top of page

Economic Vision of Ukraine: Building an Economy of Equal Opportunities



The ongoing war is drastically altering Ukraine's economic environment. Attacks on energy facilities, regular urban bombardments, increasing energy and fuel costs, and rising business expenses for wages and logistics are taking a toll on the economic conditions of both citizens and businesses 


The consumer price index has risen by 44.2% since the beginning of 2022 (a 144.2% increase)[1], meaning consumer goods prices have increased on average by this much in less than three years of the full-scale war. The proportion of Ukrainians cutting back on food expenditure reached 20.5% in October 2024 [2], nearly double the 12.2% recorded in 2021.  This suggests a near doubling of the population at or below the poverty line since the full-scale invasion began.


Unemployment in 2024 is estimated at 15[3] - 19%[4], 1.5 to 2 times higher than pre-invasion levels[5]. Simultaneously, employers are struggling with a shortage of skilled workers due to migration and mobilization. This has resulted in weak business confidence, with economic expectations at 48-49 points (below the neutral 50-point mark[6]). Citizens also largely express negative views about their personal economic outlook.


To recover, Ukraine needs systemic reforms and transformations. The We Build Ukraine team, supported by the Boston Consulting Group, developed the Economic vision of Ukraine to 2040. This Vision aims to create a thriving society and an economy with equal opportunities for all. The research includes a detailed analysis of Ukraine's macroeconomic situation, strong economic sectors, and potential growth areas. The document lays out a program of more than 350 priority initiatives to achieve long-term sustainable economic recovery in Ukraine.


The analysis reveals that sustainable GDP growth requires the Ukrainian economy to have access to affordable finance and insurance, a well-developed transport infrastructure to boost trade, and enough skilled workers. Foreign direct investment (FDI) is essential for achieving substantial long-term economic growth, which means creating a business-friendly environment supported by regulatory reforms and the rule of law. These combined efforts will build a strong foundation for Ukraine's long-term prosperity.


Economic inequality in Ukraine


Ukraine exhibits lower income inequality than most EU countries[7], as measured by the Gini index, which has remained at approximately 25-26%[8], over the last decade, compared to an EU average of around 30%[9]. However, the significantly lower standard of living and substantial shadow economy, particularly among wealthier individuals, may obscure the true extent of wealth disparity in Ukraine[10]. 


Systemic economic inequality in Ukraine disproportionately affects vulnerable populations. Gender plays a significant role, with women earning 18.6% less than men on average in 2023[11]. Rural populations are also particularly affected; in 2021, 50.1% of rural residents had expenditures below the actual subsistence minimum, compared to 34.8% of urban residents[12]. Other groups vulnerable to poverty and its consequences include people with disabilities, families with children, and the elderly.


However, the war has exacerbated economic inequality in Ukraine, highlighting the issue of socio-economic adaptation of internally displaced persons (IDPs), of whom 4.6 million are officially registered[13]. 


A study by the International Organization for Migration (IOM) reveals that around 64% of internally displaced persons (IDPs) live below the poverty line. Compared to other population groups, they are more reliant on social assistance (10%)[14], experience difficulties in paying rent on time (14%), and have been compelled to relocate to substandard housing (12%)[15]. Moreover, a substantial number of IDPs have been cut off from government financial aid since March 2024. 


According to IOM estimates, 35% of IDPs who have been deprived of social payments continue to require this support. Reports also indicate that these hardships are forcing some IDPs to return to the occupied territories (TOT) and areas of active hostilities, despite the dangers. However, no official statistics are available on the extent of these returns.


The state of small and medium-sized businesses (SMEs)


The impact of the war on SMEs has been devastating. Compared to 2020, the number of medium-sized enterprises fell by 17% in 2022, and small enterprises by a staggering 31%. A large portion of businesses experienced significant losses due to the hostilities, with many forced to close completely or move their operations elsewhere. Only 36.5% of Ukrainian SMEs managed to stay operational during the war, while 6% were forced to shut down for over a year[16]. 


The destabilization of the SME sector has had a negative impact on employment, contributing to rising unemployment. Nevertheless, SMEs remain crucial to Ukraine's economy, providing 75% of all jobs despite the war and other difficulties[17]. 


The Economic Vision of Ukraine is informed by data and extensive consultations with businesses, experts, and the public. Throughout the development process, we received strong calls from the business community and the public for fairness, a level playing field, and transparent procedures. 


Ukrainian businesses face a multitude of challenges, with 48% reporting pressure from law enforcement and regulatory bodies, according to a 2024 study. The most pressing concerns for entrepreneurs include: uncertainty about the country's future (54.6%), unpredictable state actions (53.9%), a shortage of qualified workforce (52.4%), insufficient effective demand (44.9%), limited access to capital (31.4%), decreasing profitability (26.5%), and hurdles from regulatory and fiscal institutions (22.8%)[18]. 


Excessive regulation in numerous industries, the prevalence of monopolies, substantial corruption risks, and restricted access to finance and essential resources pose significant challenges for Ukrainian businesses. These factors constrain the growth potential of businesses, particularly SMEs.


