Abstract: In the wake of Russia’s full-scale invasion of Ukraine and the ensuing war, there has been a significant transformation in the socio-economic and political landscapes of Europe. The continent and the rest of the world have grappled with devastating economic consequences. At the same time, EU member states and other European countries have had to address the influx of Ukrainian refugees. More than 6 million Ukrainians, predominantly women and children, have fled their country to escape widespread destruction. As we approach the two-and-a-half-year mark since the onset of the war, we now have the opportunity to evaluate its wide-ranging effects. This article focuses on the Ukrainian refugee crisis in European countries, delving into the impact on the workforce and the substantial costs incurred by host countries to accommodate and provide public services to a large number of refugees. Housing, schooling, childcare, specialised services for vulnerable children and adults, and the issue of human trafficking pose additional challenges to all host countries. By examining the economic costs, potential positive impacts, and social and political challenges, this article underscores the complexity of the crisis and presents a range of policies and intervention measures.
1.0 Background
The Russia-Ukraine war has led to a significant humanitarian crisis in Ukraine and neighbouring European countries. Indiscriminate shelling, air strikes, and ongoing fighting have caused extensive damage to public and private property, infrastructure, and healthcare facilities. Over three million people have been displaced within Ukraine, while more than 6 million Ukrainians have sought refuge in neighbouring European countries since Russia's full-scale invasion of Ukraine in February 2022. The influx of refugees has placed immediate pressure on host European nations, leading to broader socio-economic consequences. This article critically analyses the ongoing crisis faced by EU member states and other European countries due to this crisis.
2.0 Distribution of Ukrainian Refugees in Europe
The distribution of Ukrainian refugees in European countries is outlined in Table 1, with Russia being the top destination. Many Ukrainians were compelled to relocate to the east due to limited options, and some were forcibly moved to Russia by the occupying army. The UNHCR has expressed concerns about their legal status and well-being, citing a lack of records and access to information. In Western Europe, Germany hosts the largest number of refugees, followed by Poland. Collectively, EU member states provide shelter to 4.1 million Ukrainian refugees.
3.0 Arrival of Ukrainian Refugees in the EU Countries:
Temporary Protection Directive was established to provide immediate and short-term shelter to individuals from non-EU countries during extraordinary situations and humanitarian crises. The Directive was introduced in 2001, following the Yugoslav wars in the 1990s, which involved genocides and ethnic cleansing, leading to a huge influx of refugees in the EU member countries. The number of Ukrainian refugees turned out to be significantly higher than those from the former Yugoslavia, requiring special measures. It became evident that EU member states needed to swiftly offer shelter to Ukrainian civilians fleeing their country due to an imminent threat to their lives. Following the standard asylum process would have put immense pressure on the existing system of the member countries, mainly due to the large number of applicants. Consequently, in March 2022, just one month after the conflict began, the EU member states unanimously agreed to activate the Temporary Protection Directive. Although there was initial opposition from Hungary, eventually, all member states agreed to trigger the Directive, which was never used before the Russia-Ukraine war.
The Temporary Protection Directive aims to expedite supportive measures by fostering collaboration between member states during a large-scale refugee crisis. Temporary protection is distinct from asylum. It can usually be applied for three years. The Directive helps people obtain fast-tracked residence permits and have access to social services, unlike other asylum seekers who typically go through tedious bureaucratic processes. Children have the right to access education services, while adults are allowed to work. Hence, the Directive offers opportunities for social integration and financial independence. In so doing, the Directive protects the rights of people by arranging urgent measures, including special provisions for the most vulnerable people who suffer from mental trauma and physical injuries due to a conflict.
Many experts reflect on the Bosnian refugee crisis, which led to hundreds of thousands of refugees mainly arriving in five European countries: Germany, Denmark, Austria, the Netherlands, and Sweden. These countries applied temporary protection measures to facilitate the settlement of Bosnian refugees. However, there were marked differences in legal status, access to labour markets, integration measures, and financial support, as shown in Table-2. On the contrary, the EU Temporary Protection Directive ensures consistent policies and measures and a collaborative approach to tackling the crisis.
