Saving the future: how to restore Ukraine’s post-war economy in the face of a demographic crisis and a shortage of specialists
Ukraine has been facing a labour outflow for several years now, which has been seriously exacerbated by the war. Millions of citizens have left the country in search of safety and work abroad, leaving the economy without skilled professionals and workers. But the war will not last forever, and we need to think about restoring economic potential now. How to stop this outflow? How to increase labour productivity when key sectors of the economy are weakened?
Demographics and labour productivity
The outflow of labour from Ukraine is one of the most acute problems facing the country. While the war is forcing many to seek safety abroad, this is not a temporary phenomenon that will resolve with the end of hostilities. We can already see how rapidly Ukraine is losing its labour potential – skilled professionals and young people are integrating into the economies of neighbouring countries, and the question of their return is a big question mark. While other countries are interested in retaining Ukrainian workers, we need to think about what we can do to prevent this outflow from becoming irreversible, and how to increase the productivity of those who remain.
According to official figures, there are currently about 11.25 million people working in Ukraine. This is less than half of the total working-age population. Another 6-7 million Ukrainians are abroad, most of whom have found work there and have no plans to return. At the same time, the shadow sector continues to be a major problem – according to various estimates, it employs between 3 and 4 million people. That is, Ukraine could potentially have up to 22 million workers in the labour market, but the real picture looks much worse.
If we don’t take immediate action, our economy risks losing more than just temporary labour. European countries, where millions of Ukrainians have left, create attractive conditions for their integration and are not going to let them go. The governments clearly understand how important the contribution of Ukrainian labour migrants to their economies is and are doing everything possible to keep them here. According to polls, up to 80% of Ukrainians who have found refuge abroad have no plans to return. This is an alarming signal, because we are talking not only about the short-term consequences of the war, but also about the long-term loss of labour potential.
As for the shadow economy, it existed in Ukraine before the war and continues to grow. In the post-war period, it is difficult to expect a significant reduction in this sector without systemic reforms and the fight against corruption. Legalisation of labour relations should be a priority for the government, otherwise we will face even greater losses for the budget and the economy as a whole.
Another important aspect is the issue of labour productivity. After the war, we will not only have to rebuild the infrastructure, but also work to increase labour productivity at all levels. Ukraine’s labour resources are limited, and their productivity in many sectors remains below global standards. Raising productivity in Ukraine after the war is an issue that will determine not only the speed of infrastructure recovery, but also the country’s overall economic stability and competitiveness.
Technological modernisation is an integral part of the process of increasing labour productivity. Investments in new technologies can significantly speed up production processes, make them more automated and less dependent on human factors. An example of such a technological leap would be the introduction of robotic systems in production facilities, where they can perform repetitive and physically demanding tasks, freeing up resources for more creative and complex tasks. For example, in Ukraine, there are only 10 robots for every 10,000 employees, while in Germany, the figure is 400 robots. This demonstrates how far the country is lagging behind in the implementation of automation. After the war, investment in robotics and modern production lines could be key to a rapid recovery and increased productivity.
Another critical aspect is improving the skills of the workforce. The country’s recovery will require a significant number of skilled professionals in engineering, construction, biotechnology, IT and mechanical engineering. Unfortunately, many educational programmes in Ukraine do not meet modern requirements, and therefore the state needs not only to reform vocational education but also to introduce systems of continuous retraining and professional development.
This includes updating the curricula that train specialists in the professions that will be most in demand in the coming years. In addition, it is critical to introduce programmes for the adult population that will allow them to retrain and become competitive in the labour market. It is especially important to provide these opportunities for veterans returning to civilian life, as well as people with disabilities, who often face difficulties in finding employment.
One of the important steps to overcome the labour shortage is to engage those categories of the population that often remain outside the mainstream labour market. Women, pensioners, veterans, and people with disabilities can make a significant contribution to economic recovery if the government creates the right conditions for them. This requires developing social support programmes, adapting workplaces, and encouraging employers to hire workers from these categories.
Attracting foreign labour can also be a solution to temporarily overcome the staff shortage. Other countries that have gone through large-scale recovery have used this mechanism to quickly fill the labour market. But this step is controversial. On the one hand, it can help fill jobs, but on the other hand, it can create social tensions among the local population due to competition in the labour market. At the same time, foreign workers may not solve the problem in the long run, so the emphasis should be on developing local talent.
