White Book of Reforms
joint KSE and VoxUkraine project

Acknowledgement. The authors are grateful to VoxUkraine Editorial Board and especially Oleksandr Zholud for proofreading the text. The authors are grateful to Ksenia Alekankina, Anastasia Chernukha, Liena Shulika, Julie Danylenko for their valuable help during the work on this project

Ukraine is often described as a ‘crossroad’ or a ‘borderland’ between East and West. As such, it is believed to combine some features of both. But we would rather describe Ukraine as a blend of ‘North’ and ‘South’ in the meaning of economic models where ‘North’ denotes more technologically advanced states and ‘South’ – less developed ones.

Indeed, Ukraine combines the features - good and bad - of developed and developing countries. For example, its low birth rate, ageing population and shrinking labour force resemble the demography of developed countries. At the same time, its average life expectancy is ten years lower than in the EU, which makes reforming Ukraine’s pension system an enormous challenge.

Its growth rate of 2-3% also resembles that of developed countries – despite Ukraine’s income per capita being at levels of developing countries. Like many developed countries, Ukraine has rather generous social obligations. However, it struggles to collect taxes to finance those obligations: the level of tax evasion and capital flight is at par with developing world. Corruption and quality of governance, specifically law enforcement, resemble the ‘South’ too. Somewhat counterintuitively, high levels of corruption induce the desire for a large government and significant state interference[1]. This desire is intensified by paternalism inherited from the Soviet Union.

Voting for populists, previously characteristic of developing countries, now is spreading to the developed world. Ukraine has not been left out of this trend. Similar to developing countries, Ukraine lacks strong institutions present in developed countries that help their economies to withstand populists in the highest political offices.

Under these conditions, where can Ukraine find strength and resources for growth? One answer is to create a market for agricultural land. According to the World Bank estimates, it can provide about additional 1.5 percentage points to GDP growth annually. Moreover, this effect will be felt almost immediately.

Another ‘low hanging fruit’ is the free trade agreement with the EU. Ukraine’s exports of goods to the EU in 2018 were 19.6% higher than in 2013, and with further implementation of the agreement this trend will continue. At the same time, Ukraine should pursue signing bilateral trade agreements with other countries [2]. Exports of products in which Ukraine has comparative advantage as well as inclusion of Ukrainian companies into global value chains will add to sustainable growth.

However, the most important factor is fostering investment. The level of gross capital formation in Ukraine recently has been about 20% of GDP. This is close to the EU level, while in developing countries this indicator is significantly higher - about 30%, and in some instances above 40% of GDP. Investment is required in all the sectors, both into physical objects such as equipment or infrastructure and into intangible assets such as knowledge and skills of both youth and adults.

To attract investment, one does not have to invent a wheel: the necessary conditions are secure property rights and a functioning law enforcement. When these are in place, development of various instruments of financial intermediation (if they are allowed by legislation) is just a matter of time. Certainly, it is advisable for governments to reduce the regulatory burden on business and lower uncertainty by being more transparent about policy formulation and building it on rules and evidence rather than short-term political gains. Then the best possible signal to foreign investors would be trust of Ukrainian businesses to their own state.

In developed countries, before making a final decision, an investor studies the law. In developing states, she looks for ‘facilitators’, ‘guarantors’ and workarounds. In Ukraine, investors probably do both. Hence, reduced need for the second type of inquiries would be a clear sign of progress.

The path from ‘South’ to ‘North’ is not an easy one. Ukraine will continue to embed the features of both developed and developing countries for quite some time. However, we would like those to be the best features - the ‘Northern’ level of law compliance and the ‘Southern’ investment rate. Then it would be possible to grow at the rate of developing countries and approach the quality of life of developed ones.

In this paper we overview the progress on the path of structural reforms that lay the foundations for sustainable growth and highlight necessary next steps.

Table of Contents

Click on folder to select reform

Political System

Political System

Ilona Sologoub, KSE, VoxUkraine

Electoral system

  • Party leaders can trade places on party lists – either for money or for loyalty.
  • In single-mandate districts candidates with the most money have the highest chances to win (although the last elections showed that there can be exceptions to this rule).
  • In single-mandate districts many votes are lost, so the winners can actually be minority candidates.

Dualism of executive power


  • Mandatory merge ATCs that did not voluntarily merge before the deadline which has to be defined.
  • Resolve the issue of raions – one needs to decide whether raion level of the government remains. If yes, then its powers and responsibilities have to be redefined, if not – then raions should be liquidated by law [5].
  • To clearly distribute the responsibilities on the local level – i.e. between local branches of the central government and local elected officials.

