If 3.3 Million Ukrainian Refugees Never Come Home? The Economics Of Post-War Life Choices
According to the State Border Service, the number of people leaving the country is 1.6 million more than the number of border crossings to Ukraine. However, this data is incomplete because it does not take into account persons who left the country not through official checkpoints, but, for example, through temporarily occupied territories or via Russia.
Hard to calculate
In addition, the data presented by domestic border guards is strikingly different from the data obtained from the EU countries with which Ukraine shares borders. The Office of the United Nations High Commissioner for Refugees (UNHCR) estimates that the number of people who crossed the western border of Ukraine after February 24, 2022 is 3.8 million.
UNHCR also provides estimates for people who crossed Ukraine's border with the Russian Federation and Belarus, referring to information from these countries. According to this data, 2.9 million Ukrainians left Ukraine via this route. However, only 1.3 million people have remained there since. Many Ukrainians used countries like Russia and Belarus to travel to other, more hospitable countries.
The number of migrants can also be gauged by the number of persons with refugee status. In June, there were 6.3 million such Ukrainians - mainly in Central and Eastern Europe.
Most of the refugees, unsurprisingly, are women and children. The largest group of Ukrainians in the EU are women aged 35-49. About 70% of them have higher education.
According to the CES survey, 63% of Ukrainian citizens currently residing abroad are determined to return home. However, CES anticipates that some Ukrainian families separated by the war will be reunited outside of Ukraine. As a result, after the end of the war, 100,000-745,000 thousand citizens, mostly men, could leave the country.
September 15, 2022, Ukraine: Refugees from south Ukraine are seen hugging during the evacuation of civilians at a refugee centre in Zaporizhzhia.
Andriy Andriyenko/ZUMA
GDP in free fall
The migration of millions of Ukrainians is expected to deal a heavy blow to the domestic economy. And if a significant population of the refugees never returns home, the impact of the blow will only worsen over time.
In 2022, Ukraine's GDP fell by a record 30.4%. It is, however, impossible to say how much of this decline was caused by the fact that 6 million Ukrainians are now abroad. Last year, Ukraine also experienced major losses in production capacity, access to sea exports, and power outages.
Ukraine is already feeling the impact of migration on economic activity
According to estimates by the CES together with the Center for Economic Recovery and the Institute of Demography, as a result of the non-return of migrants, Ukraine's labor force may drop by 3.1-4.5 million people by 2032. As a result, economic losses during this period may cumulatively reach 113 billion dollars.
"Due to the low birth rate, it will be impossible to compensate for these losses by natural population growth,” researchers from the CES argue. “A well-thought-out policy for the return of migrants is extremely important to minimize such losses."
Ukraine is already feeling the impact of migration on economic activity. Demand for goods is shrinking, preventing companies from expanding.
However, even if such problems can be solved and security risks minimized, it would still be difficult to increase export-oriented production due to the depleted labor force.
Given that the level of education of Ukrainian refugees abroad is higher than the average in Ukraine, highly qualified workers will be scarcer. This can become an obstacle to the development of more complex, technology-led production.
Depending on how many Ukrainians do not return home after the end of the war, economic losses due to the drop in production and consumption could range from 2.6% to 7.7% of GDP per year. In the long run, these losses will only increase as children of refugees who have gone abroad also do not enter the labor market.
If the non-return of refugees portends a catastrophe for the economy of Ukraine, it is a real gift for the countries where they have found refuge. The governments of such countries want Ukrainians to stay and work there in order to grow their economies. As a result, the future return of refugees will require dialogue with partner countries and joint policies with them.
Job needs
The end of the war ranks first among the factors that refugees say are critical if they are to return home. Other security improvements, such as the absence of hostilities and air strikes and the de-occupation of one's hometown, were among the most common assurances that would encourage them to come back.
However, the war isn't the only thing that stands in their way; the efficiency of post-war economic recovery is also vitally important.
For example, 28.3% of Ukrainian refugees interviewed mention the availability of well-paying jobs among the conditions for their return to their homeland. Another 20.7% expect an improvement in the standard of living in Ukraine. There are even those who expect the state to provide them with financial assistance after returning home.
In order to facilitate the return of refugees, the state needs to implement a comprehensive policy to catalyze reform and attract investments, particularly in the restoration of destroyed infrastructure. This will also require the help of partner countries.
The post-war recovery could stand in the way of Ukrainians returning from abroad
"While European countries will enjoy a direct economic benefit if Ukrainians remain abroad,” the CES argues, “there will also be an indirect benefit for Europe if they return home. The return of refugees will strengthen Ukraine's economy and allow it to invest more in security and recovery, which means it will depend less on European funds."
Among other recommendations, the Central Committee of Ukraine has called for rapid post-war reconstruction, providing aid to people from the most severely affected regions, simplifying the reintegration of children into the national education system, and opening the EU labor market for Ukrainians after the war.
