A single electric welder now costs a manufacturing plant nearly half a million hryvnias a year — UAH 495,000. And it is not only about pay: to secure a specialist at all, in 2025–2026 the Kyiv Electric Railcar Repair Plant simultaneously secures his exemption from mobilisation, pays social top-ups, and covers his training and certification itself, because no qualified specialist is available on the labour market. A training tender was announced for UAH 90,000 for six workers — about UAH 15,000 each, on top of the annual payroll (a qualified welder in 2025 earned about UAH 40,000 a month, UAH 480,000 a year). In total — over UAH 495,000 per person. The plant has shifted from hiring ready-trained specialists to training them itself.

This is not a local case but a new norm. Ukraine’s labour shortage has ceased to be a cyclical fluctuation of the labour market and has turned into a structural crisis: the labour force is shrinking for several independent reasons, while demand is rising. Under an inertial scenario, it cannot be closed by domestic resources. Without attracting foreign labour, post-war recovery at the declared pace cannot be achieved — and below we show why.

The vanishing labour reserve

The most direct measure of the staffing collapse comes from official employment statistics. The average headcount of full-time employees fell from 7 million in 2021 to 5.3 million in September 2025, and the State Statistics Service estimates the labour shortage at least 2 million people — that is how many unified social contribution payers have gone missing since the start of the full-scale invasion. This is no longer cyclical unemployment but a withdrawal of labour from circulation.

Formally, there are about 11 million men aged 25–60, but the actual mobilisation and labour reserve is considerably smaller — it is simultaneously cut down by mobilisation, health status, reservation, and departure abroad. Precise mobilisation data are classified, so the figures below are order-of-magnitude estimates rather than official statistics.

Structure of the mobilisation reserve of men aged 25–60, early 2026. Estimated from open sources; official mobilisation data are not published.

Mobilisation has removed about 1.2 million people from the civilian economy and hit hardest the industry, construction, transport, and energy sectors, where the share of male employment is high. A further 1.5 million or so have been found unfit for health reasons, 0.6 million hold reserved (exempt) status, and 1.3 million are abroad. A separate block — 2.7 million people with deferrals; they sustain education, family care, and the reproduction of the workforce, so mobilising this group en masse would merely shift the shortage to another sector.

Demography works against us

Beneath the reserve, its demographic base is subsiding. As of early 2026, about 29 million people lived on government-controlled territory — almost 1 million fewer than a year earlier. This is not a one-off wartime effect: natural decline has continued since 1993, and the war has only accelerated it. A pure demographic marker, independent of migration: 252,000 children were enrolled in first grade in the 2025–2026 school year, against 322,000 in 2022, and this is a consequence of falling birth rates, not of emigration.

The Ptukha Institute for Demography and Social Studies of the National Academy of Sciences of Ukraine estimates the current shortage of workers at roughly 4.5 million people and, in the long term, projects a decline in population to 25–35 million by 2050. Partial domestic reserves exist — up to 2 million people of pension age could be returned to employment through flexible arrangements — but these soften rather than close the gap. Unlike mobilisation or migration, the demographic factor is cumulative and does not “reverse” once the war ends.

A new driver: the defence industry is taking engineers

To the classic factors — war, mobilisation, migration, demography — a new one has been added since 2022: the explosive growth of the defence-industrial complex and defence tech. In 2025 the Ukrainian defence-technology market reached USD 6.8 billion; UAV production grew by 137%, electronic-warfare systems by 215%, and unmanned ground systems by 488% (KSE Institute, Brave1). Employment in the defence-industrial complex exceeds 300,000 people by industry estimates, and a significant part of this workforce was drawn away from machine-building, electronics, and IT. This driver does not reduce the number of workers — it intensifies competition for the scarcest resource, engineering and technical personnel, between the defence and civilian economies. Hence even a full return of Ukrainians from abroad would not remove the shortage in civilian sectors while the defence industry keeps increasing demand.

Where the gap is deepest

In the first half of 2026, employers submitted more than 240,000 vacancies to the State Employment Service, but only 131,500 could be filled — a little more than half. In the first quarter the ratio was even worse: of 148,000 vacancies declared, 61,000 were closed. The problem is not the number of job openings but that there is no one to take them up.

A detailed sectoral breakdown shows exactly where the gap is deepest. As of 1 May 2026, the employment service had 59,900 registered vacancies and 141,200 jobseekers — formally 2.4 applicants per vacancy. The figure is misleading: it reflects not a surplus of labour but a structural mismatch, where registered unemployed people do not fit by qualification or location. In key sectors the reserve is effectively exhausted.

Most tellingly, the shortage coexists with high unemployment. According to the NBU, the average unemployment rate in 2025 was 11.3% — markedly better than 18.2% in 2023 and 13.1% in 2024, but still well above the pre-war 8.2% of 2021. And this is despite staffing being the number-one problem for business: in a survey by the Institute for Economic Research 60% of companies name it, according to the European Business Association only 5% feel no shortage, and 96% of employers have raised wages. When unemployment remains elevated while employers cannot fill half their vacancies, that is the definition of a structural rather than cyclical crisis: people and jobs both exist, but they do not match by qualification and geography.

Vacancies and jobseekers by sector, State Employment Service, snapshot as of 1 May 2026. In education, vacancies already outnumber applicants.