[3] For a comprehensive discussion of Ukraine’s constitutional design see the article of Myerson, Roland and Mylovanov) and an explainer article by Rostyslav Averchuk.

[4] For an intermediate detailed evaluation of decentralization reform (2014-2016) see Levitas&Djukic (2017), see Dudley (2019) for evaluation of the most recent results.

[5] The former minister of regional development suggested to reduce the number of raions from 465 to 102 leaving them with functions of coordination of local offices of central government bodies.

Public Administration Reform

Public Administration Reform

Anna Bilous, Blavatnik School of Government, University of Oxford

Figure 1. Ukraine’s Governance Indicators

Source: World Bank’s Worldwide Governance Indicators

Table 1. Recruitment Dynamics for Category A Positions, 2016-2018

Source: Report On Implementation Of Ukraine’s 2016-2020 Strategy For Public Administration Reform In 2018, p.33

Figure 2. Performance against the selected international rankings and indices of governance

Source: Directorate of Public Administration at the Secretariat of the Cabinet of Ministers 2018, p. 14

  • Lack of political support
  • Changing the strategy of reform
  • Reversal of the reform progress
  • Ineffective communication of the reform

  • Generating better value for money
  • Improving access to public services and their quality
  • Making the way the government is running more efficient
  • Increasing the chances that policy interventions are effective

  • Demonstrating tangible change
  • Linking reform outputs to outcomes
  • Being transparent about funding the Strategy of Public Administration Reform
  • Openly discussing the cost-cutting measures adopted as a part of the reform

[6] Verheijen, T.J. and Rabrenovic, A., 2015. Civil service development in Central and Eastern Europe and the CIS: a perfect storm?. In Comparative Civil Service Systems in the 21st Century (pp. 15-37). Palgrave Macmillan, London.

[7] Financial and Economic Analysis Office in the VRU, 2018. Financing the Reform of Public Administration in 2017: Plans and Facts

[8] Secretariat of the Cabinet of Ministers of Ukraine, Response No 6511/0/2-17 from 21/07/2017 to the Request of MP A.Shkrum No 417/213-17 from 3/07/2017.

[9] Cabinet of Ministers, 2018. Reform Implementation of Ukraine’s 2016-2020 Strategy of Public Administration Reform in 2018

[10] Reform Delivery Office, Cabinet of Ministers of Ukraine, 2018. Public Administration Reform Report for 2016-2017, p. 40

[11] Bilous, A., Tyshchuk, T., 2019. Civil Service Reform in Ukraine: Patterns of Success in Reforming Institutions. Vox Ukraine, forthcoming

[12] The reform was introduced in some of the city council beforehand, however it had a limited spread (Dobryanska, N., 2014. Centres of Administrative Service Delivery – a Way to Fight Bureaucratisation and Corruption. Dzerkalo Tyzhnia, 29/04/2014).




Elena Besedina, KSE

Figure 3. Doing business rank of Ukraine by pillars

Source: Doing business reports

[13] As a prominent example, regulation of prices on certain products in Ukraine was finally cancelled only in mid-2017, while in other transition countries price liberalization was a key element of the package of initial market reforms. Other examples – a number of Soviet-time sanitary norms and standards (not used anymore) were cancelled in 2015-2016.

[14] Source: 2016-2017 Action plan implementation page on the DRSU website, visited on August 14 2019

[15] According the different ways of surveys (in 2016-early 2018), only around 15% of the respondents knew about what the Council was doing, and almost half of these respondents believed that the Council was ineffective (Source: reforms.in.ua)


