Promoting economic diversity in Ukraine:
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1 Promoting economic diversity in Ukraine: Skills and business enabling environment in the hotel sector Marion Jansen (ILO) Kiev, March 12, 2010
2 Promoting economic diversity in Ukraine: Skills and business enabling environment in the hotel sector Why does ILO work on economic diversity in Ukraine? Why does ILO work on skills in Ukraine Why on the hotel sector?
3 Why diversification? Crisis related ILO work in Ukraine Upon request by Ukraine Minister of Labour and Social Policy in December 2008 to provide policy advice on crisis impact mitigation, ILO started three lines of work wage policy, income distribution and tax policy; social security and pension reforms; policies to promote the diversification of the economy and the export base through strengthening of the business enabling environment
4 Why skills? ILO s capacity on skills G20 Pittsburg mandate to ILO: We pledge to support robust training efforts in our growth strategies and investments. We recognize successful employment and training programs are often designed together with employers and workers and we call on the ILO, in partnership with other organizations, to convene its constituents and NGOs to develop a training strategy for our consideration.
5 Successful skills, trade and investment policies in a globalized world Successful globalizers like South Korea, Taiwan and Costa Rica have at certain stages of their development successfully coordinated investment policy Trade/export promotion policies technology policies and training and education policies. Why skills and diversification? Hence the decision to formulate ILO s crisisrelated work on diversification in terms of a forward looking strategy: Increase diversification through strengthened enabling environment for entrepreneurship: a focus on skill endowments and export orientation
6 Why hotel the sector? Sector significant growth potential : Ukraine has significant touristic and recreational potential Low existing hotel capacity (two hotel rooms per 1000 population compared to in other European countries) Sector suffered from crisis: In 2009 the number of incoming tourists decreased by 20% Concrete immediate investment opportunities: Related to EURO-2010
7 Tourism: a growing sector export im port Fig. 2. Import and export of travel services, mln USD (BoP data)
8 that only represents a small share of Ukraine s economy 10% 8% 6% 4% 2% 0% Aus tria Croatia Spain Uk raine In 2007, tourism only represented 0.8% in Ukraine s GNI
9 Employment growth in hotel sector Hotel sector Restaurant sector Number of employees Percentage of total employment
10 Wages declined compared to Ukraine average Hotels Restaurants
11 Low investment in training obtained new occupation training Training activity in the sector is low! More needs to be done to upgrade skills
12 Number of incoming tourists dropped sharply in crisis year Incoming tourists
13 Business tourism The share of private income tourists was 70% in 2000 and 90% in Decline in business travel was more than proportional during the crisis: minus 25% in 2009 Business tourism is concentrated in the cities hosting EURO-2012
14 Slight increase in number of hotels in recent years Increase in urban areas, decrease in rural areas Hotel servicing capacity total Hotels Ownership 70% private property 15% government owned 15% local authorities
15 Ambitious plans for star 4 star 3,2,1 star no star according to State Program EURO 2012
16 Where are the bottlenecks? Pre-crisis pattern: Growing number of incoming tourists, growing employment and growing revenues. But growth has been modest and hotel sector remains very small by international standards Sharp drop in tourist arrivals during crisis: global phenomenon How to ensure medium- and long-term profitability of investments made? In run-up to 2012: Important increase in number of hotels planned in particular in four and five star category. Capacity required for EURO-2012 is much higher than current Ukranian tourist sector requirements. But Kiev (20,000), Donetsk (17,500) and Lyiv (12,000) face structural deficit in hotel rooms
17 Enabling environment Transparent and competitive markets The role of the regulatory environment Quality of material equipment Infrastructural issues Labour Law
18 Skill related bottlenecks? Signaling skill demands Employer involvement in training/education design Strengthening the link between the labour market and the VET system Increased responsiveness of the VET system
19 Euro 2012 as opportunity Investing in material and people
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