WAR AND HUMAN CAPITAL: how to avoid turning a labor shortage into a famine
Photo courtesy of the Kyiv International Economic Forum (KIEF)
The global human capital market is undergoing tectonic shifts. New technologies and AI have already reformatted many business strategies. Add to this the aging population, climate change, pandemic threats, rising protectionism, the economic ambitions of the Global South, and more.
Modern wars are also contributing to this new reality, which demands new motivations, competencies, and skills from management. At the Kyiv International Economic Forum, held for the third time under martial law, one of the most crucial topics was human capital, social challenges, and economic strategies during wartime.
THE MIGRATION TREND IS NOT OVER
It is worth recalling that at last year’s KIEF in 2023, the issue of returning forced emigrants to Ukraine was the subject of profound and comprehensive discussion. It was noted that Ukrainian citizens who found themselves abroad demonstrated incredible adaptability.
According to forecasts, no more than 30% of Ukrainians who left the country during the war are expected to return to Ukraine after it ends. Businesses alone cannot handle the severe shortage of specialists without a multi-level national strategy covering economics, demographics, and education.
A year has passed. The war continues, and it is taking away the most motivated and active people. A year earlier, large companies reported 25 frontline casualties out of every 1,000 mobilized workers, with the share of mobilized employees representing 10–15% of the workforce.
HOW TO ADAPT HR STRATEGY TO WAR?
It is unlikely that the situation has improved since then. Moreover, the migration trend is far from over, further complicating an already dire labor market. In this context, the fight for human capital has become one of the key elements of Ukrainian companies’ strategies.
How can the state and businesses adapt HR policies to ensure the stable functioning of the economy during the war? This topic was discussed on one of the forum panels titled «Human Capital: Social Challenges and Economic Strategies».
Natalia Dmytrenko, head of the Office of the President of Ukraine’s analytics and monitoring service and a member of the Council for Social Change and Behavioral Economics, moderated the discussion.
UNPRECEDENTED CHALLENGES
Participants from both the public and private sectors were invited to start looking for solutions to prevent the labor shortage from turning into a labor famine. According to the Ministry of Economy of Ukraine, the country currently lacks 4.5 million workers.
How can modern HR strategies and international practices be adapted to the realities of the Russia-Ukraine war? Ukrainian businesses are clearly facing challenges never encountered before in their history. The tools they used to attract employees before the war no longer work and, in all likelihood, will not work in the future.
Thus, the main challenge in Ukraine is How and with what to attract people. The discussion participants sought to answer this critical question. Here are some of the key takeaways.
THESIS 1. FOCUS ON HUMAN-CENTRICITY
Today, people are at the center of all processes. It is essential to transform organizations into human-centric models, prioritizing the management of people’s overall well-being, including material, physical, and psycho-emotional aspects. Employers are employing a wide range of tools to achieve this: covering housing costs, offering employee loans, and more.
THESIS 2. INCREASE THE SPEED OF ADAPTATION AND RETRAINING
The employee life cycle is becoming shorter, leaving less time for retraining and integration. Efforts should be concentrated on creating conditions that ensure rapid adaptation. At the national level, the employment service plays a significant role, using European experience and testing new approaches in wartime conditions.
THESIS 3. DEVELOP RESILIENCE
Today, the Ukrainian population is experiencing an unprecedented level of stress. Therefore, to manage human resources effectively, it is essential to draw insights not only from «peaceful» Europe but also from «restless» Israel.
Adopting global best practices in managing resilience — the ability of individuals to cope with unforeseen situations, changes, and stress — is necessary.
Such programs are needed not only for Ukrainian military personnel but also for civilians, including employees of Ukrainian companies. Moreover, the unique experience of managing resilience could become an exportable Ukrainian asset.
THESIS 4. INTEGRATE WAR VETERANS
Amid the labor shortage in the Ukrainian job market, a strong trend is emerging — more active employment of people with disabilities and war veterans. This trend has moved beyond the realms of corporate or social responsibility. It has become a matter of survival for both businesses and the state.
THESIS 5. ENGAGE THE ECONOMICALLY INACTIVE POPULATION
Employers must actively reach beyond major cities when searching for employees. There are many small towns across the country whose residents are not yet integrated into modern technologies or the national labor market.
Statistics show that Ukraine has about 8 million economically inactive or underactive people. With the right approach, this represents a tremendous resource. We are already seeing examples of women mastering stereotypically male professions.
Additionally, there are many energetic retirees in the country who are willing and able to work.
THESIS 6. RETHINK MOTIVATION
In wartime, companies need to rethink how they attract, develop, and retain employees. Managing corporate values means first understanding them internally and then attracting people with the ideas and principles for which they are willing to join your team.
THESIS 7. INVEST IN PRODUCTIVITY
For comparison, Denmark has seven times fewer people than Ukraine had before the full-scale war, yet its GDP is twice as high. The reason for this discrepancy lies in low labor efficiency. Beyond creating an inclusive job market that appeals to returning Ukrainians, systemic investments in productivity and the competitiveness of the Ukrainian workforce must be made.
THESIS 8. REDEFINE THE ROLE OF PSYCHOLOGISTS AND HRD IN COMPANIES
A professional certified psychologist is becoming a new standard for modern organizations. HR departments once seemed innovative; now, psychological corporate services are emerging alongside them. Psychological safety is as crucial as physical safety. In stressful and uncertain conditions, the psychological environment in which employees operate is critical to both individual and collective effectiveness.
THESIS 9. REPLACE THE «RETURN» NARRATIVE WITH A «UNITY» NARRATIVE
Engaging with young people who left Ukraine for further education, personal development, and professional growth is essential. Forcing them to return is unrealistic due to various factors, such as a lack of career opportunities, housing, safety, and so on.
Wherever Ukrainians are, they are active agents of their destiny and should be free to decide whether to return or stay. We should consider replacing the discourse on «returning» with a narrative of «unity».
Young people should feel that, whenever they choose to return, Ukraine will be ready to welcome them and offer them far greater opportunities for self-fulfillment and social advancement than abroad.
THESIS 10. IMPROVE MOBILIZATION PROCEDURES
The state and businesses are investing massive resources in training professionals and bringing them into the market. How rational is it to waste these resources by using such people purely for national defense? Protecting Ukraine from the enemy is, of course, an absolute priority. However, mobilization and exemption procedures need refinement. A balanced approach must be found to replenish the armed forces without causing severe economic damage.
Prepared in partnership with KIEF. Huxley is the information partner of the Kyiv International Economic Forum
