Ukraine’s talent shortage: How businesses can build teams for the years ahead

For businesses in Ukraine, plans for growth and expansion are increasingly being shaped by the ability to find people with the right skills. The main question is: will such businesses be able to build teams with the skills needed to deliver on these plans? Migration, mobilisation, and demographic shifts have significantly affected the availability of talent, notes Serhiy Popov, Partner and Head of Tax and Legal Services at KPMG in Ukraine. In a column for Mind, he argues that for many employers, current situation is turning recruitment and retention from routine HR tasks into a strategic business priority for many employers.

The Ukrainian labour market in a new reality

For a growing number of companies in Ukraine, competing for customers increasingly also means competing for talent. A shortage of skilled workers is already among the key factors affecting companies’ growth prospects, with businesses identifying only the risks associated with attacks on energy infrastructure as posing a greater challenge.

This labour shortage is particularly acute in engineering, manufacturing, construction, logistics, and technical roles. Yet the issue extends well beyond individual professions. The combined impact of external and internal migration, mobilisation, and the mismatch between employees’ existing skills and employers’ needs is gradually turning a talent shortage into a structural challenge for the Ukrainian economy.

A quick resolution is therefore unlikely. Labour shortages are likely to remain a significant constraint on business growth over the next three to five years, while competition for skilled professionals is expected to continue until the security and economic environment stabilises at the earliest.

The situation may gradually improve over time, as investment activity recovers, capital flows increase, and some Ukrainians return home. These developments are likely to move at different speeds, however, and investment may pick up before people are ready to return to Ukraine. Even under a favourable scenario, businesses should not expect a rapid or large-scale increase in labour supply. The talent shortage is more likely to ease gradually and businesses should therefore factor this time lag into their investment decisions, expansion plans, and future hiring needs.

Workforce planning requires a different approach

Under current conditions, building a team in Ukraine goes far beyond conventional recruitment. Mobilisation remains one of the factors directly affecting workforce availability and companies’ ability to plan their staffing needs.

According to available estimates, 91% of Ukrainian companies have employees serving in the Armed Forces of Ukraine. Almost half of surveyed businesses report that mobilised employees account for up to 10% of their workforce, while a further 44% say that more than 10% of their employees have been mobilised.

Workforce planning has therefore become a matter of operational resilience, with companies investing in backup teams, cross-training employees, and developing more flexible organisational models.

Ukrainian law also permits businesses designated as critical to the economy or to national defence to obtain mobilisation deferments for certain categories of employees.

Businesses are broadening their approach to attracting talent

The talent shortage has prompted companies to rethink traditional approaches to building teams. Ukrainian businesses are increasingly using automation and AI-based solutions to help address labour shortages. Employers are also broadening their candidate pools, bringing more women and older workers into professions and sectors where they have traditionally been underrepresented. Remote working arrangements are becoming more widespread as well, enabling companies to work with Ukrainian professionals regardless of where they are currently based.

Companies are also taking a broader view of their potential talent pool. Approaches that were considered optional just a few years ago have now become essential to growth for many employers.

Compensation remains important, but it is no longer the only way to compete for talent. Employee development and training, together with long-term workforce planning, are playing an increasingly important role.

Employer resilience has become part of the employee value proposition

Employee expectations have also changed considerably in recent years. Although Ukrainian legislation has not imposed fundamentally novel employer obligations following the introduction of martial law, an employer’s responsibility for providing safe working conditions remains unchanged. In practice, employers are advised to establish procedures for responding to air-raid alerts, provide remote working options where possible, and ensure safe working conditions, including access to shelters.

Employees, meanwhile, increasingly value not only salary and career development opportunities but also stability and safety, as well as confidence that their employer can continue operating in a high-risk environment.

Employment relations: what employers should consider

Employment relationships in Ukraine are generally formalised through an employment agreement or an employer’s hiring order. Open-ended contracts remain the standard, although fixed-term contracts may be used in cases specified by law. Certain categories of employees, including parents of young children, pregnant women, and persons with disabilities, are entitled to additional guarantees and protections.

Recent legislative changes have also simplified certain procedures relating to the employment of foreign nationals. Specific salary requirements for most foreign employees have been abolished, for example, while certain aspects of their employment in Ukraine have been streamlined.

Employers should determine their preferred employment model and approach to meeting HR and tax requirements in advance. For international companies, this planning should also include decisions about the appropriate structure for establishing a presence in Ukraine.

Human capital is becoming a strategic advantage

Ukraine’s labour market continues to adapt to new realities, but competition for skilled professionals is unlikely to ease significantly in the coming years. Workforce planning is therefore becoming an integral part of broader business strategy.

Beyond standard matters like how many employees will be needed to deliver growth plans, companies should also assess beforehand whether the required skills are available, how they can build a talent pipeline, and how they will develop and retain their people. Alongside access to finance, technology, and markets, human capital is becoming a key source of competitiveness.

Businesses should not wait until expansion begins before building the teams they need. Companies that invest in people today and plan their workforce systematically will be better prepared to grow as economic and investment activity in Ukraine recovers.