Promoting structural change in Ukrainian coal regions


While the Ukrainian coal industry in overall is in decline, it still plays a salient role as an employer in some regions. Its contribution to the economy, however, is low and even though the sector is highly subsidised, coal is losing its competitiveness as an energy source against renewable alternatives.

In the long-term, a further decline of the coal industry seems inevitable. It is crucial to initiate the process for supporting a smooth structural change in the coal regions as soon as possible in order to avoid a sudden structural break. According to international experience this process should be authorized from the highest political level and supported with political commitment as well as extensive funding. While being initiated from the top, the structural change needs to be developed bottom-up at the same time. Hence, regional development agencies should be founded and complemented with a structural change fund to promote economic development and social stability in the regions.

Our analysis shows that with adequate support through training of younger miners, transitional decommissioning work and fair retirement schemes, a negative impact on the labour market is avoidable. In the contrary, a successful structural change in coal regions has the potential to trigger an economic shift towards a more future-oriented industry and to overcome the socio-economic challenges these regions are facing today.

Simon Unterschütz, Oleksii Mykhailenko, Dmytro Naumenko

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