Judicial Reform

Judicial Reform

Ilona Sologoub, KSE, VoxUkraine

Table 2. Number of positions and vacancies in Ukrainian courts

Source: Higher Qualification Commission of Judges

  • the court system was changed from four-level to three-level one. The intermediate level between appellate courts and the Supreme Court introduced by former president Yanukovych was eliminated. The role of the Supreme Court was strengthened. An open competition for 196 positions in the Supreme Court started in 2017. In May 2019, 193 vacancies were filled. However, the Civic Integrity Council that had an advisory role in the selection procedure reports that 44 appointees have dubious reputation.
  • the Higher Court on Intellectual Property and the Higher Anti-Corruption Court (HAC) were established in mid-2018. Establishment of the HAC was uneasy because this court completes the vertical of anti-corruption bodies - National Anti-Corruption Bureau (investigation), Anti-Corruption Prosecution and Anti-Corruption Court (conviction). In September 2019 the HAC started its operations. International experts played a major role in selection of the HAC judges. In fact, the willingness of the former president Poroshenko to undermine their role was one of the major obstacles to the adoption of the law on the HAC.
  • the independence of the judiciary was strengthened along several lines. Firstly, selection and disciplinary actions towards judges are performed mostly by the professional community. Thus, if previously the Higher Council of Justice (HCJ) consisted of 10 representatives of judges and other lawyers and 10 representatives of executive and legislative power, today the ratio is 15 to 6. The Higher Qualification Commission of Judges (HQCJ - the body responsible for selection of judges) previously did not include representatives of attorneys and included a person from the Ministry of Justice. Now it includes two representatives of attorneys and no Ministry representatives. Secondly, judges now do not have a five-year ‘probation’ period. They are appointed once and for life (they can be dismissed by the HCJ if they commit a crime or ruin their reputation). However, the minimum age and experience needed to become a judge were raised. Thirdly, judges are appointed not by the parliament but by the Higher Council of Justice (the president formally signs the decree with appointment of judges recommended by the HCJ). At the same time, members of the HCJ and the HQCJ cannot work elsewhere while previously they were allowed to hold elected or executive offices. Finally, salaries of judges were increased multiple times. Simultaneously, judges are obliged to submit the declaration of their assets and revenues and the declaration of integrity, and their immunity was limited - now a judge can be detained if captured at the crime scene.
  • the institution of attorneys was considerably strengthened - they received a lot of opportunities to protect their clients which were not available to them before. At the same time, only attorneys are allowed to represent a person in court, while previously anyone could do that (although the law which still has to be adopted can limit this clause only to criminal or otherwise significant cases).
  • court procedures were streamlined - in particular, many have been transferred into electronic form (e-court), and an automatic distribution of cases among judges was introduced.
  • to improve the enforcement of court decisions, private enforcement agents were allowed, and remuneration of public enforcement agents was linked to the results of their work.

Figure 4. Trust to judiciary, prosecution, police

Panel A.

Note: the graph shows the share of people who said they trust or mostly trust in those who had a definite answer. Source: Institute of Sociology NASU surveys

Panel B.

Source: Democratic Initiatives Surveys

Table 3. Trust to judiciary by different types of respondents

Source: USAID “New Justice Program” surveys

[16] See the article of Irena Budz for a comprehensive discussion of evolution of Ukrainian judicial system.

[17] At that time, heads of courts distributed the cases among judges (now this is done automatically) and thus could arrange hearing of certain cases by the “right” judges.

[18] More details on the judicial reform can be found on a special portal: sudovareforma.org


Monetary Policy and the Banking Sector

Monetary Policy and the Banking Sector

Yuriy Gorodnichenko, University of California, Berkeley, KSE, VoxUkraine
Olena Bilan, Dragon Capital, VoxUkraine

