Labor Shortage Reached Record 67% in March Since the Start of the War — IER Survey

• Labor shortage is the #1 obstacle to doing business in wartime.
• Inflation is a problem for 45% of enterprises.
• Corruption concerns only 4% of surveyed enterprises.

“Labor shortage” has remained the primary obstacle to doing business in wartime for a long time. In March, for the first time, 67% of respondents complained about this issue—the highest figure across all survey waves. In previous months, it stood at 64–65%.

These findings are based on the results of the 47th monthly survey conducted by the IER among 472 industrial enterprises in March, with support from the International Renaissance Foundation.

Furthermore, March saw a sharp increase in the difficulty of finding qualified workers—from 51.4% to 61.4%. Even unskilled workers have become harder to find, as reported by 35.1% of enterprises, up from 30.8% in February. The share of enterprises planning to increase employment remains stable (16.6%), while the share of those planning layoffs has nearly halved—from 6.9% to 3.9%.

67% of Ukrainian businesses suffer from a lack of employees

The relevance of the obstacle “rising prices for raw materials, supplies, and goods” increased slightly—from 43% to 45%.

“The issue of rising prices remains in second place. For a long time, this indicator has fluctuated between 39–55%, although it previously reached higher levels,” said Yevhen Anhel, Senior Research Fellow at the IER.

The obstacle “unsafe to work” remained at the same level in February–March—42%. “This obstacle rounds out the top three. At the same time, compared to the winter months, it has become less relevant: back in January and December, it concerned 54–57% of businesses,” Yevhen Anhel explained.

This remains a pressing issue given the war and shelling. Traditionally, larger businesses consider the danger factor more often—over 50%—while for micro-enterprises, this figure is twice as low.

Regionally, the problem is more acute in frontline industrial regions—Zaporizhzhia and Dnipropetrovськ regions—but it also concerns businesses in the city of Kyiv, as well as the Kyiv, Zhytomyr, Cherkasy, and Vinnytsia regions.

The problem of danger by region

Regarding “disruptions in electricity, water, or heat supply,” their relevance decreased significantly—from 41% to 30%.

“This may be a result of the warming in March and less significant problems with electricity supply. The issue of heating also became less urgent,” said Yevhen Anhel.

At the same time, even in February, every second enterprise (52%) worked continuously despite power outages, and 11% of businesses had no outages at all. Only 36% of enterprises partially suspended operations during outages. The average loss of working time in February was 6%, down from 9% in January. The largest losses were recorded in the Dnipropetrovsk region (20%), Zhytomyr region (18%), Sumy region (14%), as well as in Kyiv and the Chernihiv region (13% each).

Among enterprises of different sizes, micro-enterprises were the hardest hit, losing 9% of working time, followed by small businesses (7%), while medium and large enterprises lost 5% and 4%, respectively.

The survey also recorded a decrease in the significance of the obstacle “decrease in demand for products/services”—from 29% to 25%.

Meanwhile, “corruption” and “unlawful demands or pressure from law enforcement or regulatory authorities” traditionally remain insignificant problems against the backdrop of the main ones—cited by only 4% and 3% of respondents, respectively.

In March, the survey did not record significant changes in the assessment of the government’s economic policy. The share of positive reviews remained at 6% against a high share of neutral ratings (60%).

“Negative ratings stand at 25%, which is slightly less than in January–February (28–29%). Despite the slight improvement, negative ratings continue to significantly prevail,” noted Yevhen Anhel. “The gap in the balance of these assessments has been growing since the summer of 2023, and unfortunately, a certain pessimism regarding economic policy persists.”

Up to 500 Ukrainian industrial enterprises located in 21 of 27 regions of Ukraine participate in the New Monthly Enterprises Survey (#NRES) by the IER. The survey has been conducted on a monthly basis since May 2022.

Video presentation of the March survey results is available here.