In July, labor shortages eased, while wages continued to rise – IER survey

• 66% of businesses identified labor shortages as the biggest obstacle in July, down from 71% in June;
• 38% of businesses have already raised employee wages, while 29% plan to do so by the end of the year;
• Rising prices for raw materials, inputs, and goods ranked second among the main obstacles to doing business;
• Disruptions to electricity, water, and heating supplies are no longer a major concern for businesses;
• Businesses’ assessment of the government’s economic policy improved, with positive assessments reaching 8%.

Labor shortages remain the No. 1 problem

Labor shortages remain the biggest obstacle to doing business during the war. However, in July, the share of businesses citing labor shortages fell by 5 percentage points. This was the first decline since February 2026.

“Labor shortages remain the top obstacle, although the share of businesses reporting this problem has decreased somewhat, to 66%,” said Yevhen Anhel, IER Senior Researcher.

The sharpest decline was recorded among microbusinesses, where the share fell from 49% to 34%. The figure also decreased among small businesses, from 66% to 61%, and large businesses, from 79% to 75%. Meanwhile, the share among medium-sized businesses increased slightly, from 73% to 74%.

At the regional level, labor shortages are a concern for more than 80% of surveyed businesses in Chernivtsi, Lviv, Cherkasy, Dnipropetrovsk, Poltava, and Zhytomyr oblasts.

These findings are based on the 51st monthly survey conducted by IER in July among 472 industrial enterprises.

After difficulties in finding workers eased in June, the problem intensified again in July. The share of businesses that found it difficult to recruit qualified specialists rose from 46.3% to 54.3%, while the share reporting difficulties in finding unskilled workers increased from 30.4% to 34.4%.

Finding both qualified and unskilled workers is a greater challenge for small and medium-sized businesses than for large and microbusinesses.

Expectations regarding employment levels remain largely unchanged. Only 1.2% of businesses plan to increase their workforce over the next 3–4 months, while 2.9% plan to place employees on forced leave. The share of companies planning to lay off workers in the near future increased from 3.4% to 4.9%.

What is driving the labor shortage

“In a separate survey, when asked directly whether they were experiencing a labor shortage, 73% of businesses answered yes. The problem is most acute among medium-sized (85%) and large businesses (88%). By sector, the highest shares were recorded in the chemical industry (84%), construction materials manufacturing (79%), and metallurgy and metalworking (78%). The problem is least pressing for microbusinesses (34%) and the printing industry (55%),” said Oksana Kuziakiv, Executive Director of IER.

Some 79.4% of businesses consider employee mobilization to be a factor that has a major impact on workforce availability. Restrictions on reserving employees from military mobilization ranked second, at 57.8%. The third most important factor is employees leaving the country (52.3%), followed closely by a shortage of candidates in the labor market (51.6%). Other factors were cited much less frequently as significant contributors.

“The war is the key factor behind the labor shortage. Only 46.9% point to ‘insufficient qualifications of candidates’ as a reason, meaning that candidates do not meet the requirements of available vacancies. Internal migration of workers was cited by 45% of businesses – practically every second enterprise – while only 38.2% attributed the labor shortage to uncompetitive wage levels at their businesses,” Oksana Kuziakiv said.

Do businesses plan to raise wages?

In 2026, more than a third of businesses (38%) have already raised employee wages, while more than half (59%) have kept them unchanged. Only 3% of businesses surveyed by IER in July reported cutting wages.

“The ability of businesses to raise wages depends on their size. Since the beginning of the year, 27% of microbusinesses and 32% of small businesses have raised wages, compared with 56% of large businesses. By sector, the highest share was recorded in printing, at 45%, while the lowest was in machinery manufacturing, at just 25%,” said Yevhen Anhel.

On average, wages increased by 11%, with the largest increases recorded in metallurgy and metalworking (15%), followed by the chemical and woodworking industries (12% each). Among regions, the largest increases were recorded in Chernihiv Oblast (+19%) and Khmelnytskyi Oblast (+15%), while the smallest increase was recorded in Kharkiv Oblast (+5%).

Another 29% of businesses plan to raise wages by the end of the year, by an average of 12%. The highest shares of businesses planning wage increases are in printing (55%), food processing (37%), and woodworking (34%). Machinery manufacturing businesses are the least likely to plan wage increases (17%). Wage increases are most commonly planned by small (33%) and medium-sized (32%) businesses.

“Among the businesses planning to raise wages are some that have already increased them since the beginning of the year. This is quite often the case with businesses that have critical status and need to raise wages to retain that status, as well as those that have recently obtained critical status or are in the process of obtaining it and therefore need to increase wages,” Yevhen Anhel explained.

What other challenges do businesses face?

Rising prices for raw materials, inputs, and goods remain the second-biggest obstacle to doing business. The share of businesses citing this problem increased significantly, from 50% to 57%. This is the highest level recorded in three years, since August 2023.

In July, “it is unsafe to work” remained the third-biggest obstacle, with the share of businesses citing this problem rising from 41% to 44%. This marks the sixth consecutive month in which the issue has ranked among the top three obstacles.

The issue is a concern for 54% of large businesses, 48% of medium-sized businesses, 34% of small businesses, and just 28% of microbusinesses.

“We explain this by the fact that medium-sized and large businesses are predominantly large infrastructure facilities that may become targets of enemy attacks,” Yevhen Anhel explained.

More than 80% of respondents in Kyiv, Odesa, Rivne, Cherkasy, Dnipropetrovsk, and Zhytomyr oblasts consider unsafe working conditions an obstacle to doing business.

“Among the other obstacles, disruptions to electricity supply are worth noting. This obstacle has become less pressing, falling from sixth to eighth place. At the same time, the share of businesses citing it fell from 19% to 11% in July, reflecting a relatively stable electricity supply situation during the summer. There were far fewer power outages, and in some areas, there were none at all,” said Yevhen Anhel.

Some 89% of businesses either did not experience power outages or reported that outages had no impact on their operations. Average working-time losses stood at 3% in June, the lowest level since August 2025. The largest losses were recorded among micro and small businesses (6% each). By sector, the highest losses were reported in metallurgy and metalworking (10%), while at the regional level, the highest figures were recorded in Sumy and Khmelnytskyi oblasts and Kyiv (10% each).

Other obstacles, including “corruption” and “pressure from law enforcement agencies” (3% each), have traditionally not been considered significant business constraints.

How do businesses assess the government’s economic policy?

In the area of economic policy, the share of neutral assessments of the government’s economic policies fell by 5 percentage points in July, to 65%. This was driven by increases in both positive assessments of the government (from 5% to 8%) and negative assessments (from 20% to 23%).

The shift in sentiment among respondents may be linked to optimistic expectations regarding the new government, which was appointed one week before IER began its survey. A year earlier, positive assessments of the government also rose sharply following a change in government.

“The last time positive assessments were this high, at 8%, was in August last year. In other months, they ranged between 4% and 6%,” said Yevhen Anhel.

The IER’s New Monthly Enterprises Survey (NRES) covers up to 500 Ukrainian industrial enterprises located in 21 of Ukraine’s 27 regions. The survey has been conducted monthly since May 2022.

A video presentation of the July survey results is available here.