Labor Shortages, Mobilization, and Wage Increases: How Ukraine’s Industrial Sector Survived in July 2026
18 August 13:50
Ukrainian businesses are gradually adapting to the conditions of a protracted war, but the labor shortage remains the number one problem. According to a survey conducted by the Institute for Economic Research and Policy Consulting, in July 2026, 66% of companies cited labor shortages as the main barrier to growth, reports "Komersant Ukrainian".
Barriers to Doing Business in July 2026
As indicated by the survey results, for the first time since February 2026, this figure fell by 5 percentage points compared to June (71%).This was primarily due to microbusinesses—from 49% to 34%—while large (from 66% to 61%) and medium-sized (from 79% to 75%) businesses showed relative stability. Medium-sized businesses, however, continue to face an acute labor shortage—rising from 73% to 74%.
“Labor shortages remain our top concern, although the absolute figure for this obstacle has decreased slightly—to 66%,” noted Yevhen Angel, a senior research fellow at the Institute for Economic Research (IER).
This problem concerns more than 80% of respondents in the Chernivtsi, Lviv, Cherkasy, Dnipropetrovsk, Poltava, and Zhytomyr regions, the researchers note.
Rising prices for raw materials, supplies, and goods are cited as the second-biggest obstacle to doing business. However, disruptions in electricity, water, and heat supply hardly concern businesses at all. Also, as of July, 38% of businesses had already raised their employees’ wages, and 29% plan to do so by the end of the year.
Why the Labor Shortage Exists and How Businesses Retain Employees
According to the IED, the war remains the key factor behind the labor shortage.
“In a separate survey, when asked directly, ‘Do you feel a shortage of labor?’, 73% of companies answered in the affirmative. This problem is most acute among medium-sized (85%) and large (88%) enterprises. Among industries, it is most prevalent in the chemical sector (84%), the production of construction materials (79%), and metallurgy and metalworking (78%). This problem is least of concern to microbusinesses (34%) and the printing industry (55%),” said Oksana Kuzyakiv, Executive Director of the IED.
Businesses attribute staffing difficulties to several main reasons:
- the main factor affecting staffing is mobilization measures—79.4%;
- restrictions on hiring specialists—57.8%;
- employees leaving the country—52.3%;
- a general shortage of candidates in the market—51.6%;
- 46.9% of respondents cite insufficient qualifications among candidates;
- internal employee migration—45%;
- 38.2% attributed the labor shortage to uncompetitive salary levels at their company.
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Should We Expect Salary Increases?
In response to the labor shortage, companies are forced to raise salaries. Since the beginning of 2026, 38% of companies have already raised wages for their workers (by an average of 11%), and another 29% plan to raise them by the end of the year (by approximately 12%). Wages have risen the most in the metallurgy and metalworking sectors (15%), as well as in the chemical and woodworking industries (12%).Among the regions, the highest growth was recorded in the Chernihiv (19%) and Khmelnytskyi (15%) regions, while the lowest was in the Kharkiv region (5%).
“The ability to raise wages depends on the size of the enterprise—since the beginning of the year, 27% of microenterprises and 32% of small enterprises have raised wages, while this figure stands at 56% among large enterprises. By industry, the highest rate is in printing—45%—and only 25% among machine-building enterprises,” noted Yevhen Angel.
Rising Raw Material Costs and Security: Other Threats to Production
As analysts note, in addition to labor shortages, industrialists are facing the sharpest rise in prices for raw materials, supplies, and goods in the past three years—a problem cited by 57% of respondents (the highest since August 2023).
“The third-largest obstacle remains workplace safety risks (44%). Large infrastructure and industrial facilities in the Kyiv, Odesa, Dnipropetrovsk, and Kharkiv regions are most concerned about this,” the report states.
As the researchers note, at the same time, the energy factor has temporarily lost its urgency: 89% of enterprises reported that they felt almost no impact from power outages on their production processes during the summer.
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