Supermarket shelves go unstocked. Metro trains run less often. Large companies are freezing whole divisions. Factory employees take on overtime shifts to meet production. Projects to alleviate Ukraine’s energy crisis have been delayed.
Across nearly every sector, Ukraine’s economy is feeling the same labor crunch that is squeezing its battlefront units, as companies face the reality that a large portion of their workforce has simply vanished.
Some Ukrainians are fighting on the frontline, some are internally displaced, and millions more have moved abroad to flee the war.
“I have been in HR for a long time, and such a situation has never existed in Ukraine’s labor market,” said Yana Romanenko, human resources director for Nibulon, Ukraine’s agricultural giant. “Moreover, the problem is getting worse. Today, it is not about finding the best on the market, but finding someone at all.”
Companies are trying to adjust by expanding their pools of candidates to recruit from, looking for ways to retain existing talent, increasingly relying on automation, and raising wages, among other tactics.
The problem has become even sharper in recent months following a renewed recruitment push and a new law that requires employers to maintain and share updated military registration records of employees. More men are avoiding official employment where conscription officers can easily find them by moving into “grey” markets or ceasing work altogether.
“The conditions that we offer them, and even our compensation regarding the level of wages, a full social package and so on, they can not compensate for the risk that, frankly, people are not ready to go to combat,” said Vitalii Pakhomov, human resources director for Interpipe, one of the world’s largest suppliers of steel pipes.
Kyiv faces a delicate balance between mobilizing men to fight, and sparing enough workers to power the economy. Men are desperately needed on the frontlines to stave off a much larger enemy force that has been slowly capturing ground. At the same time, a functioning economy remains key for Kyiv’s ability to pay its soldiers and purchase equipment to persist on the battlefield.
Ukrainian companies deemed critical to infrastructure and the war effort can exempt a percentage of their employees from mobilization, but the exact amount varies between industries and companies.
Even so, in June, a survey by the American Chamber of Commerce Ukraine of more than 100 of its members, which include some of Ukraine’s largest employers, found 81% of respondents said that mobilization is affecting their business operations. The companies said that reserving employees from military service is now their top challenge – higher even than employee safety and security, electrical outages, and Russian strikes on infrastructure.
‘There are no people’
When the full-scale invasion broke out in 2022, job openings and job seekers immediately experienced a “colossal” drop, with job postings dropping almost ten-fold, said Lesia Prymakova, communications manager for Work.ua, a top Ukrainian site for job postings. “There were simply no vacancies, and people were clearly not looking for work.”
Ukraine’s State Statistics Service stopped publishing its regular updates on the labor market after the full-scale invasion, leaving companies and experts to rely on proxies like job postings to analyze market conditions.
New postings have opened each month as the economy recovered, Prymakova said, and earlier this year, Work.ua surpassed the number of vacancies open before the full-scale invasion.
But while demand has recovered, the supply for labor is a different story.
“This crisis, it is not like all the others before it. Because the real problem here is not with inflation, or salaries – it is precisely that there are no people,” said Prymakova.
Nearly 6.5 million Ukrainians are estimated to be refugees abroad, according to the International Organization for Migration – about 15% of the pre-war population of 45 million. Another 3.7 million are estimated to be internally displaced.
Around another million Ukrainians have been mobilized, the Ukrainian government said earlier this year, while an estimated 800,000 men are in hiding or working off-the-books to avoid being sent to fight, Dmytro Natalukha, chairman of the parliamentary Economic Committee, told the Financial Times.
New bills have been proposed in parliament to exempt workers of certain salary levels from service, or institute a system where companies can pay to protect them, but these bills have sparked controversy over questions of fairness.
“It is just daily a game of cat and mouse, where business owners want to maintain their people and draft officers want to mobilize them,” said Hlib Vyshlinsky, executive director of the Kyiv-based think tank Center for Economic Strategy (CES).
‘No one wants to go there’
While no part of the country has been spared, vacancies are particularly high in the eastern regions.
Pakhomov of Interpipe estimated that the company is short around 12% of its needed workers, but in certain areas closer to the front, the number is as high as 25-30%.
“Around half the population has left for good” in the region near the company’s operations in Nikopol, Pakhomov said, “and the constant shelling definitely does not create an opportunity to increase the flow of working people.”
Nibulon, which recently moved its headquarters from Mikolaiv to Kyiv for security reasons, also has difficulty filling positions for its agricultural and shipping operations further east.
“No one wants to go there. Before, you could hire a contractor, pay him money, and he would. But now they say, ‘No, no, no, wherever you want – just not to Mykolaiv, not to Voznesensk, not to Nova Odesa’ and so on,” Romanenko said.
Vacancies were rare before the war, she said, but now the company regularly has 150 vacancies open each month as people are recruited to the army, leave the country, or move to other jobs.
Nor are the effects limited to large corporations.
It can take a year and a half for new employees to be fully trained at Triada-welding, said Kyrylo Vitaliyovych, director of the Zaporizhzhia-based specialized engineering and welding company. Ten percent of the approximately 20-strong company is now fighting on the frontlines, he said.
