Ukraine’s unemployment rate will decline to an average of 21.1% in 2023 from 21.1% in 2022, the National Bank said in its inflation report, explaining the improvement by revised methodology and positive trends in the labor market.
In its January report, it estimated unemployment in 2022 at 25.8% and expected it to rise slightly to 26.1% this year.
“In the absence of official statistics, assessing the impact of the war on the labor market, both in general and in terms of certain categories of the population and regions, is difficult and requires additional research methods, including the use of alternative sources of information. These are the data and survey results that allowed us to refine the unemployment estimate for 2022,” the NBU said.
He specified that based on such surveys, the average unemployment rate in 2022 is estimated at 19% to 23%. In addition, an improvement in the unemployment rate in the second half of 2022 was confirmed.
“Since the beginning of 2023, the labor market has been gradually recovering, but this process is still unstable… Since the beginning of 2023, the situation on the labor market has been improving. However, unemployment remains high and is becoming structural,” the NBU said.
It is noted that imbalances in the labor market will persist, the unemployment rate will remain higher than before the war, and real wage growth will be more restrained, but uneven by sector and region.
According to the published information, the recovery in the labor market was driven by an improved situation in the energy sector and a seasonal pickup in activity.
The NBU added that the burden per vacancy has increased and differs significantly between regions and professions. This is due to both changes in the structure of the economy as a result of the war and a large number of IDPs, and may indicate increased signs of structural unemployment. One of the reasons for structural unemployment is the difficulty of moving potential employees to a region where there is work in their specialty.
In terms of wages, the SSSU estimates that in 2022, thanks to the public sector, the average nominal wage increased by 5.9% (real wages decreased by 11.8%), which is better than the NBU’s previous estimates.
It is expected that real wages will grow by 3.7% on average in 2023, while nominal wages will grow by 21.9%, while in January the NBU estimated these figures at 3.3% and 25%, respectively.
As reported, the NBU improved its inflation forecast for this year to 14.8% from 18.7% compared to its January report. According to its estimates, inflation in annual terms will decline from 21.3% to 14.5% in the second quarter, after which it will fluctuate between 14.9 and 14.7% by the end of the first quarter of 2024.
