With 10.7 million workers in Ukraine in 2025, there were 10.2 million pensioners, 1.7 million veterans (2.4 times more than in 2021), 3.6 million people with disabilities, and 4.6 million internally displaced persons. This means that the demand for financial support from the state has increased significantly in recent years. Meanwhile, the number of employed Ukrainians whose work fills the state budget through taxes has decreased by 1.3 million since 2021. As long as social funds receive revenues from social security contributions from military salaries, the situation is temporarily better. Thus, in 2025, $28.2 billion was accumulated for social protection. But after the war, salaries in the defence sector are likely to be reduced. And with them will come a reduction of revenue for payments.

Pension expenditures in 2025 remained practically unchanged. Although the number of pensioners decreased, indexation and increase in the average size of payments levelled out the difference. Nevertheless, pensions, the minimum wage established by law, and the subsistence minimum are still lower than the actual cost of living. Due to inflation (11.2% in 2025), the real subsistence minimum has risen to $228. Under the law, the minimum is $70, and the minimum wage is $192. More than half of pensioners receive almost half of the real subsistence minimum. For example, the average pension is $104, and the minimum pension is $57. Therefore, 27.6% or 2.8 million pensioners are forced to continue working.

The labour market is experiencing two opposing trends at the same time: falling employment and relatively high unemployment, even though that’s going down from 20.6% in 2022 to around 10-11% in 2025. The main problem is that employers’ needs and candidates’ skills or place of living don’t match up. Comprehensive retraining and employment of veterans and representatives of vulnerable groups would improve the situation. Only 21.8% of veterans who applied to the State Employment Service found employment in 2025.

Changes due to the mass return of Ukrainians from abroad are now unlikely. In 2025, ∽5.9 million of our citizens were outside Ukraine as refugees. 90% of them are in EU countries. 75% of refugees are women and children. This shapes the labour market not only today but also sets negative trends for the coming decades. They require the state to develop more long-term programmes for return, support for integration, interaction with citizens abroad, simultaneous employment and residence in two or more countries. At the same time, internal migration raises questions about changes in the allocation of funds between local budgets. Mass movements of citizens who need state support constantly update the amounts that regions need for social payments.

The education system also needs updating in order to properly prepare the next generation of specialists. Recovery from the shock of 2022 is still incomplete – funding in 2025 was 17.4% lower than in 2021. The number of students is 12.2% lower than in 2021. The number of students is 12.2% lower than in 2021. The number of pupils planning to apply to universities is decreasing. Young people’s demand for scientific subjects is falling. This could create a critical gap between the actual number of STEM specialists and the need for them to support recovery. Without sustained investment and targeted restoration of education, a crisis in the post-war labour market is highly likely. The state needs to pay special attention to protecting the quality and results of education through targeted support and funding that is focused on results rather than ‘improving efficiency.’

In 2026, the government will prepare a package of structural reforms to respond to these challenges. Labour market reform is expected to be a key priority. The new Labour Code should improve the participation of vulnerable groups, particularly women with children, in the labour market. Pension reform will help to improve the adequacy of pensions and reduce the risk of poverty. A new methodology for calculating the subsistence minimum will better reflect actual living costs and improve the regulation and distribution of social payments.

For more details on reform content and impact, as well as the state and prospects of Ukraine’s human capital, see the full version of the Human Capital Chartbook from the KSE Institute: https://shorturl.at/IBsvF