New report identifies 7 major risks for business development in Ukraine 19 September 2017

Representatives of businesses, trade unions, ministries and the International Labour Organisation (ILO) discussed the preliminary results of the National Report of Enabling Environments for Sustainable Enterprises (EESE)  . The meeting took place on 14 September, 2017 in Kyiv, Ukraine hosted by the Federation of Ukrainian Employers.

In 2016-17, the Ukrainian Centre for Social Reforms, in cooperation with the Federation of Employers and with the support of ILO, conducted a comprehensive study on the obstacles to an enabling environment for sustainable enterprises in the country. The study included comprehensive desk research, focus groups and involved 2,000 business executives through in-depth interviews, who identified 7 major risks that hinder business growth, and made specific recommendations how to overcome them.

Dragan Radic, Senior Specialist on Employers’ Activities of the ILO explained that the EESE study and Strategic Policy Framework that will follow will make a powerful evidence-based advocacy agenda for the Federation of Employers in their efforts to improve the business environment. Ruslan Illychev, Director of the Federation of Employers added that not only the recommendations, but the study itself is important, being an additional tool to put pressure on authorities responsible for creating an enabling business environment.

The draft EESE report identified the following risk factors:

#1 The risk of instability. The majority of interviewed entrepreneurs believe that business relations with government representatives often take illegal and coercive forms; 63.8% of respondents admitted they paid bribes.

#2 Ineffective management in the country. Almost 46.7% of surveyed employers noted that authorities do not make any effort to stimulate entrepreneurship at all, and 41.8% rated this activity more negatively.

#3 Macroeconomic instability. According to the EESE survey, the greatest obstacles to business development are high taxes (according to 47.5% of respondents) and frequent changes in laws and business regulations (30.3%).

#4 Insufficient coherence and consistency of legislative and regulatory reforms. Nearly 53% of surveyed employers indicated that tax legislation was ambiguous, while 73% of respondents considered the tax burden to be a serious barrier to business.

#5 Weak control over compliance with the law and the provision of property rights. According to 60.6% of the respondents, the protection of property rights in Ukraine is ineffective.

#6 High corruption risks and ineffective competition. Almost half of the polled entrepreneurs confirmed that the competition stimulates innovations. However, this process is complicated by inefficient innovation policy, low innovation activity of enterprises and the relatively long process of obtaining results from the introduction of innovations.

#7 Undeveloped entrepreneurial culture. According to the results of the EESE survey, only 39.2% of entrepreneurs consider the state support policy of businesses is considered adequate and appropriate to the requirements of time.

Regions and countries covered: Europe, Ukraine

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