Analysis. Parliament. Articles.

Employment of People with Disabilities exists "on paper"

Monday, 21 July 2014 793
Author: Ivan Sikora and Olexander Babanin
How to employ more than 640 thousand people with disabilities and effectively spend UAH 1 billion? The right to work is enshrined in Article 43 of the Constitution of Ukraine. Yet, it is not equally available to everyone. Millions of Ukrainians are unsuccessfully trying to get a job. For people with disabilities the life is even harder. Most of the doors in our country remain closed for them.

Today every 18th Ukrainian is living with disability. The total number of people with special needs reaches 2.8 million or 6.1% of the population. Just over a quarter (755 thousand) of those are employed.

Standards of the International Labour Organization provide for employment of 50% of the total number of people with disabilities in the country. According to these 1.4 million people with disabilities should be employed in Ukraine.

How to employ more than 640 thousand people with disabilities?

The answer partially concerns the imperfections of government mechanisms to ensure the right to work of people with disabilities.

The state encourages employers to equalize the chances of employment for people with disabilities. Tax credits, loans and grants are provided from the state budget through the Fund for Social Protection of Persons with Disabilities.

Around UAH 1 billion is spent annually on employment and vocational rehabilitation of people with disabilities out the state budget. In the 2013 state budget the losses from tax privileges exceeded UAH 110 million.

These benefits should encourage employers to hire persons with disabilities registered in State Employment Center. Disabled people also have the possibility of employment within the enterprises and organizations founded by the NGOs for people with disabilities. These also receive state support.

However, the reality is much more complicated.

Tax credits and loans are available mostly for enterprises founded by public organizations for disabled people. This has a negative impact on job creation in other enterprises. The research of the "Open Society" Foundation revealed persistent inefficiency of public funds use and other manipulations.

For example, the practice of simulating employment of disabled people in companies remains widespread. People with disabilities often work for 0.25 or 0.3 of the official minimum wage. Would the salary of UAH 400 help the disabled person? The question is rhetorical.

The employers have also learned to avoid penalties for uncreated jobs for the disabled people. At the trial they claim the enterprise had taken comprehensive arrangements for the people with disabilities, but the State Employment Service did not provide the candidacies on-time.

Such employers take advantage of the Ukrainian judicial system deficiencies and inadequate legislation (in particular insufficient monitoring of jobs created for the disabled persons) and avoid paying penalties for non-employment of people with disabilities. In 2012 the courts have denied 552 claims of the Fund for Social Protection of Persons with Disabilities with total of UAH 530.9 million. If the claims had been be satisfied, the budget of the Fund would increase by 50%.

By law, the companies that create jobs for the disabled people may be exempted from VAT and corporate income tax. The companies of a few Ukrainian regions enjoy the bulk of the benefits. According to statistics, people with disabilities in Kharkiv oblast (33% in 2010 and 49% in 2011) and Kyiv (31% in 2010 and 21% in 2011) receive the most of assistance.

At the same time only 6% and 5% of the total number of disabled people in Ukraine reside in Kharkiv oblast and the city of Kyiv respectfully. That is, the number of disabled people in the region does not correlate with the amount of support provided for the creation of jobs for the people with disabilities.

In addition, the experts have found that some companies had enjoyed both tax benefits and direct budget support. In June 2009, Training and Production Enterprise of the Ukrainian Society for the Blind People "Krym-Pak" received permission to use the tax benefits. In 2010 the same enterprise was granted a loan of UAH 5.6 million to create jobs for the disabled people.

Moreover, this company continues to enjoy budgetary support for technical re-equipment of production facilities in order to create new jobs for the disabled people (5.2 million in 2011 and 5 million on 2012).

Volodymyr Lyutikov is the director of "Crimea-Pack". He is married to Party of Regions MP Valentyna Lyutikova. By the way, Lyutikova tried to push through a draft law 3376 "On the cancellation of debt for the target loan granted to public association "Kerch Training and Production Enterprise of Ukrainian Society for the Blind People "Krym-Pak" for debt relief of her "family business".

"Open Society" Foundation disclosed similar schemes for enterprises "KrymPlast", Bila Tserkva production enterprise "Vesna" of the Ukrainian Society for the Blind People and Dnipropetrovsk Training and Production Enterprise "Lutch".

One should understand that these manipulations were possible due to lack of clear criteria for deciding on the benefits and loans for the enterprises. Regular monitoring and the assessment of job market, including the real wages, the list of direct spending to create jobs for the disabled persons remain crucial. These simple steps will save tens of millions while employing thousands of disabled people.

The substitution of employer’s penalties with mandatory contributions to the Fund for Social Protection of Persons with Disabilities can also help. In this case the state would have guaranteed resources to create jobs for the disabled people without litigations with the employers. Also it would have increased the responsibility for the implementation of the law on the creation of appropriate conditions for the employment of disabled people.

Given the average cost of creating a single job place for the disabled person one could calculate a guaranteed number of jobs that a state could create for a certain period. According to expert estimates this will increase income of the Fund for UAH 60 to 100 million.

These simple steps can lead to a substantial increase in the share of employment of the disabled people. According to experts of the Foundation at least 140 thousand new jobs will be created over the next few years. In this way Ukraine would partially implement the ILO standards on employment of people with disabilities.

These steps will lead to increase in revenue and promotion of the employment for disabled people. They will also result with minimizing corruption schemes and flows into the pockets of dishonest officials.

The summary of the above recommendations was sent to the Minister of Social Policy Lyudmila Denisova.

Is the Minister ready to change the Yanukovych-time distribution mechanisms? The answer will become clear soon.

The analysis was prepared within the project "Analysis of policies to support enterprises and organizations of disabled people in Ukraine and Kyiv: promoting equal access to state support of NGOs and delivery of social services for disabled people", implemented by the "Open Society" Foundation and supported by the International Renaissance Foundation.

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