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The labor market in Ukraine four years after the full-scale Russian invasion has proven surprisingly resilient. It has been adjusting through profound geographical and sectoral reallocation. That is the result of a new study, published by the ROCKWOOL Foundation Berlin as RFBerlin Discussion Paper 10/26. “Long wars are often won in factories rather than on battlefields. The Ukrainian labor market has so far withstood shocks of unprecedented magnitude”, says co-author Tito Boeri, professor at Bocconi University in Milan.
“The figures suggest an ability to reallocate labor with surprising speed under conditions of extreme stress. But the challenges of reconstruction will be no less formidable than those of the war itself.”
The labor supply shock was of historic size In Ukraine. Out-migration alone implied about 3 million fewer workers. Plus at least 500,000 labor force participants were mobilized into the army and 150,000 exits were due to casualties. The overall contraction is about one fourth of the pre-war labor force in government-controlled areas. Unemployment spiked to more than 20% in 2022, then stabilized and is now around 11%. That is only a couple of percentage points higher than before the war.
Real wages, after an initial drop, reached and surpassed pre-war levels by 2024. Activity shifted towards the West of the country, away from the frontline. Labor markets in contested areas nearly collapsed. Employment moved towards defense manufacturing. Wage flexibility, adaptability of recruitment policies of firms, and remote working help explain the resiliency of labor outcomes. Matching efficiency on the labor market, estimated with data on vacancies and job seekers in the largest Ukrainian online job search platform, fell by around 15% after the invasion. That is sizeable, but less than reduction in matching efficiency during the Great Financial Crisis in the US in 2007 to 2009.
In English and Italian:
Tito Boeri Tel: 0039-02-58 36 33 23, Tito.Boeri@unibocconi.it
Giacomo Anastasia 001 (332) 269-8155, giacomo.anastasia@columbia.edu
RFBerlin Discussion Paper 10/26: “A Wartime Labor Market: The Case of Ukraine”. By Giacomo Anastasia, Tito Boeri and Oleksandr Zholud; Published here:
Also forthcoming in: Economic Policy: Papers on European and Global Issues, Volume 41, Issue 125; published here: https://www.rfberlin.com/wp-content/uploads/2026/01/26010.pdf
RFBerlin Research Insight: Still Standing: The Ukrainian Labor Market at War; Published here: https://www.rfberlin.com/research-insight/
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