A ship run aground Deepening problems in the Ukrainian economy. OSW Commentary Number 173, 16 June 2015

The drop in Ukraine’s GDP by nearly 18% in the first three months of 2015 (versus the corresponding period in 2014) has confirmed the decline of the country’s economy. Over the last 14 months, the Ukrainian currency was subject to an almost threefold devaluation against the US dollar, and in April 2015 the inflation rate was 61% (year-on-year), which exacerbated the impoverishment of the general public and weakened domestic demand. The main reason behind the crisis has been the destruction of heavy industry and infrastructure in the war-torn Donbas region, over which Kyiv no longer has control, as well as a sharp decline in foreign trade (by 24% in 2014 and by 34% in the first quarter of 2015), recorded primarily in trading volume with Ukraine’s major trade partner, i.e. Russia (a drop of 43%). The conflict has also had a negative impact on the production figures for the two key sectors of the Ukrainian economy: agriculture and metallurgy, which account for approximately 50% of Ukrainian exports. The government’s response to the crisis has primarily been a reduction in the costs of financing the Donbas and an increase in the financial burden placed on the citizens and companies of Ukraine. No radical reforms which would encompass the entire system, including anti-corruption reforms, have been carried out to stop the embezzlement of state funds and to facilitate business activity. The reasons for not initiating reforms have included the lack of will to launch them, Ukraine’s traditionally slow pace of bureaucratic action and growing dissonance among the parties making up the parliamentary coalition. The few positive changes, including marketisation of energy prices and sustaining budgetary discipline (in the first quarter of 2015, budgetary revenues grew by 25%, though partly as a result of currency devaluation), are being carried out under pressure from the International Monetary Fund, which is making the payment of further loan instalments to the tune of US$ 17.5 billion conditional upon reforms. Despite assistance granted by Western institutional donors and by individual states, the risk of Ukraine going bankrupt remains real. The issue of restructuring foreign debt worth US$ 15 billion has not been resolved, as foreign creditors who hold Ukrainian bonds have not consented to any partial cancellation of the debt. Whether Ukraine’s public finances can be stabilised will depend mainly on the situation in the east of the country and on the possible renewal of military action. It seems that the only way to rescue Ukraine’s public finances from deteriorating further is to continue to ‘freeze’ the conflict, to gradually implement wide-ranging reforms and to reach a consensus in negotiations with lenders.

Extending Working Lives: A comparative analysis of how governments influence lifelong learning, CEPS Special Report No. 111, July 2015

This report offers a comparative policy study on adult learning within the scope of complementary research conducted by Beblavý et al. (2013) on how people upgrade their skills during their adult lifetimes. To achieve our objectives, we identified regulatory policies and financial support in 11 countries for two main categories of learning: formal higher education and employer-based training. Drawing upon the results of the country reports carried out by our partners in the MoPAct project, we found that in none of the countries examined is there an ‘older student’ policy. In most cases grants and financial support are awarded only up until a certain age. In all of the countries studied, standard undergraduate and post-graduate studies are available for part-time students. The distribution of full-time students and part-time students in tertiary education varies from one country to another as well as from one age group to another. The participation in full-time tertiary education programmes decreases with the age of students. In Lithuania, Latvia, Poland and the UK, there are no mandatory policies to ensure employer-based training. However, in Belgium, Czech Republic, Denmark, Estonia, Germany, Italy, the Netherlands and Spain, employer-based training is more clearly regulated and the employers might have obligations to provide training for their staff. Taking into consideration Beblavý et al. (2013), we observe that comparative differences across countries can be related to policy differences only in some cases. The policy framework seems to impact more the employer-based training than the educational attainment (upgrade of ISCED level). In Denmark, the Netherlands, Latvia, Lithuania, Czech Republic and Poland, we find a perfect match between policy outcomes and the results of Beblavý et al. (2013) related to employer-based training. This is not the case in the United Kingdom, where the two aspects observed are not correlated.

Germany’s ‘refugee’ problem. The most important test for Chancellor Merkel and the grand coalition. OSW COMMENTARY NUMBER 182/11.09.2015 2015-09-11

The rapid increase in the number of immigrants from outside of the EU coming to Germany has become the paramount political issue. According to new estimates, the number of individuals expected arrive in Germany in 2015 and apply for asylum there is 800,000, which is nearly twice as many as estimated in earlier forecasts. Various administrative, financial and social problems related to the influx of migrants are becoming increasingly apparent. The problem of ‘refugees’ (in public debate, the terms ‘immigrants’, ‘refugees’, ‘illegal immigrants’, ‘economic immigrants’ have not been clearly defined and have often been used interchangeably) has been culminating for over a year. Despite this, it was being disregarded by Angela Merkel’s government which was preoccupied with debates on how to rescue Greece. It was only daily reports of cases of refugee centres being set on fire that convinced Chancellor Merkel to speak and to make immigration problem a priority issue (Chefsache). Neither the ruling coalition nor the opposition parties have a consistent idea of how Germany should react to the growing number of refugees. In this matter, divisions run across parties. Various solutions have been proposed, from liberalisation of laws on the right to stay in Germany to combating illegal immigration more effectively, which would be possible if asylum granting procedures were accelerated. The proposed solutions have not been properly thought through, instead they are reactive measures inspired by the results of opinion polls. This is why their assumptions are often contradictory. The situation is similar regarding the actions proposed by Chancellor Merkel which involve faster procedures to expel individuals with no right to stay in Germany and a plan to convince other EU states to accept ‘refugees’. None of these ideas is new – they were already present in the German internal debate.