In education, vacancies outnumber jobseekers (0.88 people per vacancy); in manufacturing, construction, and transport, the reserve is near exhaustion (1.1–1.2). A special risk zone is critical infrastructure: in energy, water supply, and waste management the ratio stays within 1.2–1.5, but even a slight shortage here has disproportionate consequences, because what is at stake is the continuity of life-support systems.

The cost of the staffing gap

The scale of lost output can be estimated through labour productivity, calculated from official statistics. Nominal GDP for 2025 was UAH 8.93 trillion, with about 12.5 million employed; that is roughly UAH 715,000 of output per employed person per year. Applied to the employment shortfall, the figure gives an order of magnitude: a gap of 2 million workers corresponds to up to UAH 1.4 trillion of lost annual output, or about 16% of GDP. This is the upper bound — part of the gap is structural and frictional, and new workers do not reach average productivity immediately. A more realistic range is UAH 0.7–1.4 trillion a year, or 8–16% of GDP.

Funding for reconstruction exists — the people do not

Ukraine’s reconstruction needs as of the end of 2025 were estimated at USD 588 billion over a decade — almost three nominal 2025 GDPs (RDNA5: the Government, the World Bank, the European Commission, the UN). Among the key constraints on deploying these funds, the World Bank explicitly names an acute labour shortage. The problem of reconstruction is no longer financing as such, but the capacity to absorb it.

The 2025 macro statistics show this almost in pure form. Gross capital formation rose by 15.5%, while real GDP added only 1.8%, slowing from 3.2% in 2024 and 5.5% in 2023. Money is being invested eight times faster than the economy delivers a return. This is the cost of the staffing shortage at the macro level: capital comes in, but there is no one to convert it into output.

Nominal indicators mask this picture. GDP in current prices rose from UAH 3.88 trillion in 2022 to UAH 8.93 trillion in 2025, but this growth is mainly inflationary and a low-base effect, not a doubling of physical output volumes. Given the labour shortage, the risk is obvious: funding for reconstruction is available, but the capacity to absorb it is not.

Conclusion: a structural labour crisis

Ukraine is entering a phase in which the need for workers grows faster than human capital is replenished. The shortage is structural across all channels: mobilisation, migration, demography, and the flow of personnel into the defence industry. Therefore the solutions, too, must be structural.

Let us combine all available sources of labour using official figures. The gap is at least 2 million employed (State Statistics Service), the structural shortage up to 4.5 million (Institute for Demography). Internal activation: up to 2 million people of pension age can theoretically be returned to employment, but only partly. Return: of the 5.6 million Ukrainians abroad, about 29% firmly plan to return if temporary protection is withdrawn (CES), while the net migration balance remains negative at least until 2027. Even under an optimistic summation of these sources, the gap does not close, while the USD 588 billion reconstruction adds demand on top of what already exists. This is the arithmetic basis: foreign labour migration is turning from an option into a basic instrument for compensating losses. The question is no longer whether to attract it, but under what rules.

The next article in the series shows why the current migration system works against its own goals and loses even those who are ready to come. The flagship article offers an answer — the concept of a dual-track model that separates the filters for labour and for capital.

Full list of sources

Plant case, tender, wages — Clarity Project, work.ua

Employment, shortage ≥2 million, population, first-graders — State Statistics Service (statement by the head of the agency)

Shortage of 4.5 million, projection to 2050 — Ptukha Institute for Demography, NAS of Ukraine

Unemployment of 11.3% — National Bank of Ukraine

Shortage as the number-one business problem — IER / European Business Association

Vacancies, filling rates, sectoral breakdown — State Employment Service

GDP 2025, growth of 1.8%, capital formation +15.5% — State Statistics Service / Forbes Ukraine

Reconstruction needs of USD 588 billion — RDNA5, World Bank

5.6 million abroad, 29% return — Centre for Economic Strategy, fifth wave

Defence-technology market, defence-industry employment — KSE Institute / Brave1

Methodology and caveats

This material was prepared on the basis of official statistics (State Statistics Service of Ukraine, National Bank of Ukraine, State Employment Service), inter-governmental assessment data (RDNA5), and publications of academic and analytical institutions with direct attribution in the text. The labour-productivity figure is calculated as the ratio of GDP to the number of employed according to official data. The figures in the mobilisation-reserve table are order-of-magnitude estimates from open sources: official statistics on mobilisation are not published.

The assessments, conclusions, and recommendations set out in this article are those of the authors and do not necessarily reflect the position of the partners, donors, or organisations mentioned in the text. Responsibility for the content of this publication rests with the authors and the Ukrainian Institute for the Future.

This article was prepared with the assistance of the AI tool Claude (Anthropic). The facts, figures, and sources were verified by the authors, who bear full responsibility for the content.

This publication was produced by the NGO “Ukrainian Institute of the Future” with the support of the Askold and Dir Foundation, administered by ISAR Ednannia within the project “A Strong Ukrainian Civil Society — A Driver of Reform and Democracy,” funded by Norway and Sweden. The content of this publication is the sole responsibility of the NGO “Ukrainian Institute of the Future” and does not represent the views of the governments of Norway or Sweden, or of ISAR Ednannia.

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