Figure 5. Headline Inflation and NBU Targets

Sources: NBU, SSS

Figure 6. A shift to flexible exchange rate management

Source: NBU

Figure 7. Number of Banks and Banking Sector Concentration

Source: NBU


Fiscal Policy and Public Finance

Fiscal Policy and Public Finance

Darina Marchak, KSE

  • UAH value of government debt jumped upwards since the crises were accompanied by sharp currency devaluations.
  • External markets closed and the government struggled to finance the really needed budget deficit.
  • The government turned to the IMF as a lender of last resort.
  • IMF provided the bail-out but also recommended fiscal austerity and structural reforms. Fiscal austerity was usually implemented to receive the first tranche of a program but as soon as the situation stabilized structural reforms were forgotten.
  • Absence of fiscal rules. In generally weak institutional environment government short-sightedness becomes unavoidable. Fiscal rules can help mitigate this problem - that is why in Poland, for example, they are embedded into the Constitution. By fiscal rules we mean not only the most widely known public debt cap but also restrictions on frequency and size of state budget amendments.[41]
  • Persistent budget deficit and thus rising public debt. At the same time, the government tried to ‘conceal’ the true level of debt by issuing state guarantees for borrowing of state-owned companies rather than direct government debt. For instance, although the state budget deficit in 2013 accounted for 4.3% of GDP, the total public finance deficit stood at 6.7% of GDP (the respective figures surged to 4.6% and astonishing 11.6% of GDP respectively in 2014).
  • Inefficient use of funds. Although the program budgeting was introduced already in 2002, its implementation was rather formal than genuine. Purposes of government budgetary programs and indicators of their achievement were (and still are) vaguely defined and/or irrelevant. Another prominent example of inefficiency is keeping household gas tariffs 2-3 times below the market level. Equivalent to provision of a universal subsidy, this situation created plentiful opportunities for arbitrage - gas could be purchased from Naftogaz at ‘household’ price and sold to the industry at the market price. In 2014, this resulted in Naftogaz deficit higher than the State budget deficit (see the Energy Market section for details).
  • Diversion of public funds to private pockets close to the government. This was implemented using various schemes. One of the most popular - ‘manual’ VAT refund to exporters. In order to get the refund, companies had to ‘give back’ up to 30% of the refund sum. Otherwise they could wait for years. Another vast source of rent was public procurement - government agencies used to buy things from their ‘preferred’ suppliers at higher than market prices.
  • Overly regressive tax system. The government used to provide extensive tax exemptions to the largest companies which had a strong lobby in the Ukrainian parliament. In the early 2000s, these privileges were provided via the ‘special economic zones’ and ‘territories of priority development’ that covered 10% of Ukrainian territory and were extensively used to minimize tax payments by large businesses. Even after these tax loopholes were closed in 2005, numerous tax privileges for business remained. In 2011 tax privileges provided to 15 sectors of the economy amounted to 4.5% of GDP. In 2012-2013, estimated total revenue that business retained due to various tax privileges was about UAH 70 billion or 20% of potential tax revenue [42]. This created adverse incentives since honest taxpayers were ‘punished’ for their honesty and were at a competitive disadvantage compared to those who managed to evade taxes or get privileges. To compensate for the lost budget revenues, the government disproportionately taxed other economic agents, i.e. households.
  • collection of additional funds from business, i.e. advance profit tax payment (as of January 1st 2015 these advance payments amounted to UAH 25.2 billion).
  • implicit emission [43]: the Ministry of Finance would issue domestic government bonds and the National Bank of Ukraine would immediately buy them out. During 2011-2013, the NBU became the largest holder of domestic debt securities (figure 8).
  • usage of funds of local governments stored at the Treasury account to finance expenditures of the central government.

Figure 8: Distribution of government bonds by holder types, year-end

Source: National Bank of Ukraine. *as of end-August

Figure 9: Distribution of Ukrainian government debt, $ billion, as of year-end

Source: Ministry of Finance. *as of end-July

Figure 10. Public finance deficit and government debt

Source: IMF data

[41] As an example, consider the budget-2012. The government led by Mykola Azarov (March 2010 - January 2014) tried to steeply raise social spending before the parliamentary elections held that year. Thus, the budget was amended 39 times, and at the end its revenues grew by 7.5%, expenditures by 10.5% and the deficit by 54%(!)

[42] Theoretical and practical aspects of the application of tax benefits in Ukraine, Serebryanska Y. V, Volochay A. S.

[43] This is directly forbidden by the law, and formally a secondary market was used, e.g. government increased Naftogaz capital with bonds and the latter sold bonds to the NBU


Pension Reform

Pension Reform

Olga Nikolaeva, KSE

Figure 11. Pension Fund balance, per cent of GDP

Source: Pension Fund Budget, State Statistics Service

[19] These professions were military, coal miners, teachers and some other. After 2017 reform, only military professions keep the right for early retirement.

[20] Again, in 2017 their scope was considerably reduced.

[21] The formula for calculation of a pension includes coefficient based on person’s duration of employment, ratio of her salary to average wage in the economy during the respective time, and average wage in the country. But average wage used for calculation of pensions was not adjusted automatically – for example, before its increase in 2017, 2007 average wage was used. Thus people who retired earlier, other things being equal, had lower pensions.

[22] In 2017, average wage was 37% higher than in 2016 in nominal terms and by 19.1% in real terms, which is the highest rate since 2005.

[23] Some market players argue for development of the decentralized model.


Trade Policy Reforms

Trade Policy Reforms

Veronika Movchan, IER, VoxUkraine
Maryna Khorunzha, KSE


Energy Markets

Energy Markets

Oleksiy Gribanovskyi, KSE

  • cross-subsidization (low tariffs for households, high tariffs for industrial enterprises),
  • monopolization of the sector with a weak regulator,
  • lack of measuring devices (except for electricity) in the majority of households,
  • negligible investments into infrastructure (significant energy losses on the way from producer to consumer),
  • subsidies to the chronically loss-making coal industry, and others.

