Lack of employees has become the main obstacle to doing business for the first time - survey

The Business Activity Recovery Index (BAI) rose to 0.12, which is an improvement compared to August (0.08), when the lowest figure for the year was recorded, Delo.ua reports. However, in September 2024, the shortage of workers for the first time became a key obstacle to doing business in Ukraine, surpassing previous problems related to infrastructure and prices.

This is evidenced by the results of a monthly survey conducted by the Institute for Economic Research (IER) among 473 Ukrainian industrial enterprises.

The growth in the PMI was observed among all enterprises, regardless of their size. However, microenterprises remain in the worst situation, showing negative results.

Positive dynamics is observed in several indicators:

The share of enterprises that improved their business activity compared to the previous year increased from 28.3% to 30%.
The share of enterprises with deteriorating business activity decreased from 20.6% to 18%.
The average order backlog increased to 7.9 months, the highest level over the entire survey period. This was mainly due to an increase in the number of long-term orders covering a year or more (22% of respondents in September, compared to 5-7% in March).

Business expectations for the future

The 6-month and 2-year expectations of entrepreneurs regarding the financial and economic situation of their companies remain positive. Expectations have been rising since July, although they are not as high as in the spring.

In particular, 6-month forecasts have improved for all major indicators, while 2-year expectations have increased from 0.13 to 0.15. The share of firms expecting growth in the long term also increased by 1 pp to 19.1%.

Lack of employees has become the main obstacle for business

The share of companies complaining about a shortage of employees due to mobilization or emigration decreased from a record 63% in August to 61% in September. Nevertheless, this problem has taken the first place among all obstacles to business.

In addition, 55.1% of businesses are experiencing problems finding qualified employees, which is another record. Even unskilled labor has become more difficult to find (39.2% of businesses have experienced these difficulties).

Another obstacle for business was the problem of interruptions in electricity, water, and heat supply. However, the share of companies reporting this problem decreased from 65% to 45% in September. Another problem is the rise in prices for raw materials and goods.

Deteriorating expectations for labor resources

The share of firms planning to increase the number of employees in the next 3-4 months decreased from 14.6% to 12.1%, while those planning to reduce staff increased from 8% to 9.8%.

The share of firms planning to increase the number of employees on forced vacations also increased from 3.8% to 13.9%.

Business attitude to the state:

The share of companies that assess the state as an "enemy" increased to 5% in September compared to 3% in the previous quarter.
The share of those who call the state an "obstacle" increased from 20% to 23%.
At the same time, 40% of entrepreneurs see the state as a "regulator," and only 10% called it a "partner." None of the respondents consider the state a "friend".

In September, businesses continued to downgrade their business activity assessments. The improvement in business expectations was driven by a pickup in domestic demand, an increase in the supply of goods, stable operation of the sea corridor, and growth in rail transportation.

The New Monthly Enterprises Survey (#NRES) by the IER involved about 500 Ukrainian industrial enterprises located in 21 of the 27 regions of Ukraine. The survey has been conducted on a monthly basis since May 2022. This survey was conducted with the support of the European Union and the International Renaissance Foundation within the framework of the joint initiative "European Renaissance of Ukraine".

Author: Tetyana Goydenko