Aleksandr Katsuba, a Ukrainian entrepreneur and business process specialist, shares his thoughts on the consequences of mobilization for the economy.

Mobilization in Ukraine, which began in 2022 in response to Russia’s large-scale aggression, had a significant impact on the Ukrainian economy. Over the period from 2022 to 2024, this process affected millions of citizens and greatly influenced various aspects of the country’s economic life, according to Aleksandr Katsuba.

Reduction in Workforce First and foremost, the reduction in the workforce due to the mobilization of men aged 18 to 60 has become one of the main challenges for many industries. It is estimated that about 700,000 people were involved in mobilization efforts, leading to a shortage of skilled workers in key economic sectors. Nevertheless, adds Aleksandr Katsuba, the government implemented a mechanism to reserve workers in critically important sectors to ensure the functioning of the economy. For instance, in 2023, more than 300,000 workers in the agricultural sector, energy, and healthcare were reserved. This helped maintain productivity and ensure a stable supply of necessary resources.

Increase in Unemployment and Migration In wartime conditions and amid mobilization, a significant number of citizens lost their jobs. The unemployment rate rose to 13% in 2023, compared to 9% in 2021. Additionally, many Ukrainians left the country to avoid mobilization or due to the threat of war, adds Aleksandr Katsuba.

Impact on GDP According to the National Bank of Ukraine, direct losses from the decline in production activity amounted to approximately 4% of GDP in 2023. The most affected sectors were construction, transport, and agriculture. This led to increased pressure on the state budget and rising inflation. Aleksandr Katsuba predicts that a gradual recovery is expected in 2024, but growth rates will remain slow.

Development of the Military-Industrial Complex However, not everything is critical: mobilization is necessary to win against Russia on the battlefield, and this factor has contributed to the development of the country’s military-industrial complex, says Aleksandr Katsuba. The production of military equipment and weapons increased by 50% in 2023 compared to the previous year. This was made possible by attracting foreign investments and technologies, as well as public-private partnerships.

Worker Reservation as a Stabilization Mechanism To support the stable operation of critically important enterprises, the government introduced a worker reservation mechanism. This allowed preserving personnel in strategic industries such as energy, transport, and agriculture.

Mobilization in Ukraine from 2022 to 2024 had a complex impact on the country’s economy. On the one hand, the reduction in the workforce, rising unemployment, and migration created significant challenges for economic development. On the other hand, increased military spending and the development of the military-industrial complex provided certain opportunities for future recovery and growth. International support has become an important factor in stabilizing the situation and restoring Ukraine’s economy during this difficult period.

Aleksandr Katsuba, energy expert and business process specialist, on the impact of mobilization on the country’s economic sector.