How to Address Economic Inequality and Create an Economy of Equal Opportunities?


  • Inclusive Policy Development Processes


We Build Ukraine is launching public dialogues involving stakeholders, beneficiaries, and experts to shape legislation. These dialogues will ensure the participation of civil society organizations representing IDPs, women, people with disabilities, veterans, and other vulnerable groups, alongside experts and business representatives. A just economy requires that the voices of those experiencing economic injustice are heard and incorporated into policy decisions. 


Committed to the principle of "leaving no one behind," we are developing legislation, procedures, and digital solutions that empower all Ukrainians to engage in governance and pursue professional fulfillment and entrepreneurial endeavors on an equal footing. We place particular emphasis on providing equal access to opportunities for the most vulnerable members of society. Ukraine requires an economic environment that enables everyone to maximize their potential and contribute to the collective well-being.


  • Focus on Small and Medium-Sized Enterprise Development


Our focus is on creating solutions, legislation, and procedures to support SME growth. We believe a robust legal framework and fair market practices—including transparent pricing and competitive tendering—are crucial for preventing monopolies, driving economic development, and promoting social equity.


  • Focus on Access to Employment and Professional Fulfillment


Our team is working to create solutions that enhance access to employment opportunities for all Ukrainians, especially vulnerable groups like IDPs and women. We need to identify the most effective actions that the government and businesses can take to generate new jobs and address the evolving demand for skills in a changing economy.


  • Creating an Action Plan to Implement the Economic Vision of Ukraine 2040 


Achieving the Vision's vision of a thriving society and an economy of equal opportunity requires a detailed Action Plan. This Plan will tailor the Vision to the needs of specific sectors, investors, and government bodies, and outline the necessary solutions and reforms for implementation by the government and parliament. The document will be developed through an inclusive process of broad public consultations involving all stakeholders and beneficiaries.


The Vision identifies human capital as a key driver of economic development. Consequently, the Action Plan will prioritize strengthening social protections, investing in education and skills development, fostering inclusion, and promoting improved living standards.


Furthermore, the Vision and the corresponding Action Plan must adhere to the principles of a green transition to ensure sustainability and safeguard the environment for future generations.



 

[2] Info Sapiens Research Agency (October 2024)

[3] Info Sapiens Research Agency (October 2024)

[4] Assessment by the Verkhovna Rada Committee on Finance, Tax and Customs Policy as of January 2024 https://www.rbc.ua/rus/news/bezrobittya-ukrayini-vdvichi-perevishchilo-1704722831.html 

[5] According to official data from the State Statistics Service, as of the end of pre-war 2021, the unemployment rate in Ukraine was 10.3%. Since the beginning of the full-scale invasion, the State Statistics Service has not published unemployment data

[6] Ukraine War Economy Tracker, Centre for Economic Strategy (November 2024) https://ces.org.ua/en/tracker-economy-during-the-war/ 

[7] Ukraine Report 2023. European Commission https://neighbourhood-enlargement.ec.europa.eu/ukraine-report-2023_en 

[9] Gini coefficient of equivalised disposable income – EU-SILC survey. Eurostat. https://ec.europa.eu/eurostat/databrowser/view/ilc_di12/default/table?lang=en 

[10] Manifestations of Economic Inequality of the Population in Ukraine in the Context of Ensuring Sustainability, National Institute for Strategic Studies https://niss.gov.ua/doslidzhennya/sotsialna-polityka/proyavy-ekonomichnoyi-nerivnosti-naselennya-v-ukrayini-v-konteksti 

[12] Projected Poverty Rate in Ukraine in 2022, M.V. Ptukha Institute for Demography and Social Studies https://idss.org.ua/arhiv/%D0%9F%D1%80%D0%BE%D0%B3%D0%BD%D0%BE%D0%B7%20%D0%B1%D1%96%D0%B4%D0%BD%D0%BE%D1%81%D1%82%D1%96%202022%20.pdf 

[13] Information and Computing Centre of the Ministry of Social Policy of Ukraine https://www.ioc.gov.ua/analytics/2 

[14] According to IOM estimates, 10% of IDPs rely on social benefits; however, this figure could be higher as the government has reduced the number of IDPs receiving payments (Resolution No. 332)

[15] Ukraine — Income, Social Protection and Coping Strategies in Ukraine — November 2024, IOM  https://dtm.iom.int/reports/ukraine-income-social-protection-and-coping-strategies-ukraine-november-2024?close=true 

[17]  Manifestations of Economic Inequality of the Population in Ukraine in the Context of Ensuring Sustainability, National Institute for Strategic Studies https://niss.gov.ua/doslidzhennya/sotsialna-polityka/problemy-rozvytku-maloho-ta-serednoho-biznesu-v-ukrayini-yak 

[18] Study on the Challenges Facing Small and Medium-Sized Businesses in the Third Year of the War, Advanter Group https://epravda.com.ua/columns/2024/09/09/719100/ 


bottom of page