Technology and qualifications alone are not enough to increase employee productivity. It is also necessary to encourage workers to develop themselves, continuously improve their skills and be actively involved in their work. This can be achieved through the creation of an effective incentive system, including salary increases, performance bonuses, and career development opportunities. An important role is played by corporate culture, which motivates continuous learning and innovation.
Ways to restore the economy
To truly revive Ukraine’s economy, concrete actions are needed that go beyond banal reforms and investment promises. Ukraine has enormous potential in the IT and high tech sector. Today, Ukrainian IT specialists are already successfully working for global markets, but a key step towards development will be the creation of clusters where technology companies, start-ups and investors can work together, sharing ideas and resources. Examples of such clusters include technology parks in the US (Silicon Valley) or Israel. If innovation hubs are created in Ukraine with support from the government and international partners, this will attract more investment and create high value-added products, which will significantly increase the country’s competitiveness.
After the war, Ukraine will have a huge need to rebuild its destroyed infrastructure, and green bonds can be a key tool for financing this process. Green bonds are financial instruments that raise funds for environmentally friendly projects. The global market for these bonds is growing rapidly, and if Ukraine can offer investors such bonds for infrastructure rehabilitation – solar power plants, wind turbines, environmentally friendly transport – it will attract both domestic and foreign investors. This will not only help rebuild the country, but also create a foundation for sustainable development for the future.
Ukrainians have always been known for their creative potential – from art to eSports. The creative economy is one of the fastest growing sectors in the world, and it can be a powerful driver of revival for Ukraine. Investments in the development of the film, music and art industries, as well as support for young start-ups in design, architecture and fashion, can give a powerful impetus to creating new jobs and promoting Ukraine on the international stage. It is important for the government to create favourable conditions for the development of creative businesses: tax breaks, special grant programmes and access to international markets.
One of the key problems of the Ukrainian economy is the dominance of large corporations and oligarchic structures. Genuine economic growth is only possible through support for small and medium-sized businesses (SMEs), which are the backbone of any healthy economy. Ukraine needs to create mechanisms for microfinance and soft loans for small businesses, especially in rural areas and small towns. The state can provide SMEs with access to new markets, help promote their products and stimulate job creation through special business incubators.
Ukraine is already one of the world’s leaders in agriculture, but significant potential still remains untapped due to low technological equipment. Increasing yields, reducing the impact of climate change and optimising costs are possible through investment in agricultural technology. This includes drones for field monitoring, intelligent irrigation systems, biotechnology to improve seeds and automation of farming processes. Through the introduction of such technologies, our country can not only increase production, but also reduce the environmental impact of agriculture, making it more attractive to foreign investors.
In addition, Ukraine can attract significant funds for infrastructure development through the public-private partnership (PPP) mechanism. This will help relieve the state budget and attract private investment for large projects, such as the construction of roads, bridges, logistics hubs, and modern transport systems. Examples of successful PPP projects include Eastern European countries that, after joining the EU, were able to raise billions of euros through this mechanism. For Ukraine, this could also be a chance to modernise its infrastructure and create jobs.
The return of Ukrainians who left abroad because of the war should be one of the government’s priorities. However, in order for them to return, favourable conditions need to be created for them: tax breaks for businesses, special grants for starting their own business, preferential mortgages and retraining programmes. Many Ukrainians working abroad have gained valuable experience in various fields, and this potential can be used to help rebuild Ukraine. The state should offer concrete economic benefits so that migrants see the value in returning and investing in their home country.
Increase labour productivity
The key to reviving Ukraine’s economy, especially in the face of demographic challenges and labour outflows, is a gradual increase in labour productivity. It is directly linked to economic growth, living standards and the country’s competitiveness on the global stage. It is labour productivity that determines how many products or services one employee can produce per unit of time. And here Ukraine has a serious problem: our labour productivity is one of the lowest in the world.
The average Ukrainian worker produces about $15 worth of output per hour. For comparison, in the Czech Republic this figure is $46, in Germany it is $68, and the leader in this ranking is Luxembourg, where an employee produces $146 per hour. These figures clearly show the huge gap that exists between Ukraine and developed countries, which has a direct impact on our economy and the future of post-war recovery.
