74% of Ukrainian employers experience a workforce shortage.

Russia-Ukraine war has significantly reshaped the labor market dynamics, with businesses across the nation grappling with a pronounced shortage of skilled workers.

This trend emerges from a detailed study conducted by the European Business Association in collaboration with Tetyana Pashkina, a noted expert in labor market analytics. The findings underscore the acute challenges employers face as they strive to maintain operations despite the ongoing war.

As the war continues to influence all aspects of Ukrainian life, companies are forced to adapt to a rapidly changing economic landscape. The study, which surveyed business leaders from various sectors, reveals that an overwhelming 74% of employers currently experience a workforce shortage, a stark increase from 55% in the fall of 2023.

This shortage is particularly pronounced in industries that require high levels of specialization and language proficiency, highlighting a critical gap in the labor market that has been exacerbated by the dual pressures of mobilization and migration.

It was also previously reported that Russia-Ukraine war prompted labor shortage in Russia. Russia’s labor shortage affects Moscow’s ability to recruit men for its armed forces, according to Bloomberg. The competition for workers in Russia has led to substantial salary increases and made the once relatively lucrative military service less attractive, even after a 10.5% increase in monthly pay for participation in the war in 2023.

The persistence of remote working arrangements highlights another dimension of the evolving work environment. While 54% of companies offer some form of remote work, the applicability varies significantly across different employee categories, indicating a selective adaptation based on operational feasibility.

In response to these challenges, Ukrainian companies have implemented several strategic measures throughout 2023 to stabilize their workforce and ensure continuity in operations. A notable 79% of companies increased salaries as an incentive to retain employees amidst growing economic and social instability. Additionally, nearly half of the businesses expanded their functional roles and hired new staff, despite the difficult circumstances.

The adaptation extends beyond mere adjustments in payroll and staffing. About 36% of respondents indicated that their companies have increased budgets for employee development, training, and retention. Moreover, the support for employees has been robust, with 97% of companies continuing to pay full salaries and 85% disbursing bonuses and premiums.

The mental health of employees has also been a focal point, with 49% of businesses providing psychological support to help staff cope with the pervasive impact of the war.

Looking forward to 2024, companies are not only planning to continue these supportive measures but are also anticipating further positive changes. A significant 72% of companies plan to increase salaries again, reflecting both a response to inflation and an effort to further incentivize their workforces amidst competitive and challenging conditions. Recruitment is also on the agenda, with two-thirds of companies expecting to open new positions, signifying a cautiously optimistic outlook towards business growth and recovery.

Companies are actively seeking solutions to address the shortage of skilled labor, investing in employee welfare, and adjusting to a new economic reality dictated by the ongoing war. As they plan for the future, the strategies implemented today will likely shape the resilience and growth potential of Ukraine’s business sector in the years to come.

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