Businesses to Save 4.5 Billion UAH Annually Under State Labour Service Reform

Overhaul of Ukraine's State Labour Service

According to Главком: The Ministry of Economy, Environment, and Agriculture has drafted a resolution to restructure the State Labour Service (Derzhpratsi). The proposed changes shift the agency toward a new model focused on workplace safety oversight and enforcement of labour laws. Key elements of the reform include:

• Separation of supervisory and control functions;
• Delegation of certain procedures to independent accredited bodies;
• Elimination of approvals and involvement in non-inspectorate processes;
• Digitization of documents and decisions.

These measures represent the first phase of the Derzhpratsi reform. The next stage will involve digitizing occupational safety within the Obriy system. The Better Regulation Delivery Office (BRDO) contributed to drafting the initial phase, and findings from a Tony Blair Institute report were incorporated. That report was based on roundtables with businesses, interviews with regional Derzhpratsi officials, and an analysis of data provided by the agency itself.

Expected Outcomes of the Reform

The minimum projected benefit for businesses from cutting certain procedures is estimated at 4.473 billion UAH per year. Meanwhile, the ministry estimates that freed-up administrative resources at Derzhpratsi could total 27.205 million UAH annually. These resources could be redirected toward risk-based supervision and inspections in areas posing genuine dangers to workers.

“According to preliminary calculations, the minimum effect from reducing certain procedures could be 4.473 billion UAH per year for businesses. At the same time, the freed-up administrative resources of Derzhpratsi, as estimated by the ministry, could reach 27.205 million UAH per year.” - Press service of the Ministry of Economy, Environment, and Agriculture

Currently, 302,260 individual entrepreneurs employed over 817,000 Ukrainians last year. The average number of employees per entrepreneur with hired staff is three. Meanwhile, 14% of these sole proprietors now hire workers and create new jobs. The Derzhpratsi reform aims to improve the efficiency of labour law enforcement and workplace safety in Ukraine.

This reform marks a significant step toward upgrading Ukraine's labour rights and working conditions oversight system. By simplifying administrative procedures for businesses, it is expected to boost economic activity and job creation. Concentrating resources on risk-based supervision could also enhance worker safety in the most critical industries.

The anticipated reforms in Ukraine's State Labour Service are not only aimed at improving workplace safety but also at optimizing governmental efficiency. As businesses prepare for these significant changes, understanding the broader economic implications becomes crucial. For instance, the recent data released by the Finance Ministry sheds light on government payroll expenditures, providing valuable context on budget allocations that may be influenced by these reforms. To explore these insights further, see the details on government payroll figures.