Businesses continue to complain about a shortage of qualified personnel – among the obstacles to doing business during martial law that they cited, this issue in July, as it did in June, ranked first with 66% of respondents, compared to 71% in June, according to the results of the monthly business survey conducted by the Institute for Economic Research and Policy Consulting (IER).
According to the institute's data, 73% of the surveyed companies report facing a shortage of workers. Among them, 84% of respondents in the chemical industry cite this issue most frequently, followed by 79% in the production of building materials, in metallurgy and metalworking some 78%, the food industry some 78%, machine building some 74%, light industry some 67%, woodworking some 59%, and printing some 55%.
As the size of the enterprise increases, so does the proportion of those experiencing a labor shortage: from 34% among microenterprises to 88% among large enterprises.
Among the factors affecting workforce availability, some 79% of enterprises consider employee mobilization to be the main factor, while 58% of respondents cite restrictions on employee retention. Nearly half of those surveyed believe that the insufficient qualifications of candidates (47%) and internal employee turnover (45%) have a significant impact on the staffing situation. Businesses less frequently cited uncompetitive salary levels at the company (38%) and high employee turnover (36%) as factors that significantly impact the staffing situation.
As for other challenges, entrepreneurs cite rising prices for raw materials and goods (second place, 57% in July versus 50% in June), unsafe working conditions (third place, 44% in July compared to 41%), a decline in demand for products/services (fourth place, 33% compared to 31%), and difficulties with transporting raw materials (fifth place, 29% compared to 30%).
The Business Activity Recovery Index (BARI) has been gradually rising for the second month in a row, although it remains negative: -0.11 in July after -0.14 in June. The IER explained that this means there are more respondents whose business activity has deteriorated compared to last year than those whose business activity has improved.
Capacity utilization compared to pre-war levels remained largely unchanged in July: the combined share of enterprises operating at nearly full (75-99%) and full (100%) capacity rose from 63% to 64%. Other changes were also insignificant; in particular, the share of enterprises operating at 50-74% of pre-war capacity decreased from 23% to 21%.
Uncertainty regarding the six-month outlook increased slightly both for the country's overall economic situation (from 26.5% to 32%) and regarding the financial and economic condition of enterprises (from 21.7% to 24.2%). In the long term, there has been a slight increase in the share of those who were unable to answer what will happen to their enterprise in two years – from 38.2% to 40.5%.
The average order backlog period increased slightly – from 2.8 to 2.9 months.
The IER survey was conducted in July among executives of 472 enterprises of various sizes in 21 regions of Ukraine. The project has been carried out on a monthly basis since May 2022.