Figure 12. Household and non-household electricity tariffs in selected European countries in the first half of 2018, UAH/kW-hour

Source: National Commission for Regulation of Energy and Communal Services * household tariffs include taxes; industrial tariffs exclude VAT and other refundable taxes. ** We used the exchange rate of the National Bank for the first half of 2018: 1 EUR = 32,42 UAH

[24] In Ukraine, ‘green’ tariffs are the highest in Europe which attracted much investment into the green energy facilities and provided investors with rather high profits. However, cost of green power generating facilities (e.g. solar panels) is falling dramatically. Hence, the government introduced ‘green’ auctions - an investor who wins the auction by promising the lowest green tariff is granted the right to construct a generation facility, while the government fixes this tariff for this investor for the next 20 years.

Strategy for Land Reform in Ukraine: 2019-2024

Strategy for Land Reform in Ukraine: 2019-2024

Denys Nizalov, Global Land Alliance, De Montfort University, VoxUkraine

Figure 13.

  • In 2018, the Government has registered and transferred to the ownership of amalgamated territorial communities close to 1.5 mn ha of state agricultural land. This process continues in 2019;
  • Numerous e-services were introduced by the State Geocadastre and the Registry of Rights, which reduced time for service provision, improved transparency and lowered corruption;
  • Data exchange between the Cadaster and Registry of Rights was established; and procedures for mandatory check of background information before the land transactions were introduced by the end of 2018;
  • Starting March 2015, notaries and several other categories of legal service providers have received an authority to register the rights for land and real estate in the State Registry of Rights. Prior to that, the registration was performed only by the state registrars causing significant delays and being a source of corruption. This step was augmented by establishment of Anti-raider Commission and further improvements of registration infrastructure.
  • In 2018, State Geocadaster has undertaken an effort to correct errors in the Land Cadaster which do not require re-surveying or court decisions. The information on several types of remaining errors is now publicly available in the online cadastral map. However, this process remains unfinished.
  • Starting 2013, auctions for selling rental and ownership rights for state and communal land were introduced. In 2015, the auction became mandatory which led to a significant increase in the land prices and budget revenues. Since fall 2018, State Geocadastre experiments with introduction of e-auctions based on Setam and Prozorro.Sales platforms.
  • The legal status of unclaimed inheritance and of land of former collective enterprises was recognized by law in 2017 and 2018 respectively.
  • Transparency and access to information on land and related rights were improved by adopting the relevant normative base and infrastructure (including establishing public cadastral map). Regular monitoring of land governance based on administrative data of 6 central government authorities was established by the Cabinet of Ministers resolution #639. State Geocadastre started regular publication some of the key statistics on its activity (land.gov.ua).
  • Public awareness campaigns on property rights protection and land market operation were implemented with the support of international donors. A coalition of stakeholders of land reform was established in 2018 to assure that land reform remains on the political agenda and to keep the Government accountable for progress.
  • A concept and several versions of law proposals for opening the land market were developed by the Members of Parliament and Government and were discussed at various committees, workshops and round tables.
  • A gradual process of land registration continued through 2014-2019. As of the end of 2017, State Land Cadastre had registered 86% of private and 22.3% of state land. For regional distribution see Figure 14.

Figure 14. The percentage of land area registered in the SLC for private land (left) and state-owned (right) as of December 2017

Source: Land Governance Monitoring Report, 2016-2017

  • Increasing productivity of land use, providing equal protection of rights and equal access to land market and necessary financial resources to all land owners and land users;
  • Improving sustainability of land use and resilience to climate change;
  • Increasing transparency of land use, access to information, and preventing corruption.

  • Establishing a partial credit guarantee agency for small producers to facilitate the use of land as a collateral and to improve access to finance.
  • Establishing a Land Ombudsman to coordinate efforts for protecting land related rights and respective legislative changes, which can be coordinated with the results of the Ant-Raider Committee activities.
  • Upgrading capacity of State Free Legal Aid system to protect rights of land owners, land users and local governments.
  • Establishing legal base and procedures for selling ownership and rental rights for land via e-auctions.
  • Providing for mandatory recording in the Registry of Rights and publication of information on contract prices for land and real estate;
  • Completing inventory and registration of rights for state and communal land;
  • Improving procedures for systematic error correction and inventory of land and completing registration of land parcels with cadastral numbers but no technical documentation;
  • Establishing legal base and responsibility for land governance monitoring (regular publication of key administrative data);
  • Transferring state land which is in the permanent use of farmers since 1990s into their private ownership.

[25] About 3 mn ha of private agricultural land are not affected by the moratorium (e.g. land for individual subsistence farming, gardening).

[26] For more information on structure of land market see Land Governance Monitoring reports and media publications.



