There is a shortage of people, and salaries are rising. What's happening in the labor market

Mobilization and migration processes have reformatted the relationship between employers and employees. Now, the latter dictate the terms, Ekonomichna Pravda writes.

The labor market in Ukraine is going through difficult times. After the outbreak of the great war, the number of vacancies dropped sharply, but in two years it was able to gradually return to the levels of 2022. Today, job search sites offer employment for more than 100,000 specialists.

Now another problem has arisen. While it used to be difficult for employees to find a job, in 2024 employers faced the problem of finding people. This is how the country, and especially business, learned what a staff shortage is.

The labor supply shortage has been warned about for a long time, as the reasons for this phenomenon are well known: increased mobilization, internal and external migration, and slow adaptation to life in a new place. What is happening in the labor market, what difficulties have employers faced, and what salaries are they offering?

There are thousands of vacancies, but not enough people

Razumkov Center researchers state that in early 2024, the number of working-age people in Ukraine decreased by 40% compared to 2021. The decline in the labor force is due, in particular, to demographic losses.

"The ratio of vacancies to resumes is reaching a critical level. If before the full-scale aggression there were two candidates for one vacancy, now the ratio is almost one to one," said Olha Pyshchulina, leading expert on social and gender programs at the Razumkov Center.

For the third month in a row, job search sites have been recording a record number of vacancies since the beginning of the great war. On the work.ua aggregator, the number of vacancies is equal to the one in the first half of February 2022: more than 106 thousand. The situation is similar on the robota.ua platform: more than 108 thousand.

The labor market is recovering unevenly. The western and central regions significantly exceeded the figures for February 2022. The largest increase in vacancies is observed in Zakarpattia and Ivano-Frankivsk regions. Among the northern regions, only Chernihiv region has recovered to the level of two years ago.

Work.ua has the most vacancies in the service sector (21 thousand), in the categories of "Working specialties, production" (19.2 thousand) and "Sales, purchases" (14.1 thousand). On robota.ua, employers are most often looking for specialists in the field of trade (20 thousand), workers (18.8 thousand) and salespeople (18.6 thousand).

TheNational Bank noted that the rapid growth in demand for workers in the face of limited supply has led to a reduction in unemployment. At the same time, it predicts that unemployment will still exceed pre-war levels in the coming years due to changes in the structure of the economy, external and internal migration, and uneven recovery in regions and industries.

How companies are addressing the staff shortage

Companies in areas where men usually worked (construction, transportation, mining) attribute the shortage of workers to mobilization, the National Bank says. Employers are most concerned about the mobilization of highly qualified specialists and the long time and significant costs of preparing a replacement.

The NBU emphasizes that the impact of mobilization on the labor market after the start of the great war was much less than the impact of migration. Arecent survey by the Ministry of Economy showed that the main problem for most employers is finding qualified workers. The reason for this is mobilization.

The shortage of personnel forces companies to attract groups that were previously less represented in the labor market. In particular, this applies to women and those who work remotely. Theinvolvement of war veterans and people with disabilities acquired before February 2022 is still insignificant.

Work.ua says there is a shortage of both men and women in the market. There have been no significant changes in the breakdown of job seekers by gender for four months in a row: 59% are women, 41% are men. There is a shortage of personnel in both stereotypically male and stereotypically female professions. For example, in the category of law, where the majority of candidates are women, employers also faced a lack of specialists.

Work.ua notes that companies have begun to implement various tools to minimize the impact of this problem: training women for stereotypically male positions (drivers, tractor drivers, boiler operators) and attracting migrants.

WorkMasters, an international recruitment agency ,said that during the Great War, they attracted about 100 workers from different countries to Ukraine, mainly from Pakistan, Nepal, India, Bangladesh, the Philippines, and African countries.

The migrants are employed in the construction and logistics industries, agriculture and manufacturing, and the service sector. For example, the Ivano-Frankivsk-based developer Blago Development has already hired foreign workers.

