(Bloomberg) — Ukraine needs its refugee women home, and soon.
Bloomberg’s Most Read
Nearly a year and a half after President Vladimir Putin’s faltering invasion, the cost of resistance to Russia’s neighbor has been devastating. Unless the more than six million Ukrainian refugees return, some of this damage will be permanent.
Most men between the ages of 18 and 60 are not allowed to leave the country, which explains why 68% of Ukrainian refugees are women, with an even greater gender disparity among adults. According to Alexander Isakov of Bloomberg Economics, failing to convince any of the 2.8 million working-age women to return would cost Ukraine 10% of its annual pre-war gross domestic product.
That’s $20 billion a year in the worst-case scenario, which would easily exceed the European Union’s proposed four-year aid package for Ukraine, worth 12.5 billion euros ($13.9 billion) annually.
“For me personally, victory is when Ukrainian families unite in Ukraine, not abroad,” Deputy Economy Minister Tetyana Berezhna said in an interview at her office in Kyiv, which is part of a government zone surrounded by checkpoints. “So the most important task now for Ukraine, for the Ukrainian government, is to do everything possible to get women with children back to their husbands and unite in Ukraine.”
Even before the war, Ukraine’s weakest economic link was its demographics, with a fertility rate of just 1.2, among the worst in Europe. Tens of thousands of soldiers and civilians killed, and even greater numbers injured or traumatized for employment, further reduce the number of consumers and members of the workforce essential to recovery.
The government has ambitious post-war reconstruction plans that would double the size of the economy by 2032, but the economy ministry says Ukraine is 4.5 million short of the number of workers and entrepreneurs needed to meet that goal. It aims to bridge the gap with a mix of returning refugees – 60% of whom have degrees – and overseas talent.
To that end, it is working on incentives to bring women back into the workforce, including new labor legislation, attempts to close the gender pay gap, and grants to help spouses of those struggling at the start of businesses.
Taken together, Ukraine’s refugees and internally displaced people make up nearly a third of the 37.3 million people the government says lived in territory it controlled before Putin launched his all-out invasion. And while some of the internally displaced may still contribute to Ukraine’s economy, those now living abroad are beginning to find work, pay taxes and increase production elsewhere.
“Only people make an economy’s GDP,” said Oleg Gorokhovsky, chief executive of Monobank, a mobile-only banking service provider, in his office in Kyiv. “I’m afraid that a lot of smart and smart people, young people, especially women, will leave Ukraine.”
Women, he says, have a disproportionate impact on consumer demand because they tend to be the primary decision makers when it comes to household purchases. “Without them it will be super hard,” he added.
Yes, many refugees are likely to return over time. Yet there are few guarantees about their numbers, and persuading them to return becomes more difficult as the war drags on: it took almost a decade after the end of Europe’s last war, in Bosnia in the 1990s, for half of the conflict’s 2 million refugees and internally displaced people to return home, according to the UNHCR.
By Isakov’s calculations, a similar outcome for Ukraine, where half of all refugees return, would cost the economy $10 billion a year. This represents 5% of GDP, taking into account the fact that some husbands and families move to join the wives who decide to stay abroad.
The loss of labor is at least as great as the lost demand. So much so, says Oleksandr Zholud, the central bank’s chief monetary and economic policy analyst, that Ukraine is looking for ways to fill the coming shortfall beyond returnees. While immigration issues are often problematic elsewhere, “in Ukraine we already have a debate about the need for new foreign immigrants after the war,” he said.
Before that, however, the focus is on persuading refugees to return to places like Mykolaiv.
When Denmark agreed to lead a wartime harbor reconstruction program, Ambassador Ole Egberg Mikkelsen knew it would help restore the water and energy infrastructure to make the city livable again. He did not expect to build bomb shelters for children.
The project was approved on July 3 to restore up to 16 damaged schools, adding shelter where needed, “because families with children said they would not return to a town so close to the front lines without them,” Mikkelsen said.
Many people returned, reflecting the fact that the numbers are not static but represent a snapshot of constant flows. The city’s local government has done a lot to make the prospect more attractive: a fleet of new buses replaces those destroyed during the war; bus stops now have adjacent concrete bunkers where people can take shelter during alarms; there is heat and water in the pipes, even if it is not drinkable.
