Workforce shortage, security, energy problems hindering businesses in Ukraine - IER survey

MOSCOW. Jan 16 (Interfax) - Ukrainian entrepreneurs have for the fourth consecutive month listed workforce shortages among the top three impediments to running a business, Ukrainian media said, citing the New Monthly Enterprises Survey conducted by the Institute for Economic Research and Political Consulting (IER).

Respondents to the December 2024 survey again named the lack of personnel as the main problem hampering business operations.

"Little changed from the previous month: the absence of a safe environment for business was mentioned by 55% [of respondents] in December, and by 54% in November. More than half of businesses have consistently mentioned this impediment since the spring of last year," the IER press service quoted the institute's senior research associate Yevgeny Angel as saying.

The 'unsafe to work" situation ranked second among the problems facing businesses in Ukraine, the IER said.

Power, water and heating disruptions climbed to third place in the list named by 51% of respondents to the December 2024 survey, while higher prices for raw material, components and goods dropped to fourth place mentioned by 41% of those polled, Angel said.

The Business Activity Recovery Index in December remained at 0.16, same as in November. The share of enterprises operating at almost full capacity rose to 42% in December from 40% in November, while the share of enterprises operating at 100% capacity went up to 11% from 10%.

"In all, 53% of those surveyed are operating at full capacity or almost full capacity. This demonstrates business resilience and ability to adapt, despite the third year of the crisis," IER Director Oksana Kuzyakiv said.

The aggregate industry prospects indicator, which reflects manufacturing expectations and the assessment of finished goods stocks and the portfolio of orders edged down to 0.07% in December from 0.08% in November. While insignificant, the decline is stable. It is confirmed by a rise in business uncertainty for the next three months, with 19.8% of exporters unable to assess their short-term prospects in December versus 12.4% in November. At the same time, the majority of entrepreneurs (80.9%) do not plan to scale down their operations within the next two years.

The manufacturing sector improved insignificantly in December, with the share of entrepreneurs who increased their output rising to 25.2% from 20.9%. Meanwhile, the share of businesses planning to scale down their operations within the next three-four months dropped from 33.3% to 29.6%.

"The index of export change expectations grew from 0.27 to 0.33, mainly due to an increase, from 30.6% to 35% in the number of those planning to boost exports, and a reduction from 9% to 4.9% in the number of those planning to cut exports," Kuzyakiv said.

Following a considerable growth in September-October 2024, the average term of new orders decreased to 6.2 months in November-December from 6.7 months in November.

Some 82.8% of enterprises said in December they were not planning any changes in their workforce. The share of enterprises planning to hire more staff dropped from 14.1% to 11.8% in December, and the share of enterprises planning layoffs declined from 6.8% to 5.4% in December. The number of enterprises planning furloughs increased from 4.2% to 10.3%.

However, the workforce shortage problem became less acute in December, according to the IER. The share of respondents who consider it difficult to find skilled workers declined to 51.6% in December from 55.5% in November. Problems with finding unskilled workers were mentioned by 34.8% of businesses in December versus 38.9% in November.

In its December New Monthly Enterprises Survey, the IER's polled 470 Ukrainian enterprises located in 21 of the country's 27 regions. The field stage lasted from December 16 to December 31.