However war ends, Ukraine’s diminished population will hit economy for years

KYIV – With war dragging on, some of Ukraine’s millions of refugees are beginning to think about settling for good in the countries they find themselves in across Europe, posing a challenge to rebuilding the economy when the guns finally fall silent.

Ms Natalka Korzh, 52, a TV director and mother of two, left behind a newly built dream house when she escaped the rockets falling on Kyiv in the early days of the war. She is only just finding her feet in Portugal, and does not plan on packing up her life again, even when fighting stops in Ukraine.

“Now, at 52, I have to start from scratch,” said Ms Korzh, who wants to open a charity in Portugal to help other migrants in the town of Lagoa, which she now calls home.

Studies by the United Nations refugee agency UNHCR show that the vast majority of displaced Ukrainians want to return one day, but only around one in 10 plans to do so soon.

In previous refugee crises, for example in Syria, refugees’ desire to return home faded with time, UNHCR studies show.

Reuters spoke to four company bosses who said they are now grappling with the likelihood that many refugees will not return and that the workforce will keep shrinking for years to come, a situation that is also worrying demographers and the government.

Mr Volodymyr Kostiuk, chief executive officer of Farmak, one of Ukraine’s top pharmaceutical companies, with nearly 3,000 employees and more than seven billion hryvnias (S$256 million) in revenue the year before the war, said that with so many people abroad, displaced within Ukraine or drafted into the armed forces, he was facing a shortage in qualified laboratory workers and production specialists.

“We need to somehow try to return them to Ukraine, because we already see that the longer people are abroad, the less they want to return,” said Mr Kostiuk, whose company relocated its research lab and staff to Kyiv, from close to the front line.

A poll of about 500 businesses in Ukraine carried out by Ukrainian think-tank the Institute for Economic Research and Political Studies showed that a third saw staff shortages as a key challenge.

Conscription-age men are restricted from leaving Ukraine, so working-age women and children make up the majority of refugees.

While farms and factories have lost workers to the armed forces, labour shortages are especially acute in industries requiring higher levels of education and training because educated young women are among those most likely to have left the country since the war started in February 2022.

Two-thirds of the women who sought refuge elsewhere in Europe have higher education, according to research published in March by Ukrainian think-tank the Centre for Economic Strategy.

It is not just a lack of labour, a shrinking workforce also dents consumer demand over the long term.

Fozzy Group, which operates leading supermarket chains, reopened stores in areas around Kyiv following Russia’s retreat from the region in the first few months of fighting.

But footfall is still low, said Mr Dmytro Tsygankov, a Fozzy director in charge of new product lines.

“We cannot talk about recovery when we have several million people who simply do not buy anything: They are not in the country,” said Mr Tsygankov.

He said client visits were up in May compared with 2022, but still 16 per cent below May 2021, before the invasion.