Wartime Labour Market Challenges and Opportunities

‍Author: Oleksandr Nazarenko — urban economist and community economics researcher at Restart. Master's student in Economics at the National University of Kyiv-Mohyla Academy.

Key figures:

• Ukraine's unemployment rate rose to 29.5%–30.7% following the outbreak of war;
• As of December 2024, unemployment had fallen to 14.2%, yet still significantly exceeds the pre-war normal rate of 3–5%.

Factors affecting the labour market:

1. Internal migration: the movement of people within the country is reshaping the labour force geography; by the end of 2024, the number of internally displaced persons (IDPs) had exceeded 4.9 million Ukrainians;
2. External migration: the departure of skilled workers is creating a specialist shortage; in total, over the three years of full-scale invasion, more than 3 million Ukrainians who left between 2022 and 2025 remained abroad;
3. Mobilisation: a large number of men and women are serving in the Armed Forces of Ukraine, which is driving gender-related shifts across various sectors.

According to a study by the European Business Association, in 2024, 88% of companies expanded their vacancies, 87% raised salaries, yet 71% faced a significant shortage of qualified specialists. The impact of these factors on business is severe. According to the Institute for Economic Research and Policy Consulting (IER), labour shortages are the third greatest barrier to doing business, surpassed only by military threats and rising raw material prices. As a result, businesses lose productivity, and the state loses tax revenues.

The Crisis and Its Consequences

It is becoming increasingly difficult for employers to offer competitive wages. To reduce their tax burden, many employees are opting for the simplified taxation system by registering as individual entrepreneurs (IEs) under the group 3 single tax. This is evidenced by the record rate of registrations in 2023–2024, which began to decline rapidly at the end of 2024 following tax increases.

Due to the staff shortages and the constant threat posed by the enemy, businesses are facing declining productivity and financial hardship. Technical processes are slowing down, which may ultimately lead to cessation of operations.

For example, due to staff shortages, the Kyiv Metro has increased train intervals. The logic is straightforward: a reduction in the number of employees leads to lower productivity and slower technical processes, which in turn reduces tax revenues flowing into the state budget.

Solutions for Labour Market Recovery

Gradually reducing unemployment should be the priority: for example, through retraining programmes, engaging groups of people who, for various reasons, find themselves at a disadvantage in the labour market. It is necessary to create favourable conditions for the integration of women, persons with disabilities, veterans, young people, older adults, and IDPs.

Employers should also establish a competitive system of financial incentives, including:

• programmes to cover tax obligations;
• compensation for an inclusive workplace setup;
• employment assistance and ongoing support for veterans.

Women

Despite the 2017 revocation of the Ministry of Health order prohibiting women from certain types of work, prejudices surrounding their employment in male-dominated and managerial roles persist. Women are frequently employed in lower-paid sectors, such as the humanities and the public sector. According to the State Statistics Service, in 2021, women's wages were 15% lower than men's.

Persons with Disabilities

As of early 2024, there were more than 3 million people with disabilities in Ukraine, of whom only 17.4% were employed. The main barriers to their employment are stereotypes and a lack of adapted workplaces.

A survey conducted by the OLX Robota analytical service among persons with disabilities reveals:

• approximately 40% of respondents reported difficulties when seeking employment;
• of these, 59% experienced stereotyping and prejudice from colleagues;
• and 40% cited a lack of adapted workplaces.

Veterans

As of July 2024, there were approximately 1.3 million veterans in Ukraine. The return to civilian life after military service is a complex process that requires retraining and adaptation to new working conditions. Many veterans face employer prejudice and need support in finding employment.

Serving soldier Andrii shares his experience of returning to his former career in IT:

Question: How would you assess your own experience of returning to your previous professional profile?

Andrii: In that time, the IT industry changed substantially — technology moved on, and what was once relevant has now become outdated. Because of this, I had to learn a great deal from scratch, which made me feel as if I had fallen behind.

Question: How long did it take to get back to your previous skill level?

Andrii: Getting back to my usual level of productivity took about 6 months, though it depended on the task's complexity. I had to master new technologies and brush up on old skills quite literally on the fly. The support of my loved ones and the desire to learn new things — to make up for lost time — played a major role in that process.

Veterans returning to civilian life after sustaining injuries — sometimes very serious ones — frequently face numerous challenges. Providing proper psychological support and creating an inclusive working environment are key to the successful adaptation and reintegration of veterans into society.

Conclusions  

Addressing the problems of today's Ukrainian labour market cannot be limited to regulatory measures and financial incentives alone. What is needed is a comprehensive approach that includes adapting educational programmes to market needs, developing and expanding vocational training and retraining, and supporting vulnerable groups in finding employment. Below, we share some solutions:

• grant programmes;
• benefits for businesses that hire women, veterans, and persons with disabilities (meeting quota requirements);
• compensation for adapting the workplaces;
• compensation for retraining and skills acquisition;
• compensation for costs associated with staff providing psychological or medical assistance;
• guaranteeing and protecting workers' rights;
• one-off and recurring payments.

There are also numerous opportunities available for raising funds to start or develop one's own business, such as:‍

• Grants of 250,000 hryvnias or more for veterans and their family members through the Diia platform;
• The "Vlasna Sprava (Own Business)" programme for young people (aged 18–25), offering grants of up to 150,000 hryvnias to start a business;
• The Ukrainian Veterans Fund, an aggregator of self-realisation opportunities for veterans.
  

The effectiveness of grant programmes and tax incentives can be improved by increasing awareness of these opportunities and providing detailed guidance on preparing grant applications. During the implementation of The Possible Lab grant programme in Voznesensk, we discovered that many residents were unaware of what a grant was or how to complete an application correctly. Local employment centres or local self-government bodies could act as intermediaries in this awareness-raising work.

At the same time, an important factor remains that these groups—such as veterans, people with disabilities, and women—face discrimination and prejudice to some extent both during the selection process and directly in the workplace. Society still harbours widespread biases about the inability of such candidates to perform their duties effectively. Ultimately, what is needed above all else is a change in societal attitudes — the dismantling of stereotypes and stigmatisation. This can be achieved through:

• Media projects;
• Open lessons in schools;
• Information campaigns;
• Support and advisory services;
• The inclusion of representatives in working groups.

In today's reality, the Ukrainian labour market cannot afford to be intolerant and non-inclusive. In addition to financial levers of influence, it is worth investing in educational and media projects that sustainably raise awareness of inclusivity, enhancing social cohesion.

Illustrations by Margo Garyazha