can be even more distressing. Of course, it takes more time to estimate them in detail, but, for example, Chinas actual loss may be estimated by a 40% drop in GDP in the first quarter of 2020 compared to the previous quarter, reported by JPMorgan Chase & Co., a US investment bank. The member companies of the EBA, the Union and others are well aware of their social responsibility and take all possible measures to prevent their employees from the infection by: - implementing work-from-home (for workers who can work remotely); - providing the means of personal protection; - explaining the danger of a pandemic. That is why the business community believes that in the current situation, it is necessary to focus on the following: 1) prevention of significant loss of jobs; 2) prompt fulfillment of the state obligations to the IMF and adopting two laws, in particular, the law on non-return of banks to ex-owners, in order to get the funding; 3) immediate reduction of budget expenditures (stop the funding of state programs, etc.) and allocation of released funds to fight the pandemic; 4) prompt and effective verification of recipients of pensions and social benefits, which will detect non-existent recipients and, accordingly, reduce the state budget expenditures; 5) centralization of funds in the local and state budgets to use them solely for preventing the pandemic; 6) the state must provide the tax-free minimum income to the workers affected by the implementation of quarantine measures; 7) non-imposition of any financial penalties on all business entities that have loans in banking and financial institutions. Considering the abovementioned, the business community appeals to the President of Ukraine, the Cabinet of Ministers of Ukraine and the Verkhovna Rada of Ukraine with the following requests: to involve the business community in the development of step-by-step actions to reduce the negative impact of the pandemic on the economy at both national and regional levels; to implement decisions only after discussing and consulting with the business. The business community realizes the complexity of the challenges facing Ukraine today and is ready to cooperate with the authorities. We are also responsible for the well-being of millions of our employees and require the state to do everything it can to prevent business shutdowns, which will lead to even more complex consequences and leave much of the countrys population without means of subsistence.

So, instead of making a list of critical infrastructure that will be allowed to operate, the Government considers creating a list of industries which operations are prohibited as they potentially contribute to the spread of COVID-19 (activities related to public events, sports clubs, food services, except for take-out or delivery, etc.) While minimizing the outbreak risks, it is important to ensure functioning channels for the business, because in case of shutting down of the majority of companies, millions of Ukrainians will lose their jobs and the countries budget will lose a big part of the income. As a result, the country will have very negative social consequences as many people, with no savings and means of subsistence, may protest out of despair, and the state will be deprived of financial and organizational resources to fight the virus. Thus, the effects of the pandemic will be truly severe.

In a comparative analysis of the measures against COVID-19 in Ukraine and other countries (where the virus has spread more widely), it is evident that as of March 22, 2020, Ukraine has already implemented a set of much more strict measures than the rest of the countries (ban on international and interurban transportation, significant restrictions on public transport, the closure of public places, including food outlets, concert venues, and retail chains). Countries, where the number of patients per million people exceed those of Ukraine by a hundred times (Germany – 286 patients / million people, the Netherlands – 246 patients / million people, Sweden – 191 patients / million people, etc.), took only part of the measures implemented in Ukraine. At the same time, Ukraine is planning even to extend the existing range of measures, which are only comparable to those implemented in the most affected regions of Italy and China. This, in turn, will result in the loss of millions of jobs and tangible budget cuts at various levels.

Other states launch multi-billion-dollar programs to support the economy because of the losses associated with the COVID-19 anti-proliferation measures. Neighboring Poland, for example, plan to spend 212 billion zlotys (1.37 trillion hryvnias) to stimulate the economy. Ukraine does not have sufficient financial reserves, so if an additional set of quarantine restrictions are introduced and a large number of enterprises are suspended without an adequate economic support program, it will result in a deep economic crisis and drastic social consequences that are difficult to predict. Leading experts say that if quarantine is extended for several months, Ukraine’s GDP will fall by 9% in 2020, and the hryvnia exchange rate may reach 35 UAH / USD. Besides, if only strategic industries remain working, the consequences can be even more distressing. Of course, it takes more time to estimate them in detail, but, for example, China’s actual loss may be estimated by a 40% drop in GDP in the first quarter of 2020 compared to the previous quarter, reported by JPMorgan Chase & Co., a US investment bank.

The member companies of the EBA, the Union and others are well aware of their social responsibility and take all possible measures to prevent their employees from the infection by:

– implementing work-from-home (for workers who can work remotely);

– providing the means of personal protection;

– explaining the danger of a pandemic.

That is why the business community believes that in the current situation, it is necessary to focus on the following:

1) prevention of significant loss of jobs;

2) prompt fulfillment of the state obligations to the IMF and adopting two laws, in particular, the law on non-return of banks to ex-owners, in order to get the funding;

3) immediate reduction of budget expenditures (stop the funding of state programs, etc.) and allocation of released funds to fight the pandemic;

4) prompt and effective verification of recipients of pensions and social benefits, which will detect non-existent recipients and, accordingly, reduce the state budget expenditures;

5) centralization of funds in the local and state budgets to use them solely for preventing the pandemic;

6) the state must provide the tax-free minimum income to the workers affected by the implementation of quarantine measures;

7) non-imposition of any financial penalties on all business entities that have loans in banking and financial institutions.

Considering the abovementioned, the business community appeals to the President of Ukraine, the Cabinet of Ministers of Ukraine and the Verkhovna Rada of Ukraine with the following requests:

to involve the business community in the development of step-by-step actions to reduce the negative impact of the pandemic on the economy at both national and regional levels;
to implement decisions only after discussing and consulting with the business.

The business community realizes the complexity of the challenges facing Ukraine today and is ready to cooperate with the authorities. We are also responsible for the well-being of millions of our employees and require the state to do everything it can to prevent business shutdowns, which will lead to even more complex consequences and leave much of the country’s population without means of subsistence.