Ukraine's civilian workforce will shrink by about 1mn to 11.9mn by end-2030 even if refugees come home, the KSE Institute said in a report published on October 26.

The workforce falls in all of the think tank's scenarios, from 12.9mn at the start of 2026 to between 11.5mn and 12.2mn at the end of 2030, depending on how many refugees return and how quickly demobilised soldiers find civilian jobs. The working-age population, aged 15 to 64, falls from 19.6mn in 2026 to 16.4mn in 2040 in the moderate scenario, a drop of 16%, and by 26% in the pessimistic one.

"The main conclusion is that the workforce will shrink under all scenarios - even with substantial returns and the rapid integration of veterans," the authors wrote in the study, titled "Demography as a limit to Ukraine's post-war growth".

The numbers put a size on the problem Ukrainian companies already report every month. Staff shortages were the biggest obstacle for 69% of businesses surveyed in August, and Economy Minister Oleksiy Sobolev said in May that Ukraine would need 4.5mn more workers over the next decade to sustain 7% annual growth. KSE's projections underscore the scale of the challenge: post-war growth would depend on each worker producing far more.

A productivity test

"Labour is the key constraint on Ukraine's post-war growth trajectory," the report says.

KSE set its workforce projection against the GDP path in its own Ukraine Macroeconomic Handbook Q4 2026, which has real GDP contracting by 0.6% in 2027 before growing by 4.4% in 2028 and 5% in 2029. With civilian employment falling by an average of 2.1% a year over the same period, output per civilian worker would have to rise by 5.1% a year, leaving it about 16% higher in 2029 than in 2026.

That is more than two and a half times the 1.9% a year Ukraine managed in 2011-2021, a pace the country last achieved during the boom years before 2008. Almost all of the effort falls in 2028 and 2029, when output per worker would need to grow by 7.2% and 6.4%. The 5.1% is a floor: GDP now includes a much larger defence sector, valued mainly through soldiers' pay, and that output will shrink as the army is demobilised.

Ukraine starts from a low base. Real GDP was 79% of its 2021 level in 2025 and KSE expects it to slip by a further 0.3% this year, while civilian employment averages about 11.5mn, or 75% of the 15.4mn in 2021. In 2021 a Ukrainian worker produced about $44,000 a year at purchasing power parity, the same as in Moldova, 79% of the Bulgarian level and about 54% of the level in Poland, Romania and Lithuania. Output per hour worked was roughly half of Poland's and a quarter of Germany's.

Fewer people, and older

Some 29.4mn people lived in government-controlled Ukraine on January 1, 2026, with a further 6.5mn Ukrainians abroad, of whom 5mn are war refugees and 1.5mn other migrants. The resident population within today's front lines has fallen by about 4.3mn, or 13%, since the start of 2022, mostly through emigration, and deaths have outnumbered births by about 1.2mn. More than a fifth of residents are aged 65 or over, and there are 114 women for every 100 men.

Ukraine already has some of the worst demographics in the world, and KSE's model starts from a fertility rate of just 1.04 children per woman, among the lowest anywhere. Natural decline is the largest and most predictable driver: the model expects 2.1mn-2.8mn births against 7.1mn-7.4mn deaths in 2026-2040. By January 1, 2041 the resident population falls to 26.7mn, 25mn or 22.3mn in the three scenarios, and in the moderate case the number of people aged 65 or over for every 100 of working age rises from 31 to 39.

The scenarios differ on five assumptions: when the war ends, how far fertility recovers, how many refugees and migrants return, and how much of the life-expectancy gap with five poorer EU members Ukraine closes. Migration does most of the work, with returns alone explaining more than half of the 4.5mn gap in resident population between the best and worst cases.

KSE Institute demographic scenarios for Ukraine. Resident population covers government-controlled territory only. Source: KSE Institute.

Returns help, but not enough

Without any returns the civilian workforce would fall by about 1.5mn, or 12%, to 11.5mn by end-2030. Emigration is the largest single drain, costing about 0.8mn workers: the moderate scenario has about 1.3mn people leaving in 2026-2030, including a one-off wave of about 0.6mn in 2028 when martial-law restrictions on men leaving are lifted and families reunite abroad. Ageing removes about 0.4mn more as the large cohorts born in the 1960s pass the retirement age of 60, and deaths up to a further 0.4mn.

Returning refugees claw back about a third of the loss, adding about 0.5mn workers by end-2030 in the central case. Nobody returns before 2028 in the model, as EU temporary protection runs until March 2028, and post-war departures still outnumber returns that year, so net migration turns positive only in 2029.

"Returns will matter, but will not be able to reverse the decline before 2030," the report says. "Each person who returns will add less than half a worker." Of every 100 people who come back, about 46 will be in the labour force by end-2030; the rest are children, pensioners or adults who are not working or looking for work.

How fast veterans go back to work changes the 2030 workforce by about 0.2mn, as much as the lowest return scenario adds. "Veteran integration is labour-supply policy, not just social policy," the authors wrote.

Drones, veterans and tax breaks

KSE wants the model of Brave1, the defence-tech cluster set up in April 2023 that has handed out more than 1,000 grants worth UAH6.2bn ($136mn), extended to dual-use goods such as farm and logistics drones, communications, energy systems and software, to keep engineers and capital in high-productivity work. Rehabilitation, retraining and hiring subsidies for veterans should be ready before mass demobilisation begins, and should be open to people with disabilities, internally displaced people and the long-term unemployed too.

Raising participation by women, older people and people with disabilities is worth about 0.2mn workers for every percentage point. The authors also propose debating a three-to-five-year cut in personal income tax for returning emigrants, along the lines of schemes in Portugal, Italy and Greece that exempt half of a returnee's income for five to seven years, while weighing whether it is fair to those who stayed and worked through the war.

KSE has warned before that fewer Ukrainian workers are supporting more people, with employment down to 10.7mn in 2025 against 10.2mn pensioners, and its president Tymofiy Mylovanov said a year ago that the population could fall to as few as 10mn-15mn in a worst case. Ukraine is an extreme case of a global baby bust, made worse by war and emigration, and the new projections show that even a peace deal in 2027 leaves the country with fewer workers than it has today until well after 2030.