Ukraine’s Dilemma Amid the Pandemic: Depopulation and its Effects on the Ukrainian Economy

BY MARK TEMNYCKY

Ukraine endured a series of hardships after the Euromaidan protests. From the annexation of Crimea and the Donbas conflict to various economic problems and the coronavirus pandemic, the Eastern European state has yet to overcome its recent national security issues. Threading through all these problems, however, is another issue: Ukraine’s demographic decline and the impact it will have on the Ukrainian economy.

Following the collapse of the Soviet Union in 1991, Ukraine held its first census as an independent country in 2001. At that time, 48.5 million people resided in Ukraine. The Eastern European state then conducted its second census in 2019. The new results found that 37.3 million now lived in Ukraine, meaning the population had declined by 11.2 million. Critics, however, were quick to question these findings. This was because the Ukrainian government opted to conduct the 2019 census electronically rather than through traditional channels. The 2019 census data were gathered by obtaining records from mobile operators in Ukraine, registered Pension Fund users, and the State Register of Ukrainians who paid taxes.

The 2019 census also did not collect data on eastern Ukraine and Crimea. According to recent estimates from the Ukrainian government, four million people reside in Donetsk oblast and two million live in Luhansk oblast, including both government-controlled and non-controlled areas. Another two million are believed to inhabit the Crimean peninsula. If these figures are correct, roughly eight million people were not accounted for in the 2019 census, meaning Ukraine’s current population is closer to 45 million—still a loss of 3.5 million from the 2001 tabulation.

Based on this trend, the United Nations predicts that the country will lose a fifth of its population by 2050.

What Has Caused Ukraine’s Depopulation Problem?

First, Ukraine has one of the highest crude death rates in the world. Poor health conditions and the widespread abuse of alcohol and drugs have led to a rise in Ukraine’s death rate. The country also has the highest global mortality rate from infectious diseases such as tuberculosis, meaning that inadequate medical care has contributed to the rise in Ukraine’s mortality rate. The coronavirus pandemic has only exacerbated these health care issues.

Second, Ukraine’s fertility rate has declined. According to the World Bank, Ukrainian families were having two children per household during the 1990s. Recent economic hardships, however, have forced families to have only one child per household. The effects of Ukraine’s struggling economy and the Donbas conflict have also discouraged some young couples from having children, and this has contributed to the decline in Ukraine’s fertility rate.

Third, emigration has played a significant role in Ukraine’s population decline as some Ukrainians have sought financial stability abroad. According to recent data from the UN, Ukrainians have moved to countries within the European Union, such as Germany, Italy, and Poland, as well as to non-EU states, including the United States and Russia. At the height of the Donbas conflict in 2016, the average monthly salary in Ukraine was roughly US $200. While the monthly average eventually rose to about $450, it is still difficult to live on this wage. In contrast, per the Organization for Economic Cooperation and Development, the average monthly salaries in Germany, Italy, Poland, and the United States in 2016 were $4,060, $3,172, $2,163, and $5,180, respectively. Meanwhile, according to the Carnegie Moscow Center, the average monthly wage in Russia in 2016 was just over $500, which was still more than double the monthly average in Ukraine in 2016. Based on these figures, it is understandable why thousands of Ukrainians have migrated to these countries in search of a better standard of living.

Should Ukrainian workers continue to move abroad, Ukraine can expect to see a smaller workforce. Fewer workers will result in slower economic growth as not as many goods and services can be produced and consumed, and the Ukrainian economy will stagnate.

Furthermore, as some Ukrainians permanently relocate, the number of pensioners in Ukraine is expected to eventually exceed the number in the workforce. This imbalance is expected to put an additional strain on the Ukrainian economy to provide for these retirees.

Compounding the demographic problem are the economic effects of the coronavirus pandemic. The International Monetary Fund has predicted that Ukraine’s GDP will decline by 8 percent due to COVID-19, meaning the combined economic impact of a waning population and the coronavirus pandemic may be catastrophic for Ukraine.

Resolving the Depopulation Crisis

With its economy at stake, how might the former Soviet republic overcome its depopulation problem?

A first step is to address the poor health conditions that have led to an increased mortality rate in Ukraine. A government-backed program to encourage Ukrainians to cut back on alcohol and drug consumption should see an overall improvement in national health. Providing better medical care for chronic infectious diseases such as tuberculosis would also improve morbidity and mortality rates while enhancing the standard of living in Ukraine.

Second, several Ukrainians cite corruption in Ukraine as a reason for moving abroad. Many of the ambitious anti-corruption reforms envisioned in 2014 have not yet been fully implemented. If the Verkhovna Rada were to pass meaningful anti-corruption reforms that improved citizens’ quality of life, this might encourage Ukrainian emigrants to return to Ukraine.

Third, the Ukrainian government must encourage its emigrants to come home. For example, Ukrainian president Volodymyr Zelensky has proposed that the government provide loans to workers who return to Ukraine to start new businesses. Should this program successfully incentivize Ukrainian émigré business owners to return to Ukraine, this could help boost the Ukrainian economy.

Overall, Ukraine’s demographic decline is a significant issue for the country. Persistence of this problem will put a considerable strain on the Ukrainian economy, compounded by the effects of the coronavirus pandemic. To reverse the decline, Ukrainian officials must improve their country’s health standards, pass real anti-corruption reforms, and incentivize workers to remain in Ukraine. Otherwise, Ukraine can expect an economic crisis with devastating effects.

The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute.