Ukraine’s latest conscription law is hindering its economy

Transcript

A MARTÍNEZ, HOST:

Ukraine is in a predicament. It needs people to fight against the Russian invasion, but it also needs people to work to keep the economy afloat. Ukraine's latest conscription law is putting those two conflicting needs to the test. NPR's Ashley Westerman reports.

(SOUNDBITE OF METAL CLANGING)

ASHLEY WESTERMAN, BYLINE: At a construction site near Kyiv's famous Golden Gate, a new restaurant is taking shape.

SERHII CHUKHRAI: (Non-English language spoken).

WESTERMAN: "We're working on putting in the network," Serhii Chukhrai (ph) says, pointing to a mass of exposed wires sticking out of one of the bare concrete walls. He's the director of a construction company.

(SOUNDBITE OF DRILLING)

WESTERMAN: Even though the place right now is mostly plywood and scaffolding, Chukhrai says the five-month renovation project is actually on time. But that's down to luck. It was nearly impossible to plan because he never knew how many workers he'd have in any given day.

CHUKHRAI: (Non-English language spoken).

WESTERMAN: "Since the launch of Russia's full-scale invasion in 2022, the construction labor force in Ukraine has decreased by about 30 to 40%," Chukhrai says. Construction is just one of the sectors hard hit by the displacement of some 14 million Ukrainians, both internally and abroad, as well as the conscription of nearly a million more over the last 2 1/2 years. Millions of Ukrainians have returned home since 2022, but the labor shortage remains dire.

Chukhrai says the new conscription law that went into force in May has made things even worse. It requires Ukrainian men between the ages of 25 and 60 to update their military registration.

CHUKHRAI: (Non-English language spoken).

WESTERMAN: "A lot of the company's specialists went home," Chukhrai says, "and have refused to travel for work because they are afraid that moving around the country could make them targets for conscription." And the new law has made many men afraid of being on a company payroll, says Hlib Vyshlinsky, head of the Kyiv-based Centre for Economic Strategy, because that means businesses have to report the military status of their employees.

HLIB VYSHLINSKY: Especially among younger people, it was a very big fear that, like, I will be caught on the street and sent to the front lines and will be killed within a month.

WESTERMAN: That's not what's actually happening, Vyshlinsky says. Random mass mobilization would actually be bad for business. But the fear is overwhelming for working men.

VYSHLINSKY: They just decided to either, like, go to shadow economy...

WESTERMAN: OK.

VYSHLINSKY: ...Or to register as private entrepreneurs.

WESTERMAN: The uncertainty also has employers antsy - and planning difficult, says Tymofii Brik, the rector of Kyiv School of Economics.

TYMOFII BRIK: So it will influence productivity of the companies. It will influence their capabilities to pay taxes. So the anticipation is that the economy can lose something.

WESTERMAN: The government says it needs to know who is available to fight as the conflict drags on. Earlier this year, President Volodymyr Zelenskyy said he wants to mobilize nearly half a million more troops. And that's the problem.

BRIK = RECTOR, KYIV SCHOOL OF ECONOMICS: So Ukrainian society debates this a lot 'cause on the one hand, everyone understands we need people serving in the military. Otherwise we're going to lose this war. Another obvious observation - we need economy. We need money. We need to produce stuff to win this war. There is no good answer to this debate.

WESTERMAN: Economists say it's hard to know just how much the new conscription law will hurt the economy.

(SOUNDBITE OF DRILLING)

WESTERMAN: But Serhii Chukhrai is already thinking of ways his construction firm can deal with a shortage of workers.

CHUKHRAI: (Non-English language spoken).

WESTERMAN: "We have taken on projects across five Ukrainian cities," he says. "This gives us a chance to hire more people to work in their own cities because any male moving around Ukraine risks getting their papers checked and maybe sent off to the front."

Ashley Westerman, NPR News, Kyiv.

(SOUNDBITE OF EMAHOY TSEGE MARIAM GEBRU'S "SONG OF ABAYI") Transcript provided by NPR, Copyright NPR.