Bohdan Prokhorov, CES
Dmytro Yablonovskyi, CES, VoxUkraine

Figure 15. Privatisation in Ukraine: planned and actual revenue (USD mln)

Source: Source: State Property Fund, State budgets

  • Active involvement of foreign investors into privatisation.
  • Reducing the level of information asymmetry by involving independent investment advisers.
  • Linking the system of financial and non-financial incentives (KPIs) of SOE top management to preparation of SOEs for privatisation – to prevent then from sabotaging privatization efforts.
  • Priority privatisation of enterprises operating in competitive markets.
  • Zero state share in privatised enterprises.

  • The following should remain in state ownership: natural monopolies for which no special conditions for privatisation have been developed; those entities that are vital for the national security or carry out other socially important activities that cannot be fully fulfilled by private capital.
  • OECD Principles of Corporate Governance and OECD Guidelines on Corporate Governance of State-Owned Enterprises should be applied in the management of the state-owned enterprises; in particular, supervisory boards should be established with a majority of independent members.
  • Remaining enterprises should be privatised, transferred to a public-private partnership (in particular, concessions) or liquidated.

[28] There are three layers of corporate governance - owner, supervisory boards, executive management. Currently the reform covers mainly the second layer - creation of independent supervisory boards. We also suggest considering changing the first layer - transfer ownership function from ministries or the government to centralized ownership entity. Ministries now often have a conflict of interest - they may perform ownership, regulatory and policy functions at the same time. In our view ministries should focus on policy function. Regulatory functions (topical for monopolies) should be given to independent regulators. Ownership function can be delegated to centralized ownership entity.

Public Procurement

Public Procurement

Artur Kovalchuk, KSE
Ostap Kuchma, KSE
Yaroslav Kudlatskyi, KSE

  • digitalization of the process (this considerably simplified the tender process and reduced the room for ‘human factor’ prone to corruption);
  • data availability (anyone can analyze the Prozorro data and find out whether there was a fraud).

Figure 16. Procurement process and Prozorro place in it

Source: Prozorro

  • additional saving for both procuring entities and tender participants;
  • simplified participation in tenders for all companies, including small ones;
  • simplification of the procurement process as well as a reduction in its duration;
  • increased transparency;
  • greater innovation and developing new tools.

[29] The threshold is UAH 200 thousand for goods and UAH 1.5 million for works. For procurement above the threshold, a Prozorro auction is mandatory, for smaller purchases desirable.

[30] A tendering committee is a few people (usually 5-8) who gather to perform a procurement. An authorized person will be one (or a few) people within an entity who will be specifically responsible for procurement. This will allow to raise skills of such a person and also make her responsible for proper implementation of procurement procedures, whereas tender committees are often unprofessional and responsibility of their members is blurred.

[31] MoH issued a ToR that included dozens items, and there were just a few firms that could supply all of them. To the contrast, international organizations allow suppliers to select which items of a list they are willing to supply and then select suppliers based on total cost.

Reforms in Education and Healthcare

Reforms in Education and Healthcare

Ilona Sologoub, KSE, VoxUkraine
Tetyana Tyshchuk, KSE, VoxUkraine

Figure 17. Number of students per school and students per teacher

Source: State Statistics Service of Ukraine

Figure 18. Distribution of schools by the number of students

Source: Institute of Educational Analytics

  • Medical facilities have to become not budgetary institutions but communal or state-owned non-profit enterprises. This shift provides them with much more autonomy and control over their budgets. Thus, they can establish the list of fee-paid services (while previously the price-list for them had to be approved by local governments), set the salaries (while for budgetary institutions the salaries are defined by the Unified Tariff Scale set by the central government), and to officially fundraise (while budgetary institutions can get additional funding only through semi-official charitable funds). Currently all of the primary level facilities and about 50% of secondary and tertiary level facilities became non-profit enterprises (the share differs by oblasts). Certainly, this transition provides much more room for decision-making of facility managers. At the same time, it increases their responsibility and skill requirements (among other, they need to develop managerial skills).
  • A ‘pay-per-service’ scheme has to be introduced. Ukraine chose to have a centralized model – thus, a single government agency (National Healthcare Service) established in March 2018 makes payments to all the facilities or doctors for the services they provide. Furthermore, ‘pay-per-service’ financing requires defining the list of services financed completely by the government, co-financed by patients and completely financed by patients, as well as the calculation of prices for services. At the primary level (family doctors) Ukraine has a fixed payment per patient who signed the declaration with her family doctor (payments for children and elderly patients are higher than for middle-age adults). At the secondary and tertiary level, the DRG system will be gradually introduced.
  • For ‘pay-per-service’ to become operational, the e-Health system has to be established – so that the National Healthcare Service sees which services were provided to a patient by a certain facility or a family doctor. Thus, payment to this facility or doctor is delivered automatically within the contract with NHS. Ukrainian e-Health is a two-tier system whereby the government controls the central database and private companies can provide interface, i.e. the systems through which doctors can access this central database. There is already a dozen of interface systems on the market.
  • Then, the local governments have to make decisions on the hospital network. In Ukraine, the network is abundant (Figure 19), and many hospitals cannot provide a decent level of services. With payment-per-service scheme ‘good’ hospitals (i.e. those with many patients) will receive more money than those to which patients do not apply. Thus, local governments will have to decide on hospital concentration within hospital districts – in a similar way they decide on school concentration within educational districts. They will also be able to provide additional support to local medical facilities. Some local governments already do this at the primary level. For example, they provide cars to family doctors so that they could visit patients or renovate premises where they work. By doing this, local officials are earning ‘electoral points’ in the eyes of their voters.

