No matter if the war ends, Ukraine’s dwindling population will hurt the economy for years

Written by Olenna Harmash

KIEV (Reuters) – As the war drags on, some of the millions of refugees in Ukraine are considering settling permanently in the countries they find themselves in across Europe, challenging rebuilding the economy when the guns finally fell silent.

Natalka Korzh, 52, TV director and mother of two, left her newly built dream home behind when she fled the missiles that fell on Kiev in the early days of the war. She’s just finding her feet in Portugal, and doesn’t plan to refill her life again even when the fighting in Ukraine stops.

“Now, at the age of 52, I have to start from scratch,” said Korseh, who wants to open a charity in Portugal to help other immigrants in the town of Lagoa, which she now calls home.

Studies conducted by the United Nations High Commissioner for Refugees (UNHCR) show that the vast majority of displaced Ukrainians would like to return one day, but about one in ten plan to return soon. UNHCR studies have shown that in previous refugee crises, for example in Syria, the desire of refugees to return to their homes faded over time.

Reuters spoke to four company chiefs who said they are now grappling with the prospect that many refugees will not return and that the workforce will continue to shrink for years to come, a situation that worries demographers and the government.

With many people abroad, or Displaced within Ukraine or conscription into the army. Forces he was faced with a shortage of qualified laboratory personnel and production specialists.

“We need to try to somehow get them back to Ukraine, because we already see that the longer people stay abroad, the less they want to go back,” said Kostyuk, whose company has moved its research lab and staff to Kiev, from an area close to the front. Line.

A survey of about 500 companies in Ukraine conducted by the Ukrainian Institute of Economic Research and Political Studies showed that a third of them saw staff shortages as a major challenge.

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Men of military age are prohibited from leaving Ukraine, so women of working age and children make up the majority of refugees.

While farms and factories have lost workers to the armed forces, the labor shortage is particularly acute in industries that require higher levels of education and training because educated young women are among those most likely to leave the country since war broke out in February 2024.

Two-thirds of the women who have sought refuge elsewhere in Europe have a higher education, according to research published in March by the Ukrainian Center for Economic Strategy.

Not only is there a shortage of labor, but the shrinking of the labor force also affects consumer demand in the long run.

Fozzy Group, which operates leading supermarket chains, has reopened its stores in areas around Kiev after Russia withdrew from the area in the first few months of fighting. Dmytro Tsygankov, Fozzy’s manager in charge of the new product lines, said turnout remains low.

“We cannot talk about recovery when we have several million people who simply do not buy anything: they are not in the country,” said Tsygankov.

He said customer visits were up in May compared to last year, but still 16% lower in May 2021, before the invasion.

Will the men leave?

The problem of the population of Ukraine exceeds the millions of refugees. A high percentage of citizens are elderly, said Ella Lipanova, one of the country’s most respected demographers, and the country’s fertility rate, already one of the lowest in the world, is believed to have fallen to 0.7 from 0.9 since the outbreak of the war. National Academy of Sciences.

A million people are fighting the Russians, and millions more live in the territories occupied by Moscow or are displaced to Russia. The Ukrainian government has not released casualty figures, but in April leaked US intelligence assessments reported that 15,000 men of working age had been killed or wounded. Many injured.

Lipanova also warned that once war restrictions on men leaving the country are lifted, many can join their families abroad.

“There is a great risk that the men will leave,” she said. “We will lose qualified, enterprising and educated youth. That is the problem.”

With Russia now occupying about a fifth of the country’s territory, Libanova estimates that the population in Kiev-controlled areas may already be as low as 28 million, down from the government’s estimate of 41 million before the invasion on February 24, 2022. The estimate excludes Crimea, which it annexed. Russia in 2014, which had a population of about two million people at the beginning of that year.

Even before the war, Ukraine’s population was shrinking.

At independence in 1991, Ukraine’s population was approximately 52 million. The 2001 census – the only one in the country to date – recorded a population of 48.5 million.

Depending on how long the fighting lasts, and how many people settle abroad, Ukraine’s population is set to decline further by between a fifth and a third over the next 30 years, according to a study published in March by the European Commission’s Joint Research Centre.

economic impact

The government has not published figures for the current population, and even the best estimates allow a large margin of error to calculate uncertainty about the number of people in Russia, Belarus, and Russian-controlled territories.

Demographic Libanova estimated the population at between 28 million and 34 million at the start of 2023 in parts of the country controlled by Kiev.

The Center for Economic Strategy estimated that between 860,000 and 2.7 million Ukrainians could stay abroad forever, based on a February survey of more than 1,000 refugees in EU countries. As a result, the economy could lose 2.55%-7.71% of GDP annually, she said.

Pharmac CEO Kostyuk said that some of his employees are working remotely and that less than 5% of his employees have left and are staying abroad.

But he worries about a growing shortage of specialized workers, in part because young graduates lack practical skills after studying remotely during the pandemic and invasion.

The government is more sanguine about the returnees, citing the patriotism that surged after the invasion. Oleksiy Sobolev, deputy economy minister, said at a recent roundtable meeting that he expects up to 75% of refugees to return to Ukraine within three years of the fighting ending.

Some Ukrainians abroad support the tele-economy. Fashion designer Ksenia Karpenko has kept her business afloat from her current home in Tarragona on Spain’s Mediterranean coast, where she was on vacation when war broke out.

“I was a tourist on February 23 and when I woke up (the next day) … I was a refugee,” Karpenko told Reuters.

She had to downsize, but kept going despite the war and now runs an eight-person team in Ukraine designing and making clothes that are sold in boutiques in Madrid and Barcelona.

“I am more effective here than in Ukraine. I do more here for my countrymen too,” she said.

(Reporting by Corina Rodriguez in Madrid and Catarina Dimoni in Lisbon; Editing by Mike Collette-White and Frank Jack Daniel)