One of the main factors affecting labour productivity is investment in modern means of production and the latest technologies. But it is not just about having access to these technologies – the qualifications of workers, their knowledge and skills are fundamental to the effective use of these technologies. Progressive knowledge and experience implemented in various sectors of the economy can significantly increase productivity without additional labour. An example of this is the Diia digital platform, which has become one of the most striking manifestations of a qualification and technological breakthrough in Ukraine. Thanks to digitalisation, the platform has replaced many administrative processes, reducing the number of civil servants needed to provide various services. Automation of the processes of starting a business, obtaining certificates and other administrative actions reduces the time spent by citizens and the state, and increases the efficiency of the system as a whole. Reducing bureaucracy and using modern technologies can optimise the work of the state apparatus, thereby saving resources for other important areas.
Another way to increase labour productivity in the post-war period is through the introduction of renewable energy sources. Solar panels and wind turbines are already replacing traditional energy chains that include coal mining, transportation and processing. Energy is now generated on-site with minimal human intervention. This not only reduces the number of employees needed for traditional energy, but also opens up new opportunities for skilled green energy professionals.
Robotics is also an important way to increase productivity. Currently, there are only 10 industrial robots per 10,000 employees in Ukraine, 70 in Poland, 140 in the Czech Republic, and as many as 400 in Germany. South Korea is the leader, with one robot for every 11 employees. The introduction of robotic systems into production not only compensates for the shortage of staff but also significantly increases labour efficiency, allowing Ukraine to compete globally.
It should be noted, however, that the introduction of technology and the upgrading of workers’ skills alone will not solve all problems. In order to make these changes effective, a comprehensive approach is needed, including modernisation of the educational system, stimulating investment in production facilities, and creating conditions for the development of innovation clusters. Ukraine’s post-war recovery will require not only financial resources and technical support, but also skilled workers who can quickly adapt to new conditions and effectively use modern technologies. Increasing labour productivity should be a priority of the state development strategy. Only then will Ukraine be able to overcome its demographic challenges, bring back its citizens from abroad, and restore its economy on a global scale.
Each of these paths is not only complementary, but also creates the necessary conditions for Ukraine’s economy to become stronger and more competitive on the international stage after the war.
Ukraine’s demographic challenges are more than just statistics. The war has significantly exacerbated the problem, and we will be feeling the effects of the outflow of population and the decline in labour potential for many years to come. However, demographic challenges are not unique to Ukraine – many European countries are already facing similar problems, but integration into the EU can significantly accelerate this process in Ukraine. The experience of neighbouring countries that have become EU members shows that the outflow of skilled workers to more developed countries is inevitable.
European integration will open up new employment opportunities for Ukrainians abroad, but it may lead to a significant shortage of specialists in Ukraine. While EU countries are attracting skilled labour, Ukraine should already be creating mechanisms to stop this outflow or at least minimise its consequences. And one of the most important steps here is to develop vocational education and improve the skills of Ukrainian workers.
Restoring the country after the war is not just about rebuilding destroyed cities and infrastructure, but a unique opportunity to build a modern economy capable of competing with developed countries. This requires not only attracting foreign investment and technology, but also creating a solid foundation for the development of our own skilled workforce. After all, it is they who will ensure the operation of new technologies, build and maintain new infrastructure facilities.
The problem is that education and training is a long-term process. And if we don’t start acting now, we risk facing a situation where the latest infrastructure projects will be built, but there will be no one to operate them. Engineers, technologists, builders, biotechnologists, machine builders – these professions will become critical to the country’s development in the near future. But what is being done now to prepare them? Is Ukraine ready to train an army of new specialists?
Unfortunately, today we see a significant delay in resolving this issue. The legislation on vocational education has not yet been adopted, and the reform of the system of state and regional ordering of specialists remains at the level of promises. The unclear cost of training students, the lack of optimisation of educational institutions, and the neglect of the introduction of professional English in vocational schools and colleges all suggest that the state is not ready for major changes in training.
Instead, businesses are taking responsibility for the training and development of their employees on their own, while the state is largely standing aside. In 2024, the EU declared the Year of Skills, but Ukraine, unfortunately, remained on the sidelines of this process. This is a clear failure of education policy that cannot be ignored, especially in the context of post-war recovery.
Several years ago, draft decrees and documents on personnel policy were developed that recognised the issue of providing the economy with qualified personnel as a matter of national security. However, everything remained only at the level of talks and projects. The national strategy for the development of vocational education has not been implemented, although everyone unanimously recognised its need.
If Ukraine wants to survive and recover from the war, it must immediately recognise the threat posed by negligence in the training of skilled workers. The sooner the government realises this, the sooner it can act to prevent further out-migration and secure the country’s competitive future.