Figure 19. Number of hospital beds per 100k people in Ukraine and in other countries

Source: State Statistics Service, the World Bank

[32] The school hub with branches compared to several small schools provides savings on administrative cost (thus, school hub needs just one principal), and also allows to optimize teacher workload (thus, a teacher may be teaching one day at one branch, another day at another branch etc. while traveling between schools is usually not possible).

[33] Thus, in 2018 the cost per student in a small school was estimated at UAH 58 thousand, while Ukraine average is UAH 15 thousand.

[34] The healthcare reform Strategy was developed in 2015. Current reform mainly proceeds along the lines of the Strategy. The details of healthcare reform and next steps can be found in the Ministry of Health Transition book.

[35] Financing according to the number of beds, number of doctors or square meters of the facility.

[36] Currently, the pilot project with secondary care facilities is implemented in Poltava oblast. The results show reduction of the length of stay of patients in hospitals and increase of the share of complicated cases (which implies reduction of unnecessary hospitalizations).

[37] Ministry of Health developed the Strategy of development of medical education in Ukraine.

Demographic Prospects of Ukraine

Demographic Prospects of Ukraine

Olga Kupets, KSE

Table 4: Dependency ratios in Ukraine, 2000-2030

Source: Demographic dependency ratio – UN World Population Prospects 2017 (population.un.org/wpp/Download/Standard/Population), Labor dependency ratio - ILO modelled estimates November 2018 (ilo.org/ilostat), Economic dependency ratios – author’s calculations based on population from UN World Population Prospects 2017 and labor force participation rates from ILO (https://www.ilo.org/ilostat) by sex and 5-year age groups. Data in 2020-2030 are based on UN population projections (medium variant), with gender- and age-specific labor force participation rates assumed to be constant at the 2016 level. Note: * 2024 is the latest year for Labor dependency ratio provided by the ILO (as of September 2019).

  • raising fertility rates and motivating higher female labor force participation rate, with policies that help women combine motherhood with work (maternal and parental leaves, child care services and workplace practices) rather than financial transfers to encourage childbirth;
  • improving health of (older) individuals and enabling longer and more productive work lives, with important policies aimed at skills development of an aging workforce, removing incentives of older workers to retire early, and supporting employers who show favorable attitudes toward older workers;
  • promoting immigration and discouraging emigration, with effective policies that would make the Ukrainian economy more attractive to potential migrants by improving the business climate and reducing the barriers of the foreign born to formal employment, education and social protection.

Figure 20: All valid permits held by Ukrainian citizens in EU/EFTA countries on 31 December of each year by reason, 2010-2017

Source: Eurostat (retrieved in July 2019)

Figure 21: Number of declarations to entrust work to a foreigner issued in Poland to Ukrainian nationals, 2007-2017

Source: Ministry of Family, Labour and Social Policy of Poland

Table 5: Number of EU Blue Cards issued to Ukrainian nationals by top countries, 2012-2017

Source: Eurostat (retrieved in July 2019). Note: Countries are shown in descending order of the number of Blue Cards issued in 2017.

