Europe will not give up Ukrainians after the war: Andriy Gaidutsky’s pessimistic forecast

The large-scale migration of Ukrainians abroad remains one of the most pressing issues facing Ukraine during the war. The loss of millions of citizens, especially skilled workers, has serious consequences for the country’s economy. This problem is a matter of much debate, as many countries in Europe and the world are interested in using the labour potential of Ukrainian refugees to help them address their own economic issues related to labour shortages and an ageing population. At the same time, the return of refugees to their homes seems unlikely for a number of objective reasons.

According to the National Bank of Ukraine, Ukrainians will continue to go abroad in large numbers in the coming years. This was stated by an expert on migration policy, Doctor of Economics, Associate Professor

associate professor of international management, Andriy Gaidutsky, in an interview with ZN.UA. He noted that this is influenced by both macro and micro factors.

“The first macro factor is the high difference in wages in Ukraine and the countries where Ukrainians move to. For example, the difference in wages between Ukraine and Poland in 2024 is about four times in favour of the latter, seven times with the UK, eight times with Germany, and 12 times with the US. This is the main factor that continues to motivate people to move abroad.

The second macro factor is that developed countries continue to provide support to newly arrived Ukrainians. That is, they stop providing support to those who arrived two or three years ago and redirect this assistance to ‘new’ Ukrainians. In this way, the authorities of these countries are trying to attract more new workers, new consumers, and new taxpayers. Over the three years of full-scale war, dozens of countries have learnt how to attract Ukrainian migrants productively and to the benefit of their economies,’ the expert said.

Among the micro factors, he mentioned the intensification of hostilities in certain regions in eastern Ukraine and periodic power outages, which prevent certain segments of the population from working in the country.

Gajdutsky also stressed that EU countries are not interested in Ukrainians returning home, as they help solve the problem of labour shortages caused by low birth rates and out-migration.

As an example, the expert cited the Czech Republic, where the country loses more than 230 billion crowns, or 4.5% of GDP, due to a labour shortage. A similar situation is observed in other countries of the economic bloc. In addition, the United States and Canada have already attracted more than 800,000 Ukrainians over the three years of war, ready to ‘absorb’ those who have not integrated into the EU.

According to Gaidutsky, after the collapse of the USSR and the collapse of GDP, Ukraine had a huge supply of labour that could not go abroad for two fundamental reasons, and this supply covered demand for employers for decades without the need to raise wages significantly.

“The first reason is that the society is not fluent in a foreign language, and even with a great desire to go abroad, integration would take a very, very long time.

The second reason is the availability of own housing (most of which was inherited free of charge from the USSR). It was the inherited ‘Soviet’ housing that relaxed society and diminished the desire to improve their own lives. Let’s take a look at the capital: the average salary in Kyiv in September 2024, according to Work.ua, was UAH 22,500 (before tax) and UAH 13,200 (after tax), and the average cost of renting an apartment in the city was about UAH 15,000 per month. Obviously, if most people lived in rented accommodation (as in most EU capitals), they would quickly realise the need to emigrate, as they would not be able to support their families on such a salary after paying the rent. And the city would begin to be filled with immigrants en masse, as is the case in Berlin, Warsaw or Prague.

However, it is precisely the availability of their own housing that allows millions of Ukrainians to not feel how little they earn (because they do not have to pay rent). This reduces their appetite for emigration. But everything changed with the war, when a window of opportunity opened: dozens of countries agreed to ‘invest’ in the integration of millions of Ukrainians. Now these countries have realised: ‘Wow, it works: we spend money on their integration, but all these costs are paid off by economic growth, increased tax revenues and increased employment.’ For example, the Ministry of Labour and Social Affairs of the Czech Republic reports that the country’s state budget revenue thanks to Ukrainian refugees amounted to 4.4 billion Czech crowns in the first half of 2024. This means that they have already collected more money than they spent on subsidies. The situation is similar in other countries,’ the expert believes.

Ukrainian refugees are only at the beginning of their migration cycle, some are starting to study or work, while others are saving up for future business in Ukraine. According to Gaidutsky, the proposal to immediately return refugees contradicts the logic of the economic cycle: ‘Ukrainian refugees are now only in the first trimester of their migration cycle, which lasts on average from 3 to 15 years and depends on the goals of the person.’

The expert believes that foreign countries will not return Ukrainians after the cessation of hostilities for the following reasons:

“Firstly, the EU countries need Ukrainians to solve their key problem – the shortage of labour, which was formed due to low birth rates, the outflow of their population abroad, and the growing share of the elderly population. Again, I will give you the data for the Czech Republic: According to PwC, the shortage of labour results in a loss of income for Czech businesses of more than CZK 230 billion, or 4.5% of the country’s GDP. And this is the situation in most EU countries. Therefore, Ukrainians are now like manna from heaven for them, stabilising the situation on the labour market. And then there are the United States and Canada, which have attracted more than 800,000 Ukrainians in three years. Like a vacuum cleaner, they are ready to absorb all those who do not integrate into the EU, because the conditions for integration in America are much easier.

Secondly, if we are talking about Ukrainian refugees, they are only at the beginning of their migration cycle and have just started to achieve their goals: some have started studying, some have started working, and some have started to accumulate savings for future business in Ukraine… But suddenly someone suggests telling refugees: ‘Drop everything and come back’. This contradicts the logic of the economic cycle. It’s like saying to a pregnant woman in the first trimester: ‘Why don’t you give birth already!’. Compared to this analogy, Ukrainian refugees are only in the first trimester of their migration cycle. And the entire migration cycle lasts an average of 3-15 years and depends on the goals of the person!

There is no war in Poland, and there is also a problem of finding staff there. The Czech Republic is also not at war, and there is a record number of vacancies, which has led to a record low unemployment rate for the EU (2.7%). So why should the end of the war change anything in Ukraine? On the contrary, the cessation of hostilities will activate the entrepreneurial spirit of Ukrainians and we will get even more vacancies. But this will lead to another strong increase in wages, as the Ukrainian authorities do not stimulate the formation of labour supply in response to business activity. Wage growth in Ukraine has already gone beyond any adequate limits, especially when compared to the rate of inflation or the overall level of development of our economy. According to Trading Economics, Ukraine is already in the first ‘anti-record’ place in Europe in terms of wage growth – 22.2% in the first half of 2024 (annualised). And the war has nothing to do with it.

Even before the war, there was inadequate salary growth in Ukraine. In 2019-2021, they grew by 58.1% in Ukraine. At the same time, in Poland – by only 22%, in Germany – by only 12%. This is the result of a shortage of labour supply for adequate money, so businesses are forced to raise salaries at this rate. Where are we heading with this rate of increase? Ukraine is now losing an important component of its economic attractiveness – inexpensive labour. What investor will come to the country when they see such figures? On the contrary, Ukrainian investors will be forced to move to other countries to ensure profitability for their businesses. It is impossible to automate everything.”

As a reminder, Prime Minister Denys Shmyhal said that since the start of the full-scale invasion, Ukraine has lost 3.5 million jobs, which is about 30% of the economy.