Arup Banerji is the World Bank's Regional Country Director for Eastern Europe, including Ukraine. This op-ed was originally published in Euractiv on June 10, 2024.
Over eight hundred days into the brutal war, Ukrainians have endured unfathomable destruction, dislocation and desolation. Yet the resolve of Ukrainian families, the actions of Ukraine’s government, and the support of Ukraine’s partners have helped temper the devastation and slow the slide into poverty.
This is borne out by a just-released assessment of Ukrainian living standards by the World Bank called “Listening to Ukraine” based on an ongoing monthly phone survey of 1,500 to 2,000 representative households in Ukraine since April 2023.
The analysis finds that Ukrainians have been resilient in the face of economic adversity, have had deprivation moderated by reliance on other family members and the government, and have begun readjusting to the new realities.
Resilience
Poverty has increased sharply in Ukraine because of the war – including the almost 30 percent decline in GDP in 2022. Three out of every ten Ukrainians are now living in poverty – and there are 1.8 million more people in poverty in Ukraine today than in 2020.
The situation is grim. Almost two-thirds of families report being financially worse off than they were before the war, and 62 percent of households had neither savings nor labor income. The disruptions, property damage and financial insecurity have also affected mental health. Only a third of those surveyed felt their mental state is good or better, and about one in six Ukrainians consistently report being in a poor state of mental health.
Ukrainian families have shown their resilience to these deprivations. Faced without money to buy food, a third of surveyed families reported eating less diverse food, a fifth resorted to eating less, and one in ten survived by skipping meals altogether. But food insecurity among Ukrainian families eased by the end of 2023 – halving from its peak in June 2023 to around 11 percent by January – as food prices stopped climbing.
Ukrainians’ resilience was helped by widely available healthcare. Around 90 percent of health clinics remained open, even in areas under active hostilities. And families greatly appreciated the quality of healthcare they received. Only four percent rated health care services as unsatisfactory, an enviable rate for most countries.
Reliance
Many Ukrainian families coped by relying on family members and on transfers from the government. Social transfers – both social assistance and old-age pensions – helped cushion the blow from losses of jobs and of property. The transfers were shared within the family. Almost two out of three households where someone had lost a job also had someone receiving old-age pensions; and a third of households whose properties were damaged received social assistance.
The government played a crucial role in maintaining social transfers. Despite the ongoing war, old-age pensions were paid without any disruptions throughout 2023. For social assistance, more than 85 percent of recipients in any month said their benefits were paid on time. For IDP benefits, the corresponding number was 91 percent, including in conflict-affected areas. The poverty-reducing effects of these benefits were also helped by the government ensuring that their value kept pace with the soaring inflation in 2023.
For the poor, old-age pensions were particularly important, making up 60 percent of the incomes of the poorest families compared to just a quarter for the richest 30 percent.
Readjustment
The biggest readjustment faced by many Ukrainian families was employment, which sank as economic conditions worsened. Around a fifth of those working before the war lost their jobs – employed adults were around 40 percent of the labor force in 2023 compared to 51 percent before the war. The poorest, again, were hit the hardest, with almost a third of them losing their jobs.
Women in Ukraine were a focus of readjustment, as they largely kept their jobs. In 2023, around two out of every five Ukrainians – both women and men – were employed. But the employment rate for men fell more than a quarter from the pre-war rate, while the fall was much less pronounced for women. And those who retained their jobs benefited from rising wages in 2023, as the economy recovered from the depths of 2022. The average household income per person from wages increased by around 25 percent in real terms between the second and last quarters of 2023, helping those families with wage earners readjust further.
Some Ukrainians who had left their homes also returned. Return was strongly associated with whether they could find jobs again – returnees were most likely to report being employed and to have actively worked in the past week. By contrast, only 17 percent of people who remained displaced were actively working.
Ukrainian families also readjusted by adapting to how their children were educated. Because the government continued to regularly pay teacher salaries, lessons were delivered to 99 percent of enrolled students during the last quarter of 2023. But the mode of instruction was different where battles raged – in areas under active hostilities, 72 percent of enrolled students were instructed remotely, compared to just 7 percent in other areas.
Support
Ukraine’s enviable record of delivering public services, even in the midst of the battles, bolstered family resilience. In particular, regular and sufficient payment of old-age pensions, even though they just flowed to the elderly, buoyed the incomes of entire families. The same was true of social assistance and IDP payments, which made meaningful differences to protect families from poverty. Ukraine’s ability to keep public services running, through paying regular salaries to civil servants, teachers and health workers – and by using digital forms of payment – has been unique.
Beyond the bravery, creativity and dedication of Ukraine’s government, partners have also played a huge role. The generous flows of assistance from the US, Japan and European countries that financed government functioning (including through the World Bank’s PEACE project) was a critical factor in the moderation of poverty. As Ukraine enters the third year of war, these findings underline what it takes to continue to protect the wellbeing of Ukraine’s families.
