53% of Ukrainian industrial businesses are operating at full or almost full capacity, signaling their adaptability. This is stated in a study conducted in December 2024 by the Institute for Economic Research and Policy Consulting (IER), which surveyed industrial enterprises. Here is a summary of the main findings from the study.
Currently, 82.8% of businesses on the labor market are not planning any changes, with fewer companies planning to hire or lay off employees.
Among the main obstacles to doing business, a lack of workforce due to mobilization and/or employee departures remains the top issue for several months in a row. In December, this concerned 61% of respondents. 51% of respondents complained about electricity supply disruptions.
In December, businesses slightly improved their production indicators, and their expectations remained positive and stable. This is a good sign at the end of the third year of the war. At the same time, a shortage of personnel and dangerous working conditions continue to be the main obstacles for business activity. This is shown by the results of the 32nd monthly survey conducted by the Institute for Economic Research and Policy Consulting (IER) in December among 470 industrial enterprises.
The Business Activity Recovery Index (BARI), as in November, was at 0.16.
'On average, the BARI index remained unchanged, but when we look at businesses of different sizes, we can identify three groups with a clear trend of decreasing recovery and one group—large enterprises—with an increase in growth rates,' noted IER Executive Director Oksana Kuzyakiv.
Small and medium-sized businesses, after a peak in October, have seen a decline in their performance for the second consecutive month, while micro-businesses have struggled with negative recovery rates throughout 2024.
The share of enterprises operating at nearly full capacity increased from 40% in November to 42% in December, while the proportion of those working at 100% capacity grew from 10% to 11%.
'Overall, 53% of the respondents are working at full or nearly full capacity. For the situation in the third year of the war, this indicator demonstrates the stability and adaptability of businesses,' said Oksana Kuzyakiv.
The Aggregated Industry Prospects Index (AIPI), which includes production expectations, assessments of finished goods inventory, and order portfolios, slightly decreased to 0.07 compared to 0.08 in November. However, this negative trend is persistent. It is confirmed by the increasing uncertainty faced by businesses in the 3-month outlook, particularly among exporters. In December, 18.9% of companies could not assess their short-term prospects, compared to 12.4% in November. At the same time, most businesses—80.9%—do not plan any reductions in the next 2 years.
'This is the foundation that allows us to assert that businesses have adapted and are not planning to give up,' noted Oksana Kuzyakiv.
Production showed slight improvement in December: the share of entrepreneurs who increased production volumes rose from 20.9% to 25.2%. Meanwhile, when businesses were asked about their prospects for the next 3-4 months, the proportion of those planning to increase production decreased from 33.3% to 29.6%.
'The export change expectations index increased from 0.27 to 0.33. This is mainly explained by the growth in the share of those planning to increase exports, from 30.6% to 35%, and the decrease in those planning to reduce exports, from 9% to 4.9%,' said Oksana Kuzyakiv.
After a large increase in September–October, the average term for new orders in November–December decreased and now stands at 6.2 months (compared to 6.7 months in November).
The pricing dynamics improved: both the indices for current prices on raw materials and materials (down to 0.31) and for finished products (down to 0.32), as well as the corresponding indices for expected price changes in the 3-month outlook, decreased to 0.34 and 0.35, respectively.
'We see a trend toward a reduction in the expected speed of price increases,' said Oksana Kuzyakiv. 'Although the share of those who report an increase in prices for raw materials and materials, and who plan to raise prices for their products, exceeds the share of those who say they will lower prices.'
On the labor market, 82.8% of enterprises do not plan any changes, while the share of those intending to hire employees has decreased (from 14.1% to 11.8%), as well as those planning to make layoffs (from 6.8% to 5.4%). The proportion of enterprises planning to send employees on forced vacations unexpectedly increased—from 4.2% to 10.3%.
The severity of the staffing problem has slightly decreased. In December, 51.6% of respondents reported difficulties in finding qualified workers, down from 55.5% in November. Unskilled labor is hard to find for 34.8% of businesses, down from 38.9% the previous month. Among the main obstacles to doing business during the war, the lack of labor due to mobilization and/or employees leaving has remained at the top for several months. In December, this was a concern for 61% of respondents, which is slightly lower than the record 64% in November.
"Compared to the previous month, there were slight changes: 55% of respondents in December stated that it was dangerous to work, up from 54% in November,” said Senior Researcher at the Institute of Economic Research and Policy Consulting (IER), Yevhen Angel. “This indicator has remained at the level of many previous months. Since last spring, more than half of businesses have consistently reported this issue.”
The perception of this obstacle remains dependent on the size of the business and the type of industry.
“As the size of the enterprise increases, the fear of workplace danger grows. Larger and medium businesses are more concerned about this than micro- and small businesses, as they are predominantly represented by large infrastructure facilities, which may be vulnerable to enemy attacks,” said Yevhen Angel.
However, this fear is not always tied to territorial proximity to the front line. A large portion of respondents reported the danger of working not only in Zaporizhzhia or Dnipropetrovsk regions but also, for example, in Cherkasy. Among the regions where fewer respondents reported this issue were not only the western regions but also Chernihiv, which borders Russia.
The business obstacle that completes the top three has changed.
"In November, the third place was occupied by ‘price increases for raw materials, materials, and goods’ with an indicator of 48%. In December, ‘interruptions in electricity, water, or heating supply’ moved to third place at 51%. We understand that this primarily concerns electricity supply, as the energy infrastructure periodically suffers from enemy attacks,” Yevhen Angel noted.
In November, 34% of respondents reported this problem, with the annual peak in July at 78%.
The issue of ‘price increases for raw materials, materials, and goods’ dropped to fourth place with an indicator of 42%.
"Since last spring, this indicator has remained above 40%, except for July, which was 32%, when businesses had other concerns and priorities,” stated Yevhen Angel. “‘Corruption’ and ‘pressure from law enforcement’ are still less significant issues compared to the main problems, with only a few percent of respondents mentioning them—3% and 1%, respectively,” he added.
The share of negative government assessments has decreased for the second month in a row, to 25% in December, while the share of neutral assessments rose to 61%. Half of the businesses (50%) now consider the state a "regulator," while one in four (24%) view it as an "obstacle."
