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How the EBRD is tackling brain drain caused by Russia’s war on Ukraine

By Vanora Bennett

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Russia’s invasion of Ukraine has not only caused heavy devastation of infrastructure and production capacities but has also led to unprecedented losses of Ukrainian human capital, a note published this week by the EBRD shows.

Many people have had to leave their jobs and homes since the war began, the note says, resulting in a ‘brain drain’, disruption to education and skills-matching, and the suspension or destruction of vital services and infrastructure that enable people to work and build up their human capital.

The note, titled "The War on Ukraine and its Effect on Human Capital: Early Evidence and EBRD response", draws information from surveys conducted by the National Bank of Ukraine (NBU), the United Nations High Commissioner for Refugees (UNHCR), the United Nations Office for the Coordination of Humanitarian Affairs (UNOCHA) and the International Organization for Migration (IOM) to assess the scale of displacement and loss. EBRD economists and Gender and Economic Inclusion specialists then outline the EBRD’s response so far to shifts in human capital, and suggests ways in which future interventions can help to persuade many of those displaced by the war to return to Ukraine once security conditions allow.

Early evidence and estimates of the scale of migration and labour force displacement suggest that 35 per cent of Ukraine’s pre-war population are now living away from home. Of a 2021 population of 41.4 million, an estimated 7.8 million have left Ukraine and another 6.5 million are internally displaced. Almost one in four of the pre-war female population is now abroad, most of whom were employed before leaving the country, versus 13 per cent of males. Most refugees have not found work in the host countries and many face financial difficulties.

Many others have also lost their lives or sustained injuries that prevent them from working.

So far, the EBRD response includes significant support for client companies to sustain people’s livelihoods and enhance human capital resilience throughout the war. This ranges from support for small and medium-sized enterprises (SMEs) affected by the war through EBRD investments into partner financial institutions and equity funds.

The Bank is also providing emergency liquidity support to large employers (particularly in the natural resources, energy and agribusiness sectors) to help sustain workers’ livelihoods, along with financial and technical support to larger corporate clients for managing their human resources and opening up employment avenues for those most affected.

The EBRD is engaging with major state-owned enterprises and private-sector clients to sustain access to vital services for citizens, thus helping to preserve their human capital.

Lastly, the Bank is working with policy partners to address the most pressing human capital needs and safeguard equal opportunities. A comprehensive reconstruction of the country, once conditions allow, will be needed to persuade refugees to return and avoid long-term inequalities.

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