The ongoing invasion of Ukraine by Russia has put the labor markets of several countries — including both nations involved in the conflict — at risk.
Ukraine’s information technology sector had been booming. Its IT export volume increased 36% last year, according to research from the IT Ukraine Association [1], an IT recruitment firm. But the country’s outsourcing of tech services, which has bounded ahead in recent years with customers in Europe and the US, is in peril.
Katie Gove, an analyst at researcher Gartner Inc., estimates there are 85,000 to 100,000 export service workers in Ukraine, employed predominantly in software engineering and other IT services, the Wall Street Journal [2] reported. Ukraine is a hotbed of talent, she says, in part due to its strong academic tradition, which nurtures skills such as software engineering and application development.
The conflict “is going to have massive repercussions because Ukraine is obviously a huge country, a huge IT delivery nation,” said Kerry Hallard, chief executive of the Global Sourcing Association, a UK-based trade group. Technology workers in the country support fields including banking, insurance and other financial services operations.
Following the Feb. 24 invasion, internet outages occurred across Ukraine, according to a monitoring dashboard run by the Georgia Institute of Technology. However, SpaceX billionaire Elon Musk on Feb. 26 announced that the company’s Starlink satellite broadband service is available in Ukraine and SpaceX is sending more terminals to the country.
Getting Workers to Safety
But with fighting intensifying and Russia ramping up its assaults, working is likely the last thing on the minds of Ukrainians — or their employers. Rather, international firms are scrambling to get workers and their families to safety, CNN reported [3]. Some tech firms have offered financial support to workers, set up hotlines and arranged for travel or housing for those fleeing the escalating conflict, according to interviews and company statements.
For example, Israel-based Wix, a global tech company, planned for weeks for worst case scenarios for its 900 employees in the country. About two weeks ago, when Russia had amassed [4] troops along the Ukrainian border, Wix offered to relocate dozens of employees to its office in Krakow, Poland; for the rest, it offered chartered flights and hotel accommodations in Antalya, Turkey. Nir Zohar, Wix’s president and chief operating officer, told CNN Business that 45 employees and an additional 45 family members took the Krakow offer. Another 350 people, of which 200 are employees and the others family members, went to Antalya.
Other companies operating in Ukraine as well as Russia have started putting contingency plans into place, according to the WSJ [5]. Executives began closing offices and factories Thursday, ensuring staff were safe and sending some to the Polish border. Companies such as Nestlé have closed their factories.
European Union
The EU is Ukraine’s largest trading partner, accounting for more than 40% of its trade in 2019, according to SIA’s recently published report, “International Talent Mobility [6],” by Fiona Coombe, director of legal and regulatory research. Since 2014, the number of Ukrainian labor migrants moving to the European Union increased significantly. In 2019 alone, Ukrainian nationals received 660,000 residence permits for remunerated activities across the member states, the largest external labor force in the EU.
Meanwhile, more than half a million refugees [7] had fled Ukraine as of Feb. 28. It is unclear how the continued invasion could impact labor migration for the EU.
Russia’s Economy Targeted
The Russian labor market as well as its overall economy are also at risk. Following the invasion, the EU, US and UK approved wide-ranging sanctions [8] against Russia, which they steadily increased over the following days. On Feb. 26, they announced certain Russian banks would be removed from the SWIFT messaging system, which facilitates trillions of dollars of international payments between institutions. While intended to spare Russia’s oil and gas exports, the sanctions “will severely damage the Russian economy and markedly constrain its ability to import and export goods,” according to the Associated Press.
Russian tech companies are poised to suffer from the sanctions, which could reduce their access to critical technologies, according to Dow Jones.
European Commission President Ursula von der Leyen said that sanctions will hit “strategic sectors of the Russian economy,” by blocking access to technologies and markets in response to Russia’s attack on Ukraine.
In September 2020, the commission published its New Pact on Migration and Asylum, a mechanism for attracting skills and talent to the EU. The New Pact proposed adopting the blue card directive, by which it aims to attract as well as retain qualified workers, in particular those that are needed in the sectors that are facing skills shortages.
In 2014, when Russia seized and annexed Crimea, Ukraine’s pro-Russian President Viktor Yanukovych was also ousted and the economy of Ukraine took a hard hit [9]. In 2020, Ukraine’s unemployment rate stood at 9.48%.
SIA’s report on the Ukrainian market [10] for European and global corporate members showed that the country’s staffing market saw strong growth since the country’s last economic downturn in 2013. However, since then, the country has faced the Covid-19 pandemic and now the war.
The information in this article is the latest available at press time.