The demographic crisis is one of the biggest threats to the economic stability and development of any country. In Ukraine, this problem gained special importance during the war, affecting various aspects of economic life. Loss of population due to emigration, declining birth rates and high mortality have become key factors that have caused serious challenges for businesses and enterprises. According to demographers, for successful economic development, the population in our state should be at least 45 million, otherwise there will be no one to build a state with.
Demographic situation
As you know, in 1992 the population of Ukraine was 52 million people. The last all-Ukrainian population census was conducted in 2001, when the population of Ukraine was about 48.5 million people. According to the Institute of Demography, 31 million people currently live in the territory controlled by Ukraine, 4.9 million have gone abroad, and about 5 million remain in the temporarily occupied territories. By 2025, the population of Ukraine may decrease to 25 million people. At the same time, it is no secret to anyone that more than 6 million Ukrainians are currently abroad, and a significant part of them are not going to return home. A large external migration was observed even before the beginning of the invasion – by 2022, Ukrainians were among the leaders in the number of residence permits issued in EU countries.
The main reasons for the demographic crisis are a low birth rate, high mortality and external migration, as well as a high level of poverty, the inability of the population to pay for quality medical services. Before the full-scale invasion, there were 1.2 children per woman of childbearing age, and after the invasion – 0.9. This is the third from the end indicator in the world. Even if Ukraine reaches the EU average of 1.5 children per woman, it will not solve the problem of demographic decline. For a stable demographic situation, it is necessary that 220 children are born for every 100 women.
The birth rate in Ukraine has been steadily declining over the past decade. Between 2015 and 2021, the rate of decline varied between 3-11%. The start of the war made the situation even more complicated — in 2022, the number of newborns decreased by 24.6% compared to 2021. In 2023, the decline was even greater — 33%. In 2023, 187,387 children were born, while in 2010-2013 this figure was about 500,000 children per year. Ukraine’s fertility index is now 0.7, while Poland’s is 1.7 and the EU’s is 1.3.
Currently, war is the main factor affecting the birth rate. The evacuation of millions of people abroad, uncertainty in the future, economic problems — all this has a negative impact on the demographic situation. In addition, a large number of men serve in the army and are rarely at home, which also reduces the likelihood of conceiving children. The decrease in the number of children every year means that in the future there will be several pensioners per one working person. At present, one working person already supports one pensioner.
How the demographic crisis affects business
The loss of labor has led to the closure of many large and small businesses, especially in rural areas. For example, large industrial enterprises – metallurgical plants in the Dnipropetrovsk and Zaporizhzhia regions were forced to reduce production due to a lack of qualified personnel. The technology sector, which has been one of the drivers of economic growth, has also felt the impact of the demographic crisis. Many IT companies were forced to move their offices to other countries due to the lack of qualified specialists in Ukraine.
The demographic crisis hit the agricultural sector particularly hard. The loss of labor led to a decrease in agricultural production, which in turn caused an increase in food prices and a decrease in export potential. Farms that depended on seasonal workers could not find enough workers to harvest and went out of business.
Population decline has led to the closure of many social institutions such as schools and hospitals, especially in remote areas. This made access to basic services difficult for those who remained and put additional pressure on urban centres. The tourism industry has also suffered losses due to the demographic crisis. The lack of labor in the service sector and the decline in domestic tourism have led to the closure of many hotels, restaurants and travel agencies.
Companies specializing in the production of goods for children are also experiencing a decrease in demand. For example, the Biosphere company, one of the leading manufacturers of household goods in Ukraine, was forced to sell its production facilities for the production of baby diapers under the Bambik brand due to an expected decrease in the birth rate. The CEO of the company explains that this decision was made due to a decrease in demand for products. The company launched a new production line in 2020 during the quarantine, investing 7 million euros. The line could produce 650 diapers per minute, and the plant had a production capacity of 18 million diapers per month. The sale of this line highlights the seriousness of the demographic crisis, which forces even large companies to change their strategies.
The demographic crisis has also had a negative impact on the children’s toy market. In February of this year, many children’s online stores stopped their activities due to the difficulties of working in the conditions of martial law, the decline of the market for children’s products and the decrease in the birth rate. These online-only stores have not been able to recover after the full-scale invasion began, resulting in a drop in sales of more than 50%. Mass unemployment, mobilization, the rise in the dollar exchange rate and wage cuts have reduced the purchasing power of Ukrainians. Despite this, parents still strive to please their children, although now more choose budget toys.
State events
The state eventually started sounding the alarm and taking the first steps to overcome the demographic crisis. The Ministry of Social Policy developed the Demographic Development Strategy of Ukraine for the period until 2040 to solve the main problems related to low birth rate, premature mortality and labor force shortage until 2040.
“Strategy 2040 aims to create conditions for the birth of children, reduce premature mortality and change migration trends. We focused on high-level solutions and developed a detailed action plan for various authorities.” – said Marchak.
According to the official, solving the problem of staff shortage by business at the expense of migrants is unlikely due to the high cost of immigration policy. It is not only necessary to find high-quality specialists, but also to integrate them into Ukrainian society. Another approach is to ensure maximum inclusiveness in the labor market.
“We have 700,000 internally displaced persons (IDPs) of working age who do not work. It is not known how many of them can be retrained and provided with better work. There are also about 1 million people with disabilities who do not work but can be employed. With 1 million potential veterans, many of whom will return with serious injuries, we must understand that this will become the new normal for society.” – admits Marchak.
The deputy minister of social policy said at the summit of HR specialists of leading Ukrainian companies that the problem of labor shortage will remain relevant for many more years. According to the forecast of the International Labor Organization (ILO), the labor market deficit will reach 8.6 million people in Ukraine over the next 10 years. The Ministry of Economy estimates the deficit a little more optimistically – at the level of 4.5 million people. Currently, approximately 10.5 million people are officially employed.
Analysis of the Demographic Development Strategy of Ukraine
After analyzing the Demographic Development Strategy of Ukraine, you can see that it contains a lot of statistical data (often outdated), lists the causes of the demographic crisis, and also consists only of general provisions without any specifics. For example, the goal is defined: to support the health and well-being of the elderly. And ways to achieve it are proposed:
“- expansion of opportunities for the prevention of diseases, encouragement of a healthy lifestyle for people of all age groups as a condition for healthy and active longevity, in particular, promotion of physical activity of the elderly;
– implementation of an effective system of care and provision of necessary medical (geriatric) and social services to the elderly;
– modernization of the pension system in order to strengthen its financial capacity and ensure a decent level of pension provision”.
Here is another goal: overcoming negative demographic trends thanks to the development of opportunities for a quality life in Ukraine. Ukraine is a country where you want to live. At the same time, it is noted:
“The demographic policy of Ukraine should also provide for the creation of end-to-end prerequisites that indirectly affect the decisions of citizens to have children, return to Ukraine or, conversely, go abroad to live, as well as opportunities to overcome the problem of premature mortality.
Such prerequisites include:
- formation of a safe social and ecological environment;
- development of tools to provide citizens with their own (individual) housing;
- creating opportunities for economic independence and raising the level of citizens’ well-being;
- availability and appropriate quality of infrastructure, friendliness of the environment to people; ensuring social cohesion of Ukrainian society”.
As you can see, the Strategy contains some slogans, but no effective proposals.
The demographic crisis is a serious problem for Ukraine, which affects all aspects of economic life. If complex concrete and effective state measures are not taken, it will be impossible to ensure stable economic development and improvement of the population’s life.
Oksana Ishchenko
