Ukraine’s strong economic growth, increased demand for skilled laborers, and a workforce migration abroad are driving labor costs to new heights.
Recent studies and polls show that in Ukraine’s expanding economy, businesses are experiencing difficulty finding qualified labor.
Observers said quality professionals are scarce, particularly in Ukraine, and demand for highly trained employees has grown significantly faster than their availability.
The official labor force dropped 83,400, to 28.1 million betwen 2005 and 2007, according to Ukraine’s State Statistics Committee.
At the moment, financial specialists, such as chief accountants, analysts, directors, and comptrollers, are in highest demand, experts said.
Brain Source International, a top staffing firm, received an unprecedented amount of requests in recent months to fill accounting positions, said commercial director Tetyana Kolombet. Demand for marketing and sales directors has yet to slacken too, she said.
“There are few good professionals that the market can offer,” said Kolombet.
“As a rule, such professionals have two to three job offers to choose from.”
Meanwhile, the development of business and the economy has created an unprecedented need for positions in Ukraine, while pushing businesses further into the country’s regions, away from the capital.
The country’s rapidly developing construction and real estate sectors have boosted demand for other highly skilled professionals, such as certified architects, engineers, project managers, and property lawyers, Kolombet said.
The burst in foreign investment that followed the Orange Revolution of 2004 has not only increased demand for labor, but increased competition within certain sectors, observers said. Successful Ukrainian businesses, facing increasingly competitive foreign rivals, started demanding highly qualified human resources (HR) professionals in order to fill their growing payrolls.
Foreign and multinational companies have a structural advantage as they already have trained HR personnel upon arriving in Ukraine’s burgeoning market, Kolombet said.
The logistics sector needs more professionals, said Aleksei Yurchenko, general director of the Kyiv office of Hudson Global Resources recruiting company.
The increasing number of Ukrainian companies pursuing initial public offerings (IPO) boosted demand for IPO preparation consultants.
“Lately, the demand for IT specialists has increased, but the situation is the same,” Yurchenko said. He explained that many IT specialists left Ukraine seeking higher salaries offered abroad.
In Yurchenko’s view, companies have saturated the Kyiv job market and many will migrate this year into the regions, creating more job opportunities outside the capital.
Retailers are opening their supermarkets and hypermarkets in the regions due to increased competition in Kyiv, Yurchenko said.
“I think this year there will be a rather big demand for all types of retail specialists,” Yurchenko stressed.
Retail banking is developing rapidly in the regions, driving up the demand for employees, he added.
Head hunters and economists agree that all businesses are facing increasing hiring and retention costs due to several factors.
“In this situation, companies are often forced to hire employees who lack the necessary education and skills,” said Hanna Cherednychenko, an economist at the International Centre for Policy Studies.
“This means they have to spend both time and money to train these employees. As businesses can’t always afford this, sometimes they have to suffer the low quality of services these new employees provide.”
In fact, the new labor pressures have turned the market to the workforce’s advantage.
Kyiv has virtually no unemployment, in the sense that anyone wanting a job can find one, said Yuriy Perch, general director of the Ancor Ukraine recruitment agency.
Positions are available in both the blue-collar and white-collar sectors, he said.
Job seeker counter offers have significantly increased lately, Perch said. Retention costs are up too, many employers are raising salaries and benefits in an effort to stabilize workforce.
In the past, employers set the compensation levels, but today’s qualified and experienced job seekers are establishing their value.
According to survey results published recently by Big Four auditor Ernst & Young, attractive compensation packages, not just salary increases, are being used more regularly by medium- and large-sized foreign and domestic businesses in Ukraine to offset soaring inflation and fierce competition for qualified employees.
The Ukraine Compensation and Benefits Survey 2007/2008, an annual survey of business practices conducted over the past six years, reported base salaries increased an average 17 percent between August 2006 and July 2007, 5 percent more than expected. Meanwhile, 83 percent of companies also paid annual bonuses, the most popular type of variable compensation employed.
In the near future, Perch noted, the country will experience labor migration from Ukraine to Poland, a result of Polish legislation aimed at attracting workers from the East.
