The labor shortage in Ukraine has reached a historic high—69% of companies cited it as the main obstacle to doing business during the war, according to the Institute for Economic Research and Policy Consulting (IER), based on the results of its 49th monthly survey, which the IER conducted among 469 industrial enterprises.
“For several months now, the ‘labor shortage’ obstacle has been breaking records. This obstacle has remained in first place for over a year and a half, reaching a high of 69% in May. Businesses are concerned about the shortage of workers,” said IER Senior Research Fellow Yevhen Angel.
In May, there was a slight decrease in the difficulty of finding qualified workers—the share of enterprises that found it harder to recruit such workers fell from 62.3% to 60.6%. It is more difficult to find unskilled workers—for 38.4% of respondents in May, compared to 34.3% in April.
Only 2.4% of businesses plan to increase employment over the next three months, while 5.1% plan to place employees on mandatory leave.
“Rising prices for raw materials, supplies, and goods” remains the second-biggest obstacle—the figure fell slightly from 56% to 49%.
The share of those concerned about “unsafe working conditions” has decreased slightly: this issue has become an obstacle for 44% of businesses, down from 46% in April, allowing it to hold third place for the fourth consecutive month.
The pattern of “unsafe working conditions” as an obstacle remains consistent across enterprise size. Medium and large enterprises are more likely to cite this problem—48% and 47%, respectively, in May—as they are more likely to be targeted by enemy attacks.
“From a regional perspective, this obstacle is particularly acute in frontline and central regions—over 80% of respondents in the Kyiv, Vinnytsia, Odesa, Zhytomyr, Zaporizhzhia, and Dnipropetrovsk regions cited it. In the west of the country, this obstacle is less relevant. The only exception is Rivne Oblast,” Angel said.
However, there have been noticeable changes regarding two other obstacles. The obstacle “decreased demand for products/services” rose from 26% to 38%. In addition, logistical difficulties have intensified, as evidenced by the increase in the obstacle “difficulties in transporting raw materials or finished goods across Ukraine” from 24% to 30%.
No significant changes were recorded for other obstacles. “Corruption” and “unlawful demands or pressure from law enforcement or regulatory agencies” remain “in the shadow” of the main obstacles—only 7% and 3% of respondents, respectively, mentioned them in May.
“The relevance of the obstacle ‘power outages’ remains at a relatively low level—20% in May—when compared to the winter attacks on our energy infrastructure,” Angel said.
It is noted that 31% of businesses temporarily suspended operations due to power outages in April, but mostly for short periods of time. At the same time, 41% of businesses operated continuously despite the outages. Already, 28% of businesses experienced no power outages, up from 20% the previous month.
Average working time losses amounted to 4% in April. The greatest losses of working time were observed in micro and small enterprises (57%); by industry, in the chemical industry (6%); and by region, in Kyiv (13%) and Sumy (9%) regions.
Assessments of the government’s economic policy remain neutral. “A large share of enterprises provide neutral assessments; specifically, 64% of respondents did so in May. The share of positive assessments remains low at 6%. At the same time, the share of negative assessments stands at 25%, and this gap between positive and negative assessments has persisted since the summer of 2023,” Angel summarized.
Up to 500 Ukrainian industrial enterprises located in 21 of Ukraine’s 27 regions participate in the IED’s New Monthly Enterprises Survey (#NRES). The survey has been conducted monthly since May 2022.
