The shortage of labor due to mobilization or employees leaving for abroad ranked first among the obstacles to business operations in September, according to data from the monthly survey conducted by the Institute for Economic Research and Political Consulting (IERPC).
As reported by IERPC, 61% of surveyed businesses cited this issue, although it was higher in August at 63%. Nevertheless, it has become the primary concern for businesses.
"For the first time since the survey began in May 2022, the lack of workforce has emerged as the number one issue limiting business operations in Ukraine," stated Oksana Kuzyakiv, executive director of IERPC, during the report presentation.
Additionally, businesses are finding it increasingly difficult to recruit qualified workers, with 55.1% of entrepreneurs reporting this challenge (up from 52.6% the previous month), marking a new record. While unskilled labor is easier to find, 39.2% of respondents still face difficulties in this area.
Expectations regarding labor resources have also worsened. The percentage of businesses planning to increase employment in the next three to four months dropped from 14.6% in August to 12.1% in September, while those planning layoffs rose to 9.8% from 8% the previous month.
Furthermore, there has been a significant increase in the proportion of businesses planning to increase the number of employees on forced leave, from 3.8% to 13.9%.
The second most significant obstacle for businesses is the "danger of working," which increased by 10 percentage points from August, reaching 56% in September.
"The issue of interruptions in electricity, water, and heating supply has become less relevant, as there were virtually no outages in September," noted IERPC expert Yevhen Angel.
This problem dropped from first to third place, affecting 45% of respondents compared to 65% in August.
The fourth obstacle is the "rising prices of raw materials and goods," which impeded 45% of respondents, down slightly from 46% in August.
Angel reported that corruption and pressure from law enforcement agencies, amidst other more "mundane" problems, remain in the background, with only a few percent of respondents mentioning them (6% and 2%, respectively).
At the same time, the proportion of businesses that view the government as an "enemy" has risen to 5% in September, up from 3% in the previous quarter; 23% labeled the government as a "barrier," compared to 20% previously.
It is noted that a relative majority still maintain a neutral view of the government's current role for businesses—40% see it as a "regulator," no one labeled the government as a "friend," and only 10% regard it as a "partner." Nearly one in five entrepreneurs were unable to assess the government's role.
As emphasized by IERPC, in September, the Business Activity Recovery Index (BARI) improved from 0.08 to 0.12, with indicators rising for all types of businesses, from micro to large enterprises.
Optimistic expectations for the next three to six months, as well as two-year plans, have somewhat improved against a backdrop of significant demand growth for products.
The order book increased compared to August, reaching its highest average level of 7.9 months (up from 7.1 months in August).
Additionally, the proportion of businesses reporting an improvement in their business activity compared to the previous year rose from 28.3% to 30%. Meanwhile, the percentage of businesses experiencing a decline in activity decreased from 20.6% to 18%.
The September survey, conducted by the New Monthly Enterprises Survey (#NRES) by IERPC, involved 473 Ukrainian industrial enterprises located across 21 of the 27 regions of Ukraine. The fieldwork for the 29th wave of the study took place from September 16 to 30, 2024.
