The labor shortage due to conscription and/or employee departures has once again become a primary issue for businesses, with the percentage of companies reporting this obstacle reaching a historic high of 64% in November, up from 57% in October and 61% in September, according to the results of a monthly survey conducted by the Institute of Economic Research and Political Consultations (IERPC).
"At the same time, the challenge of finding qualified workers is increasing. On one hand, there is a limited supply, but we are also witnessing a rise in demand for labor, which is a very positive signal indicating recovery, at the very least, not a deterioration in economic activity," - the words of IERPC Director Oksana Kuzyakiv are cited in the study.
It is emphasized that 55.5% of respondents reported difficulties in finding qualified workers, up from 51.9% in October. Additionally, 38.9% of businesses are struggling to find unskilled personnel, compared to 34.8% in October.
In the labor market, most enterprises do not plan any changes, although positive trends are noticeable: the share of companies planning to increase employment in the next three to four months has risen from 13.8% to 14.1%, while the percentage of businesses planning to increase the number of workers on forced leave has decreased from 14.4% to 4.2%.
Regarding obstacles, the top three remain the same as in October, though in a different order.
"In second place, we have 'unsafe working conditions.' In third place is 'rising prices for raw materials, materials, and goods.' The significance of this indicator has increased from 43% to 48%, possibly due to inflationary expectations," - noted senior researcher at IERPC, Yevgeny Angel.
According to him, the issue of 'unsafe working conditions' has dropped from first to second place as the share of businesses complaining about it decreased from 62% to 54%.
"Large and medium-sized businesses report safety concerns more frequently than micro and small enterprises. Among large companies citing 'unsafe working conditions,' the proportion exceeds 70%. In contrast, among microenterprises, this figure has remained between 30% and 40% in recent months. This indicates that large industrial facilities are more likely to be targets of enemy attacks from drones or missiles," - believes Angel.
Moreover, IERPC explains that this wave of the survey was conducted from November 18 to 29, thus responding to the mid-November resumption of regular attacks by the Russian Federation on Ukraine's energy infrastructure. Consequently, the issue of 'interruptions in electricity, water, and heating supply' has returned to the list of current issues, rising from fifth to fourth place and becoming an obstacle for 34% of businesses compared to 22% in October.
In October, when there were no large-scale attacks on energy infrastructure, 39% of businesses suspended operations due to power outages. This problem caused businesses to lose 6% of working time, with the most significant impacts felt in Vinnytsia, Sumy, and Dnipropetrovsk regions. The sectors most affected at that time were the chemical industry, metallurgy, and metalworking.
The study clarifies that the Business Activity Recovery Index (BARI) has ceased to grow, decreasing from 0.23 in October to 0.16 in November, which is only slightly above the September figure. Its value has declined for all enterprises, regardless of size, with microenterprises recording the lowest value with a negative figure.
Kuzyakiv is confident that this is related to the high previous statistical base, as relatively high growth rates were recorded in November 2023. Under the challenging conditions in which Ukrainian businesses currently operate, IERPC sees a certain 'ceiling' for recovery. She believes that significant recovery rates should not be expected while the war continues.
The dynamics of many indicators have changed direction in just a month. The share of enterprises operating at less than a quarter of their capacity has sharply decreased. In November, it stood at 5%, down from 17% in October. Meanwhile, the share of those operating at nearly full capacity has significantly increased from 31% to 40% over the month.
IERPC emphasized that businesses see their future in a "slowly emerging fog."
"The overwhelming majority of respondents – 79.6% – are confident that there will be no changes in terms of their business volumes, and everything will remain as it is today. Only 3.8% believe they will reduce their activities, while 16.6% plan to expand their operations. From this, we conclude that the operating businesses have already adapted to the conditions of war," - noted Oksana Kuzyakiv.
The average duration of new orders in November decreased from a record level of 7.9 months to 6.7 months amid an increase in the share of enterprises operating 'on the fly,' that is, with orders less than a month in advance – from 13% to 16%.
Businesses are also confident about rising prices, but the index of expected price changes for raw materials and materials, after peaking in October (0.49), fell last month to the September level of 0.44. IERPC believes this occurred due to a decrease in the share of those expecting price increases in the next three months – from 46.9% to 42.1%.
In the November New Monthly Enterprises Survey (#NRES) conducted by IERPC, 468 Ukrainian industrial enterprises participated, located in 21 out of 27 regions of Ukraine.