How the average salary has changed

Theaverage salary in Ukraine in the first quarter of 2024 amounted to almost UAH 19 thousand ,according to the State Statistics Service. Compared to the same period in 2023, this figure increased by 22.5%. The government predicts that by the end of 2024, the average monthly salary will be UAH 21.8 thousand.

Job search sites show slightly higher salaries. If we evaluate the salaries indicated by employers on work.ua, they average almost UAH 20 thousand, which is UAH 2 thousand more than at the beginning of the year.

The leading categories in terms of salaries have changed significantly. The highest remuneration is offered in the field of security and safety - UAH 33 thousand (1.7 times more than at the beginning of the year). The fact is that this category includes military specialties such as anti-aircraft gunner, assault rifleman, and sniper.

Compared to the beginning of 2024, salaries in the categories of "Sales, Procurement" (by UAH 7.4 thousand) and "IT, Computers, Internet" (by UAH 5.3 thousand) also increased significantly.

The lowest salaries, as at the beginning of the year, are offered in trade (UAH 17 thousand), education and science (UAH 17.5 thousand), and in the category "Finance, banks" (UAH 17.5 thousand).

The average salary for vacancies on the robota.ua aggregator is lower: UAH 14.3 thousand. This is likely due to special methods of its calculation. On average, job seekers indicate UAH 20 thousand of desired income in their resumes.

TheState Employment Service hasidentified the 15 most popular professions since the beginning of the year. The list includes working specialties and positions in the service sector. Among these professions, the highest average salaries are for sales representatives (UAH 27.2 thousand), sales managers (UAH 26.9 thousand), and drivers (UAH 24.6 thousand).

In its report, the National Bank noted that the shortage of personnel will force employers to raise salaries: "Difficulties in finding skilled workers in the face of economic recovery will lead to further wage increases in the private sector. In 2025, real wages in the economy will exceed the pre-war level and will continue to rise, in particular due to increased competition for labor with foreign employers."

The freelance market

Entrepreneurs also faced difficulties in the freelance market. According to a survey by the online service Freelancehunt, the main challenge for business is the shortage of skilled workers. This was mentioned by 31% of respondents.

In addition, many employers (29.3%) are concerned about the instability in the labor market caused by global economic fluctuations and the political situation. Among the challenges, entrepreneurs highlight competition and financial problems. A significant number of businesses plan to expand their teams with the help of freelancers, including specialists in web development (46.3%), promotion (45.6%), and design (43%).

"Ukrainian entrepreneurs and businesses are increasingly using the proven practice of engaging highly qualified specialists to implement tasks on a project basis. For example, in the United States, more than 70% of businesses hire freelancers to help them grow," said Valentyn Zyuzin, CEO of Freelancehunt.

At the same time, over the past three months, the number of freelancers registered has dropped 2.6 times compared to 2023. There were 20% fewer men registered.

Representatives of the online service note that competition is growing in low-competitive specializations, i.e. those with fewer than five reviews per project, but it is still at a fairly low level.

"Most specializations in this niche are related to information technology. There has been a partial increase in the supply of freelancers in narrow-profile freelance specializations over the past three months compared to the same period in 2023," Freelancehunt noted.

According to Zyuzin, the increase in freelance competition in popular specialties among men is not caused by an influx of new specialists, but by men switching to freelancing as their main job.

Military recruitment

Military recruiting appeared on job search sites in November 2023. Accordingto work.ua, in May, the number of job offers from the Defense Forces increased by 15% to more than 4.7 thousand vacancies.

Moreover, for the first time in 2024, the number of responses to such vacancies increased. In May, job seekers sent more than 16.7 thousand responses, which is 10% more than in April. Nevertheless, the competition indicator fell due to a higher growth rate in the number of vacancies.

Among the job seekers who applied to the Defense Forces vacancies in May, 35% were women. The number of responses from men of conscription age increased by 19% compared to April. The army recruiting center offers the most vacancies (486): from accountant to grenade launcher. The second place is occupied by the Marine Corps (95 positions).

Anastasia Dyachkina