It’s still not enough to entice Daria Chestina to return from Brazil with her nine-year-old daughter, Varvara.
Varvara had lost contact with his friends after fleeing shelling and tanks rumbling through Mykolaiv. By the time they reached Curitiba, about 400 km (248 miles) south of Sao Paulo, she had become reclusive, angry and unwilling to eat.
Once there, Chestina, commercial manager of a large grain terminal in the port of Mykolaiv before the war, quickly found work in a raw materials consultancy firm based in Brazil. And Varvara is happy in her international school, taught in Portuguese and English.
Shestina’s mother has already returned to Mykolaiv to reopen her bakery, and she herself went there in May. But school bomb shelters are not enough to eliminate the threat of cruise missile barrages for Chestina, who once had to flee the northeast city of Luhansk in 2014 when Russia annexed Crimea and stoked an armed insurgency in eastern Ukraine. Donbas region.
“If I hadn’t had my daughter, I would already be back in Ukraine,” said Chestina, 31, who fears that young people like her, who speak a foreign language and have globally employable skills, will never return, draining a vital resource for building a new Ukraine. If people don’t come back, she says, then “why are we making this war?”
Some younger residents are returning to Mykolaiv, still just 70 km from the front lines, where reconstruction projects are creating a sense of progress, according to Mykola Kapatsyna, owner of Roadstead Terminal “Concord” LLC, a shipping company in the still-closed port. Kapatsyna, who works with the Danish government, says four kindergartens with bomb shelters have recently opened and are packed.
Even so, a disproportionate number of returnees are older or retired, and it is difficult for young people to find decent work, according to Kapatsyna. He estimates that it will take a good two years without interference from the Russians to get utilities and services back to normal, and that for now people will just have to decide for themselves if that’s enough to get back. “We have no other solution,” Kapatsyna said. “Even a huge budget cannot solve the problem.”
Valeriya Lyulko was a partner in a venture with two others in Kyiv before last year, helping foreign companies such as Paramount Global and Hasbro Inc. license products in Ukraine. One business partner went to fight, another stayed in Ukraine to keep the business afloat, and Lyulko left to take her son, now 12, to safety. Paramount arranged a job for him in Germany.
While the Germans have been very kind, the country is not Lyulko’s dream destination. She’s still getting used to filling out paper forms and checking her mailbox for mail, after Ukraine’s hyper-digitalized government services. And she’s not a fan of Germany’s stratified school system. Still, she is trying to convert her refugee document, which expires next year, into a more permanent work visa.
“People who have understood the work situation in Germany, the Netherlands, the UK or, like in any European country, are more or less planning to stay where they are at this stage,” says Lyulko. When asked if she planned to return home, the 42-year-old said there were still too many open questions. “Honestly, I don’t know,” Lyulko said, adding that most of those who return only speak Ukrainian or Russian, so they struggle to find work and fit in.
An official survey of 7,000 Ukrainian refugees in Germany, released on July 12, found that 44% intended to stay for several years or for good, up 5 percentage points from last summer. Three-quarters were taking German courses or had taken one, an important prerequisite for work.
Germany hosts approximately 1 million Ukrainian refugees. The largest number are in Poland, where Alona Sirant arrived from Khmelnytskyi in western Ukraine speaking only a few rudimentary words of the language.
Although a college graduate, the 29-year-old divorced single mother initially struggled to find work in a small supermarket. But then she asked the principal of her son’s new school if there was any work available. There were, and she became a teaching assistant.
In Ukraine, she had an uninteresting job as an office manager. But in Poland, she says, she found herself: she loves teaching and children, her son has friends and both are happy. She is in no hurry to go home.
“Of course, I wish I could go to Ukraine and visit my parents, but I’m fine here,” she says. “I don’t see any sense in going to Ukraine now. Those blaring sirens, those explosions… Nope.
–With help from Andrew Langley and Aliaksandr Kudrytski.
Bloomberg Businessweek’s Most Read
©2023 Bloomberg LP