S6 Ep3: Rebuilding Ukraine’s labour market

Episode Summary

Executive Summary: The episode argues that rebuilding Ukraine means rebuilding its labor market and human capital, not just physical infrastructure. Tito Boeri explains how war, COVID, and longstanding structural weaknesses—low female participation, informality, weak vocational training, and slow sectoral reallocation—have damaged employment. He outlines policies for remedial education, women’s work, youth training, refugee engagement, and substantial EU grant-based support tied to accession reforms.

Main Topics: Why labor markets matter in reconstruction: Boeri frames human capital as the core driver of postwar growth and recovery, arguing that war destroys skills and institutions that physical rebuilding alone cannot restore. Prewar weaknesses in Ukraine’s labor market: Ukraine entered the war with low participation, high informality, slow structural change, and long unemployment durations, limiting its ability to absorb shocks. COVID-19 and then war as compounding shocks: The pandemic worsened employment and poverty before the invasion, and the war then triggered massive job losses, displacement, and firm shutdowns. Lessons from other conflicts: Examples from the Balkans, Georgia, and Ukraine’s 2014 conflict show the difficulty of reintegrating refugees, recovering lost education, and addressing long-term health scars. Remedial education and skills recovery: The transcript stresses large-scale in-person and online remedial education, with refugees and displaced teachers contributing remotely to restore learning losses. Women, youth, and labor-market design: Reconstruction should expand female participation through family-friendly supports and improve youth outcomes via advanced vocational education and better job matching. Funding and EU accession: Boeri says Ukraine will need major EU grants, not loans, plus technical assistance and institution-building linked to accession and best-practice convergence.

Key Arguments: Ukraine’s reconstruction must prioritize human capital because economic recovery depends on the labor force’s skills, participation, and health. Ukraine’s labor market was already weak before the war, making recovery harder than in a functioning labor market. The war caused both direct job destruction and a huge reallocation of people, with millions displaced internally and abroad. Refugees may not all return quickly, but they can still contribute via online teaching, remittances, ideas, and networks. Learning losses from disrupted schooling are hard to reverse, so remedial education must be urgent and large-scale. Raising female labor-force participation is essential; without it, Ukraine cannot fully use its labor supply. Youth unemployment should be tackled through stronger vocational and tertiary pathways modeled on countries like Germany, Austria, and Switzerland. Reconstruction financing must rely heavily on grants from the EU because Ukraine’s needs will exceed what loans can safely cover. EU accession prospects can improve institutions and public administration even before formal membership. Labor-market recovery policies should be embedded in broader state capacity and social-policy reform, not treated as temporary add-ons.

Data Points: Employment loss by March 2022: about 22% - Estimated share of jobs lost soon after the start of the war Employment loss by September 2022: around 13% below prewar levels - Situation improved somewhat over the summer after the initial shock Internally displaced people: about 6 million - Ukrainians displaced within the country because of the war Refugees abroad: almost 8 million - Ukrainians who left the country during the war Firms fully closed after one year of war: about one-third - Share of previously existing firms that stopped production completely Firms significantly reducing activity: another 50% - Previously existing firms operating at reduced capacity after one year Firms operating at full capacity after one year: about 20% - Only a minority of established firms were still fully active Informal employment prewar: about 1 in 5 workers - Size of the informal economy in Ukraine before the war Agricultural employment prewar: about one sixth - Share of employment still in agriculture before the war Female labor-force participation issue: described as low participation rates, especially among women - A structural weakness of the Ukrainian labor market Poverty increase during COVID-19: almost 24% over one year - Pandemic impact on poverty levels in Ukraine

Pivotal Quotes: "what ultimately matters for growth and clearly for recovery is something which is rather immaterial, and it is called human capital." — Tito Boeri: Boeri explains why labor markets matter more than only rebuilding buildings and roads "the Ukraine labour market cannot afford not to have a higher level of participation of women." — Tito Boeri: Discussion of the need to expand female employment during reconstruction "flows of people do not mean that also ideas are flowing." — Tito Boeri: He argues refugees abroad can still support reconstruction through knowledge, networks, and money

Implications: Ukraine’s recovery will hinge on restoring skills, jobs, and participation as much as repairing infrastructure. Policies on education, childcare, youth training, and refugee engagement will shape long-term growth, while EU support and accession reforms may determine how fast the labor market modernizes.