Kyiv—Micro and small enterprises in Ukraine government-controlled areas of Donetsk and Luhansk regions have had to dismiss one in three employees due to the COVID-19 pandemic and quarantine, revealed a survey, conducted by the International Organization for Migration (IOM). * 

Forty-nine per cent (49 per cent) of firms owned by internally displaced persons (IDPs) had to cease operations, IOM’s mid-May survey revealed. Among the companies owned by members of Donetsk and Luhansk regions host communities, the shutdown share was lower—just over 35 per cent. 

The average drop in sales during the quarantine was estimated at 25 per cent for the companies with monthly sales ranging from UAH 5,000 (USD 188) to UAH 50,000 (USD 1,878), and at 44 per cent for the enterprises with monthly sales from UAH 51,000 (USD 1,915) to UAH 250,000 (USD 9,391). 

“The role of micro- and small businesses in eastern Ukraine, heavily affected by over six years of ongoing hostilities, is hard to overestimate, as they provide much-needed services and create jobs in their communities,” said Anh Nguyen, Chief of Mission at IOM Ukraine. 

“Because of their pre-existing vulnerabilities, IDPs appear more at risk of being unable to recover from the economic shock of COVID-19 control measures. Female-owned businesses are under greater strain as well,” Anh Nguyen explained.

Almost one third (29 per cent) of all businesses which had to shut down operations said they would not be able to reopen after quarantine restrictions are lifted without external support. Female respondents were less confident in their ability to restart a business without external support compared with males.

Over a half of the businesses surveyed by IOM (55 per cent) indicated the need for financial assistance to cover their fixed operation costs, including staff wages; 41 per cent reported needing equipment to help run businesses online; 37 per cent said they wanted additional tax holidays or tax reduction; 15 per cent stated they required training on online business management. 

“IOM calls on international, government and private stakeholders to jointly support the micro- and small businesses in eastern Ukraine,” said Anh Nguyen. 

Ivan Zhydkov, the owner of a meat-processing plant — “Semenivski Sausages,” a family business started by his parents near Sloviansk, Donetsk Region — is still restoring his business after the ordeals of 2014, when conflict erupted in eastern Ukraine.

Recently, Mr. Zhydkov participated in business programme conducted by the IOM and funded by the German Government through the KfW Development Bank for IDPs and others in the conflict-affected population. He received some of much-needed equipment as a grant.

“We are lucky,” said the IOM grantee. “Compared to other businesses, we suffered almost no losses during the quarantine. People still need food. Due to the closure of street markets, we had to reconsider the distribution, but our production and sales volume remained the same.”

The enterprise employs about 30 people. All kept their jobs and salaries. What changed during the quarantine is that every work shift now begins with taking body temperatures and assessing general health condition.

Another change: as an alternative to public transport, management pays employees with their own cars a little extra to shuttle colleagues back and forth from work.

*Four hundred and ninety-one (491) respondents from Donetsk and Luhansk regions, government-controlled area, were interviewed from 11 to 12 May 2020 via phone. One fifth (121) of the respondents were IOM beneficiaries who received in-kind livelihood assistance through IOM projects from 2016 to 2019, and others were non-beneficiary local entrepreneurs. Women represented 53 per cent of the surveyed entrepreneurs.

Background:

The International Organization for Migration has been one of the key providers of livelihood support to vulnerable populations in Ukraine. Since 2014, it has provided grants for vocational training, self-employment or micro-business to over 11,000 of conflict-affected people, 61 per cent of them are IDPs and 53 per cent women. 

For more information please contact Varvara Zhluktenko, IOM Ukraine. Tel.: + 38 044 568 50 15, +38 067 447 97 92, Email: vzhluktenko@iom.int