NBU on the labor market in Ukraine: salaries will grow, but at a slower pace

In Ukraine, since the beginning of the year, the labor supply has been growing faster than demand, but the labor shortage will remain significant and will hinder economic recovery over the forecast horizon. Wages will grow, but at a slower pace. This is stated in the National Bank’s inflation report for July, according to UNN.

In the first half of 2025, businesses’ hiring problems eased somewhat due to both a further increase in labor supply and a decrease in the need for new employees amid slower economic growth. Thus, the number of resumes on job search sites grew significantly faster than the number of vacancies. And according to household surveys, the labor force participation rate in the first half of 2025 exceeded the level of the corresponding period of the previous year. However, persistent imbalances continued to exist in the labor market.

Reasons for the increase in labor supplyThe National Bank notes that the increase in labor supply was still constrained by migration processes: during the first half of the year, the number of migrants increased, albeit at a slower pace than last year (by about 60 thousand compared to more than 200 thousand in the first half of 2024, excluding the Russian Federation). According to the UN, as of July 1, 2025, 5.6 million people are outside Ukraine.

As a result of the vigorous growth in labor supply, the adverse impact of the shortage of workers on business activity has somewhat weakened. However, despite some stabilization, the demand for labor remained high. The shortage of workers continued to limit the possibilities of increasing production and caused high rates of nominal wage growth.

Overheating in the labor market is likely to continue. Thus, according to a study by the State Employment Service, the Federation of Employers of Ukraine, and Helvetas, potential employees are currently interested not only in salaries but also in other working conditions. The study shows that their salary expectations already correspond to the market level (which is also confirmed by data on expected and offered salaries on job search platforms). Instead, job seekers are increasingly interested in remote work or part-time work, and IDPs are also interested in the availability of housing. Given the shortage of personnel, employers will likely be forced to switch to non-price competition for employees, which may slightly slow down the pace of wage growth.

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Forecast for salaries in Ukraine

Under the influence of growing demand for labor, unemployment will gradually decrease and stabilize below 10% by the end of the forecast period. Disparities in the labor market, caused by changes in the economic structure, external and internal migration, and mobilization, will persist in the forecast period, but will gradually weaken along with the normalization of economic activity conditions.

The National Bank states that this will be facilitated by the gradual return of migrants to Ukraine and the saturation of the labor market, which will increase the supply of skilled labor.

“Real wages will continue to grow amid prevailing demand over labor supply and overall economic activity recovery. However, at a slower pace (4-5% per year) due to the gradual equalization of imbalances in the labor market and non-price competition among employers,” the National Bank informs.

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