The Center for Applied Research, an independent research company, conducted a study on the future workforce challenges and potential solutions in Ukraine. This comprehensive report, supported by the Center for International Private Enterprise (CIPE), offers valuable insights into the critical issues surrounding Ukraine’s labor market.

The CAR presented this study during the event “Leaping Ahead: Ukraine’s Talent and Business Ecosystem” on May 24, 2023. The event was hosted by the CIPE in collaboration with the U.S. Chamber of Commerce Foundation and the Jefferson Institute.

Research Methodology

The methodology for the report involved several approaches to gather data on the Ukrainian private sector and its workforce:

1. Desk research, reviewing existing reports and statistics on the private sector and workforce development in Ukraine.

2. Questionnaire survey of private sector employers in SMEs to gather data on their current workforce development and mid- to long-term needs. A total of 252 respondents were sampled.

3. Individual interviews with economic experts (6 experts) and focus-group discussions with private sector employers to identify emerging trends and skills that will be in demand in the future.

4. Individual interviews with representatives from the private sector, government, and education sectors (12 interviews) to identify challenges and barriers to workforce development.

5. Individual interviews with educators and mental health professionals (8 interviews) about the current state of mental health education in Ukraine and potential efforts to integrate mental health in standard training and educational curricula.

Key Findings

1. Since the beginning of 2023, Ukraine’s labor market has shown gradual recovery, but unemployment remains higher due to the Russian invasion in 2022. The structural nature of unemployment and regional disparities pose significant challenges to employment growth. The war’s consequences, such as enterprise closures and relocation, along with a large number of refugees and IDPs, have led to a labor market supply-demand mismatch. This is evident in various professions, aggravated by changing market demands and limited job prospects. Consequently, many individuals end up working in positions that underutilize their skills. The current unemployment rate is estimated to be around 20%.

2. Private businesses in Ukraine face a shortage of skilled workers, despite high unemployment levels. Certain professions suffer from scarcity due to skilled workers emigrating and men being mobilized into the Armed Forces. IDPs and refugees lose their qualifications if they can’t find relevant jobs quickly.

3. Assuming no major shocks, the labor market will continue to recover gradually, reducing unemployment as economic activity increases. Reconstruction efforts and investments in affected regions will help address structural disparities and facilitate the return of refugees and IDPs. Eastern, northern, and southern regions still have fewer job offers compared to early 2022, while western and partially central regions offer even more vacancies.

4. Around 8.2 million Ukrainians remain in Europe, with 5.1 million having temporary protection status. This predominantly consists of young women with children, creating future workforce challenges. While the return of refugees will accelerate, there’s a risk of reverse migration due to family reunification or job search outside Ukraine.

5. The mismatch between education and private sector needs has become a pressing issue. Workforce preparation plans need adjustment to meet the demands of the recovering economy. Priority sectors such as IT, agro-industry, energy, transportation, and the military-industrial complex require a significant number of specialists.

6. Psychosocial well-being remains a concern, particularly for IDPs and those in combat zones. Addressing this requires efforts from the government and private sector, including increased training of psychological specialists. The reintegration and employment of veterans, including disabled veterans, present additional challenges. Rehabilitation is necessary for combatants and civilians with disabilities resulting from military aggression or occupation.