Unanswered Questions in Ukraine’s 2040 Demographic Development Strategy

The Ministry of Social Policy has placed for public discussion the draft Strategy for Demographic Development of Ukraine until 2040 (hereinafter referred to as the Strategy). A presentation of the draft Strategy was also held at the Demographic Future of Ukraine Forum.

So, the prospects, according to the Strategy for Ukraine are, frankly speaking, bleak. Based on the assessment of the Institute of Demography, there will be only 29 million of us by 2040 and 25 million by 2050. However, if the measures defined by the concept are implemented, the population will stand at 34 million in 2030, but will still decrease to 31.6 million inhabitants by 2050 – provided that the war or at least its active phase ends.

Having said that, we could have laid the draft aside as not addressing at least the question of stabilizing the demographic situation, if it had not been for the assurances of the government officials during the presentation that the extinction of the population is not terrible at all as long as the quality of life is acceptable.

It should be noted that the problems facing Ukraine are elaborated upon in detail in the concept, but the reasons for their occurrence and exacerbation are presented in a fragmentary manner. However, they have a global character, and it is impossible to do without their clear identification and merciless acknowledgement, no matter how unpleasant and politically incorrect it may be. It must be recognized that neither the state nor the church has coped with the challenges that objectively destroy the institution of the family and reduce the motivation to procreate. Unfortunately, not only economic, but also psycho-emotional factors are at play.

Most of the measures proposed by the concept have a streamlined, politically correct character. Therefore, it is not worth expecting positive changes when there is reluctance to take unpopular measures. In fairness, however, the ministry at least outlined focus areas to implement the Strategy, but without offering concrete solutions. In the absence of the latter, the Strategy is reduced to a list of wishes, like slogans that are pleasing to politicians: “For everything good, against everything bad.” And although, as was noted at the Forum, the Strategy does not have to include a specific list of tasks beyond strategic goals, its practical value should be reflected in the announcement of options for political decisions, which should show that such strategic goals are not a mantra.

Therefore, it is reasonable to dwell on the questions that were not mentioned in the Strategy or at the Forum or that were not answered.

First of all, regarding the return of Ukrainians who emigrated both before and after February 2022. If we want to return not only women and children, but also men, including those who left Ukraine after the beginning of large-scale aggression, we should already admit that few people will return voluntarily today, and after the end of the war they will have the psychological barrier of facing condemnation not only from front-line soldiers, but also from those who either worked for the defense or even hid from the military enlistment offices, envying smarter emigrants. And no matter how much they assure that migrants donated to the army, lobbied for the interests of Ukraine, a silent question will remain: where were you when the country was in dire straits?

The solution to this issue is quite simple, but politically sensitive — to include the economic factor. The reservation of those who receive an official salary, as proposed by the government, at a level of even less than 1,000 euros, should also be extended to all migrants. Of course, this should force the government, particularly the tax administration, to strain itself and agree with the EU countries, where Ukrainian citizens mainly emigrated, regarding the transfer of VAT and unified social tax to Ukraine. But here we can expect understanding because these countries already help our country. Ukraine should adopt the fiscal relations approach that is applied in the United States, where an American citizen is obliged to pay taxes to the state budgets regardless of the source of income and the place of its production. Since the wages of Ukrainians abroad are clearly higher than the reservation threshold proposed by the Ukrainian government for workers who remained in Ukraine, every emigrant who will pay taxes and contributions to Ukraine will be considered not as a potential draft dodger, but as a citizen working for the victory of Ukraine.

Now on stimulating birth rate. In addition to Taras Shevchenko’s appeal “O lovely maidens, fall in love, but not with Muscovites,” it should be emphasized that the only practical result for improving demographics from love is the birth of children — in a full-fledged family, which is a union of a man and a woman, and a legal one at that. The importance of the latter became convincing to some men, who, having fathered three children without registering a marriage, were surprised to learn that a deferment from conscription is not possible if you live with a woman on civil union terms, even if they have fathered an offspring. It should be emphasized in the Strategy that the concept of family refers to the primary institution recognized by all religions, excluding other forms of relationships, which from the point of view of demographic policy should be considered as a a barren flower, a sort of a social virus.

Although the draft Strategy mentions the factor of population aging and the need to continue the active participation of the older generation in economic life as much as possible, it stays shyly silent on the need to increase the retirement age. Nonetheless, it points out the need to return to the “three generations” principle, when children, parents and grandparents live under the same roof, thus allowing the mother to return to active economic activity faster, leaving the children to the grandparents. However, this is not enough to make a decision to give birth to three or more children.

As was noted at the Forum, simple payments upon the birth of a child stimulate childbearing, first of all, in disadvantaged families, which mainly rely on such assistance from the state. Instead, it is necessary to stimulate birth among women who are socially and economically active and at the most fertile age — from 20 to 30 years. It is at this age that the relatively lowest lifetime salary falls, so this period of life is the most profitable for the employer. In general, the principle should be promoted: first the children, then the career. It is actively cultivated in the United States, where, however, it does not enjoy trust either in the business or in the socio-political environment.

In general, it is necessary to make the employer give preference to hiring workers with families — they are much more diligent and attached to the workplace than singles who are ready to defect to a competitor at any opportunity, despite the employer's investment in their professional training. By the way, employees of pre-retirement and retirement age are also objectively beneficial for the employer: their efficiency is only 20% lower than the maximum level of those aged between 40 and 50, but they usually have valuable experience.

What is missing in the draft Strategy is the participation of local self-government in improving the demographic situation. The latter is extremely interested in increasing the birth rate, at least because of budgetary factors. However, the Strategy assigns them a role only in creating a comfortable living environment without providing other financial instruments. But the state itself proved to be incompetent in implementing many social protection programs, including in stimulating fertility.

As part of decentralization, the state could entrust the solution of this task to local self-government bodies, granting them the necessary financial resources that would at least equal its current budget expenditures. But for this, the Ministry of Social Policy must develop a list of areas where these funds can be spent. These can be both direct payments for the birth of a child and indirect material incentives, particularly financial assistance in housing loans, a reduction in the payment of personal income tax in the part that belongs to the community budget, a reduction in the rate of deductions to the Pension Fund, payments to this fund of contributions instead of the woman in labor. There may also be additional bonuses for women aged 20–30 or upon the birth of a third child. Local councils must determine in what proportion to spend such funds. Of course, for this it is necessary to delineate powers between the state and self-government and also to distribute them within local self-government in accordance with the state's interest, which was already mentioned in previous publications.

Of course, every Ukrainian government traditionally wants to stay in power as long as possible. Especially if specific decisions are not made by it. However, the tangle of problems is so complicated that a politically responsible government or at least a specialized ministry could offer a list of alternative solutions in order to at least assess the level of their perception by politicians and society. For the most part, such unorthodox steps initially cause spontaneous rejection, but this is the only way reforms are carried out that lead to real changes. Even if the inevitable recession nullifies the intentions of the reformers, social enlightenment caused by their efforts sooner or later opens a window of opportunity for the next attempt to change the established inefficient system. Overcoming demographic challenges requires precisely such actions on the part of responsible politicians.