Inclusive labour markets for job creation in Ukraine

Considering the complexity of the Ukrainian labour market, the Denmark-funded ILO program implements a comprehensive approach, organized around three key pillars. This initiative concentrates on upgrading the Ukrainian public employment services, empowering them to offer more efficient and inclusive active labour market policies. The program includes a substantial skills development facet, dedicated to diminishing the skills gap. This is achieved by aligning the qualifications of new labour market entrants more closely with private sector needs. Finally, the program dedicates itself to strengthening social dialogue mechanisms, targeting vital issues such as informal employment, wage inequality, and gender discrimination.

Since gaining independence from the former Soviet Union 27 years ago, Ukraine has faced challenges in generating sufficient employment opportunities to enhance the living standards of its population. The ongoing military conflict in Eastern Ukraine exacerbated these issues, resulting in a significant drop in the Gross Domestic Product by 16% in 2014 and 2015, a downturn from which the country is gradually recovering.

In view of the complex labour market situation back in 2017 the ILO has been entrusted by the Danish Government to implement a programme aimed to assist the Government and social partners in the improvement of labour market governance through strengthening employment services; enabling them to offer more effective and inclusive active labour market policies; better align skills development systems with market demand, and improve tripartite social dialogue.

Since February 2022, the Russian Federation’s large-scale military aggression against Ukraine has had devastating impacts on Ukraine’s economy and its people. The economic output has contracted by around a third. The most significant forced displacement of the population occurred since World War 2: in August 2023, nearly 6.2 million Ukrainian forced migrants were recorded globally, and over 5 million people had to relocate within the country. The success of the country's economic recovery and post-war reconstruction will require overcoming a significant labour shortage in addition to attracting large-scale investments.

In response to these challenges, the project has been repurposed to contribute to the early recovery of the labour market and to facilitate the better reintegration of internally displaced persons (IDPs) with the following priorities:
  1. Assisting the State Employment Service in implementing new service delivery models, tailored for wartime conditions
  2. Strengthening regional labour market governance by establishing local employment partnerships. This involves supporting relocated businesses, the reintegration of IDPs into labour market, offering entrepreneurship opportunities, reducing skills mismatches, and promoting employment
  3. Encouraging entrepreneurship by providing support and resources to foster new business initiatives
  4. Ensuring continuity of social dialogue during the war by enhancing the capacities and resilience of local and regional trade unions and employers' organizations, thereby facilitating effective communication with their members.