“If a single employee is taken away or leaves, it is very painful for us, because we need a lot of time to adapt,” Vitaliyovych said. “And that’s why we carefully review which projects we can take on now, and which ones we can’t. We could develop, but because of the personnel issue, we are forced to restrain ourselves.”
The company has worked closely with the local Zaporizhzhia Polytechnic National University to hire students, Vitaliyovych said, but students increasingly want to leave the region after graduation.
Recruiting younger, older, less experienced
In addition to shrinking the workforce, the war has also reshaped its makeup. Especially scarce are trained specialists, and men of recruitment age – 25 to 60.
Some had hoped that women would be able to fill in for absent men, and many companies have instituted programs to retrain women for traditionally male-dominated roles.
Companies that spoke with the Kyiv Independent described some success in recruiting women, but said that the results were limited.
With military-aged men banned from leaving the country, most of the adult refugees abroad are women. And, for those that remained, many industrial roles affected by the labor crunch were not popular among women, for reasons including the physical demand, low rates of university training in relevant fields, and childcare issues – especially for jobs that required long stretches away from home.
“People picture London in 1942,” said Vyshlinsky of CES, referencing when women flooded the workforce during World War II. “But the difference is, in London, women hadn’t left the continent to be refugees. In our case, we don’t have a lot of spare women.”
Overall, salary offers in May were around 45% higher than pre-invasion levels, according to the National Bank of Ukraine, as companies compete for limited talent.
“Candidates have more choice, so they are becoming more demanding about working conditions, compensation and development opportunities,” a representative for the Ukraine-based grocery delivery service Zakaz.ua told the Kyiv Independent in a statement.
For students, inexperienced workers, and older job seekers, the market has grown steadily, Prymakova of Work.ua noted. According to company’s figures, job postings seeking workers without experience have increased by around 50%, while postings for older employees have more than tripled.
A representative for McDonald’s told the Kyiv Independent that while the company was experiencing minor impacts in Ukraine from mobilization, it did not reach critical levels because half its workers are women and the majority of employees are between the ages of 18-25.
Like many others who spoke with the Kyiv Independent, the state-owned oil company Ukrnafta is instituting programs to retrain existing employees for new roles, partnering with universities to work with and recruit students, and asking employees to stay past their retirement dates.
“Usually, when a person reached retirement age, we gave them material assistance for years of service and said goodbye. Now, as an employer, we are asking you to stay and work during martial law,” said Olena Artazei, Ukrnafta’s deputy director for human resources.
Another group that many companies are trying to work with: veterans. Ukrnafta continues to keep 939 service members on its payroll, and hopes they will return to the company when their service ends.
For veterans that have already returned, as well as veterans recruited externally, the company has set up a separate division to help meet their needs – physically, psychologically, and legally, including building workplace accommodations and training managers to understand veterans’ needs.
Interpipe, which has a similar re-entry program for its veterans, said that more than 80% of its 103 veterans who have come back from military service returned to work at the company.
Rethinking operations
Recruitment can only do so much, however, when there are simply not enough people, and companies are looking for ways to reduce the number of employees needed.
Many companies spoke of increasing automation. Ukraine's largest supermarket chain, ATB-Market, told the Kyiv Independent in response to written questions that the labor shortage was causing long waiting times for customers and challenges restocking shelves and inventory, as well as straining employees who worked extra hours. To reduce the workload, the company increased the number of automated registers and self-checkout machines.
In some cases, companies are combining jobs – an electrician could be retrained to serve the roles of both an electrician and a locksmith, for example.
And some companies have taken it further by freezing whole divisions. At Nibulon, “we had to focus on areas of key areas of activity – what brings us the most income,” Romanenko explained. Their animal husbandry and sausage production divisions were paused, and workers were retrained and relocated to fill in positions in the company’s core businesses, including agriculture and logistics, she said.
‘Every year, we will age by a year’
As Ukraine’s companies adapt to the new normal, there are few signs of relief on the horizon. Ukraine estimates that another 700,000 Ukrainians will leave the country in 2024 and 2025, according to a report earlier this month from the National Bank of Ukraine, and its current birth rate is only a third of its mortality rate.
Even once the war ends, many men who have been separated from their wives and children are likely to join them abroad.
"I believe that this is a very delayed problem that will have to be made up after the war," said Pakhomov of Interpipe. "Extraordinary programs should be made to educate the youth who also left in large numbers."
Workers who were 43 at the start of the war are now 45, Pakhomov noted: "Every year, if we do nothing, we will age by a year."
Nadya Savchenko, CEO of Key People, a human resources agency, says she does not foresee the situation improving soon and thinks it could be even more difficult during reconstruction. Still, she hopes that young Ukrainians will recognize the opportunities that remain.
“Those who now have the desire to build careers, to move up the career ladder, now is a very good time in Ukraine. Talented people are strongly needed in many strategic industries and areas, and salaries are very competitive,” she said.
But she also recognizes that it can be a hard sell: “It depends on security. I understand that for those who have children, for example, there is an obvious choice. You go where your children are safe. But for those that do not have such limitations, I invite them to Ukrainian companies.”
Liliane Bivings