Figure 22: Number of non-immigrant admissions of Ukrainian nationals to the US with selected types of visas during a given fiscal year, 2010-2017

Source: DHS (retrieved in July 2019)

  • The position of the Government Commissioner for Gender Equality Policy was introduced on June 7, 2017 [39]. K. Levchenko was appointed as the first Commissioner in February 2018. This helps implement gender mainstreaming in all central and local executive bodies.
  • In 2017 the Ministry of Education and Science launched the antidiscrimination expertise of textbooks used in primary and secondary schools. This will help address the issues of possible discrimination and gender stereotypes among schoolchildren.
  • In 2017 the list of banned professions for women [40] was revoked by the order of the Ministry of Health. But references to the list of banned professions are still contained in Article 154 of the Code of Labor Laws. This complicates the effective implementation of the policy.
  • In 2017 criminal liability for domestic violence has been introduced and protection of victims of physical, psychological or economic violence in families has been envisaged at the state level.
  • Gender-responsive budgeting is being implemented in Ukraine by the Ministry of Finance with support of international organizations. Gender-responsive budgeting is a legal requirement since January 2019.
  • In January 2019 the new state social program “Municipal nanny” came into force after being approved by the Government in May 2018 within the National Action Plan for the implementation of the UN Convention on the Rights of the Child up to 2021. Its idea is to provide financial support to parents to fund care services for children up to three years. The policy can potentially increase the employment rate of mothers, but due to a fairly small amount of support it is likely to be effective only in small towns or villages where the salary is low.

[38] See more in Bussolo M., J Koeetle, and E. Sinnott (2015) Golden Aging: Prospects for Healthy, Active, and Prosperous Aging in Europe and Central Asia, Washington DC: World Bank

[39] The main tasks of the Commissioner include coordination of the work of ministries, other central and local executive bodies to ensure equal rights and opportunities for women and men, conducting the monitoring of the accounting by the Cabinet of Ministers of Ukraine the principle of gender equality, assistance in developing state programs on gender equality and cooperation with international organizations and civil society.

[40] The List of 458 hard, dangerous and harmful jobs in Ukraine was adopted by the Order of the Ministry of Health # 256 of 29.12.1993. It banned women’s employment at certain jobs, including driving vehicles with more than 14 passenger seats, tractors and other agricultural vehicles, sea and river boats, or be employed at a number of industrial and agricultural positions

People’s Beliefs and Political Response

People’s Beliefs and Political Response

Tymofii Brik, KSE

  • How did attitudes to privatisation change in Ukraine since early 1990s and especially in the five recent years of 2015-2019?
  • Is there any correlation between support of reforms and support of political leaders?

Figure 23. Attitudes towards the privatization of large enterprises

Source: Ukrainian Society survey

Figure 24. Attitudes towards the privatization of land

Figure 25. Evaluation of the progress of reforms in three spheres

Source: own survey

Figure 26. Evaluation of reform progress and electoral preferences

Source: own survey

  • Most of Ukrainians do not support the idea of land privatisation. Shares of Ukrainians who disapprove land privatisation increased dramatically from 1992 to 2018. Thus, one should not expect support of land liberalisation soon. Any land reform will face inevitably a strong resistance from people.
  • Our previous studies show that people tend to have more negative views about free markets when they face economic hardships and also interpret these hardships as a consequence of market transformations.
  • At the same time, there is a political cost of such attitudes. People who do not think that reforms are on the way are less likely to support the incumbents. This also means that when people do see at least some reform progress, they remain supportive of the incumbent politicians. These findings contradict the popular belief that reformists are always unpopular. Reformists can get support in transition societies when people agree that reforms are in progress.
  • Brik, T. and Shestakovskiy, O. (2019). Market orientation in the shadow of communism: 25 years of changes in attitudes about the economy. In Ukraine in Transition. Palgrave Macmillan. Forthcoming.

    Denisova, I. (2016). Institutions and the support for market reforms. IZA World of Labor.

    Denisova, I., Eller, M., Frye, T., & Zhuravskaya, E. (2012). Everyone hates privatization, but why? Survey evidence from 28 post-communist countries. Journal of Comparative Economics, 40(1), 44-61.

    Guriev, S. (2018). Fairness and Support for the Reforms: Lessons from the Transition Economies (No. 24). SUERF Policy Note.

    Ukrainske suspilstvo (2018). Monitorynh sotsyalnyh zmin. ISNASU. Kyiv.


[1] Vitaliy Protsenko explains how corruption provides fertile ground for the desire of a ‘strong hand’, and VoxUkraine&KSE research shows that 73% of Ukrainians support some kind of state interference with the economy and people’s rights.

[2] Trade+ centre at KSE advises that the countries first in turn should be US, Ireland, Japan, Germany, Switzerland, Sweden, the UK, Qatar, China and Mexico.

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