Shortage of personnel and skills is the main challenge of the labor market in 2023
The full-scale war has significantly impacted the labor market in Ukraine, so businesses have to plan their activities, taking into account the new realities. Current and future challenges for HR specialists, changes in labor relations regulation, the current demographic situation, the role of inclusion and diversity, Ukrainians abroad, and resources for recovery – these and other important topics were discussed by speakers and participants in the discussion at the European Business Association’s “Labor Market During War” event, which took place on October 17.
Additionally, during the event, the results of the EBA “Labor Market Analysis: January – August 2023” survey were presented and conducted in partnership with Tatiana Pashkina, a labor market analytics expert. The survey involved 131 human resource management specialists who shared their interim findings for 2023 and their plans for 2024 in their professional activities. Among the key labor market trends presented by Tatiana, an increase in salaries (76% of respondents), expanding job roles, and hiring new employees (51%) stand out. Company plans for 2024 include salary increases, expanding their workforce, and increasing budgets for personnel development.
Companies cite stable payment of salaries, bonuses, and awards, as well as providing psychological support, as the primary means of supporting employees during this time. Among the surveyed companies, 19% have all their employees currently in Ukraine, while 33% have no more than 5% of their workforce abroad. Additionally, 61% have the option for remote work, and 49% of companies do not plan to bring people back to the office shortly. You can review the full research results in the news article linked.
Dmytro Lyvch, the CEO of EasyBusiness, noted in his speech that the demographic situation in Ukraine was already complex before the full-scale invasion, and the war only exacerbated the negative processes. The full-scale invasion led to a demographic shock, with a significant portion of Ukrainians becoming internally displaced persons or obtaining refugee status in foreign countries. If in 2020, Ukraine had a population of approximately 37 million people, the current population, according to various estimates, may now range from 28 to 34 million people. These events have had a significant negative impact on the country’s ability to realize its economic potential, with a 29% decline in Ukraine’s GDP in 2022.
Ukraine requires a workforce for its continued economic recovery and development. For example, to achieve economic growth of 7% by 2032, Ukraine would need an additional workforce of 4.5 million people, according to calculations. Dmytro suggests that the optimal way to bridge this gap is through a balanced approach, which involves increasing the labor force and enhancing its productivity. During the full-scale invasion, there was a significant gap between labor supply and demand. Notably, despite a high level of unemployment (forecasted at 19% in 2023 by the National Bank of Ukraine), there is a shortage of labor in certain sectors, as reported by businesses.
The return of Ukrainians from abroad could boost Ukraine’s economic potential, but this requires conditions such as security, infrastructure, and economic opportunities. The longer Ukrainian migrants stay abroad, the higher the likelihood that they may choose to remain there permanently, as forced migrants can become labor migrants and establish new social ties. Therefore, the Ukrainian diaspora is expected to grow, but it can also play a vital role in the country’s recovery, according to Dmytro.
Metro Cash & Carry Ukraine is also experiencing a labor shortage, as reported by Anna Tolmachova, the company’s HR Director. The three main reasons for resignations from the company currently include migration, job switching, and burnout. The most challenging vacancies to fill are for drivers, B2B sales managers, and commercial positions. Currently, it is most difficult for the company to attract talent in the frontline territories, despite these regions receiving many internally displaced persons. On the other hand, vacancies in western regions are filled more quickly, although there is high competition for talent there. Among the barriers to attracting candidates, Anna mentions a general shortage of skills and candidates, document issues, candidates’ health conditions, and even official employment in the context of mobilization, subsidies, and similar factors.
In 2023, Metro Cash & Carry Ukraine had 10% fewer vacancies than in 2021, with these positions taking 2 days longer to fill, and the cost per hire increased by 8%. The key strategies the company uses to overcome the labor market shortage include investing in employee retention, effective career and development planning, referral recruiting (approximately 20% of vacancies are filled through referral programs), creating external talent pools, leveraging the ambassadorship of former employees, high-quality sourcing, unbiased hiring practices, and supporting job switching.
According to Maria Abdullina, Head of OLX Work and Services department, based on the number of active job listings on the top three job resources in Ukraine, the labor market has recovered by 92%, with the “white-collar” segment recovering by 113%. The most popular job listings in the “white-collar” segment, particularly on OLX Jobs, include salespersons, drivers, and general laborers. The highest competition among employers is in the Kyiv and Khmelnytskyi regions. Average wages have increased in all sectors, with the most significant growth seen in agriculture and security/safety roles.
Maria also presented the results of a study on inclusive employment conducted by OLX Ukraine. Currently, 23% of companies have employees with disabilities in their workforce, and 14% have employees with the status of internally displaced persons. Companies believe that tax incentives from the government could help encourage the hiring of individuals with disabilities. Employers cite concerns about the health and ability of employees to perform their duties and the need for special workplace accommodations as challenges when employing individuals with disabilities. Currently, there are 1,200 job listings for socially vulnerable groups on the OLX platform, and they receive 20% more responses.
Valeriia Bezpala, a partner at Vasil Kisil & Partners, believes that the labor market while functioning as a market, is not entirely free. She points out that there is a significant player that exerts a substantial influence on this market through its policies and regulations, and that is the state. Currently, Valeriia sees the main challenges in the field of labor relations in the context of the military (mobilization, potential reduction of conscription age, electronic registries, communication between the Territorial Centers of Recruitment and Social Support and employers) and in terms of regulations (reducing the number of procedures and simplifying record-keeping, defining the characteristics of labor relations, improving the regulation of non-standard employment forms, implementing mediation procedures, enhancing state control, and increasing opportunities for balancing family responsibilities and professional activities).
A significant change for employers could be the development of electronic registries for tracking conscripts, as this will relieve businesses of the burden of maintaining their own registries of conscripts and reduce administrative overhead. In her presentation, Valeriia also drew attention to the gender pay gap issue, which currently stands at 18.6%. The National Strategy for Overcoming the Gender Pay Gap in Ukraine sets a goal of reducing it to 13.6% by 2030.
We are grateful to all the speakers and participants for an extremely rich and insightful discussion, and we will continue the dialogue in a practical sense to improve labor relations regulation and turn challenges into opportunities. We would like to thank our partner, OLX Ukraine, for their support of the event!