4.0 Economic Impact
The economic impact of Ukrainian refugees in different countries is expected to vary as we enter the third year of the crisis. Up until February 2024, Germany spent approximately 23.7 billion euros on Ukrainian refugees, the highest amount among all host countries. Poland, in second place, and the Czech Republic had the third-highest estimated cost, amounting to around 5.8 billion euros. The costs include expenses for housing, healthcare, and social services. The British Government, for instance, offers £650 per month to every household accommodating Ukrainian refugees, in addition to arranging temporary housing.
There are differences in opinions and projections on Ukrainian refugees’ contributions to a host country’s economy. For instance, some scholars argue that the possible economic impacts may depend on the capital and labour markets of the host country. When there is a higher availability of labour, real GDP generally increases, particularly in nations that can build more capital assets to support this expansion. Nevertheless, production could be reduced in countries that struggle to accumulate capital quickly enough. According to this assertion, Western European countries will likely yield positive impacts from Ukrainian refugee labour in the medium to long term as they have a more robust capital structure. However, labour market integration is simultaneously a crucial driver and a significant challenge in generating a positive economic impact for a host country. According to a study by the IMF and surveys conducted by the UN, it is expected that Ukrainian migrants are likely to contribute to a 2.2%–2.3% increase in output in Estonia, Poland, and the Czech Republic and a 0.6%–0.65% increase in Germany by 2026, assuming all other factors remain constant.
It is estimated that 69% of the Ukrainian refugees have tertiary educational qualifications, significantly higher than the EU workforce (33%)[i]. However, it has been noticed that in most cases, Ukrainian refugees only managed to secure low-skill jobs. That said, many refugees secured employment in the first year, as shown in Figure 3. Germany stands out as a top destination for many Ukrainian refugees, primarily because of its strong job market. Nevertheless, nearly 60% of the Ukrainian Refugees in Germany encounter language barriers. Even with a well-established integration process, many struggle to secure employment seamlessly[ii].
As mentioned, Poland has the second-largest number of Ukrainian refugees. Deloitte conducted a study on Ukrainian refugees’ impact on the Polish economy. Their economic modelling shows that Poland’s GDP gains are reduced due to increased competition in the labour market. The unemployment rate slightly increased by 0.18-0.3 percentage points in 2023. Additionally, this effect slows down real wage growth by 0.65-1.15% in 2023.
However, Poland has a long history of Ukrainian migrant workers. Specific legislation permitted Ukrainian citizens to work in Poland for up to 6 months without a work permit. In 2015, the Ukrainian currency experienced a significant decrease in value due to the conflicts in eastern Ukraine, prompting a wave of Ukrainian immigrants to seek more stable employment in Poland. By 2021, approximately 753,000 Ukrainian citizens were legally employed in Poland, coinciding with a decline in the working-age population of Poland. The peak of Polish citizens aged 20-64 was in early 2010, with 23.5 million people. From that time, there has been a decrease of 2.6 million individuals. 40% of the Ukrainian refugees are working-age women, offering the potential of significantly boosting the workforce. Hence, Ukrainian refugees pose both challenges and opportunities for Poland.
5.0 Social and Political Challenges and Impact
The influx of millions of Ukrainians has significantly strained social services and healthcare facilities in the EU member states and other European countries. While progress has been made in the past two years through Temporary Protection measures, the overall situation remains challenging. Although Temporary Protection was extended till March 2025 to offer further support to the refugees, a recent UNHCR report found the support systems insufficient. Healthcare systems in many of these countries were already under pressure during and after the pandemic and were not fully equipped to accommodate the additional refugee populations. Any conflict can profoundly impact the physical and mental well-being of those affected. People fleeing their country and seeking refuge in a new one are inherently vulnerable, grappling with uncertainty about their future and the challenge of integrating into the host community and adjusting to daily life.
There has also been significant concern regarding human trafficking. 40% of the Ukrainian refugees are women, while another 40% are children. Most of the children were either unaccompanied or disconnected from their family members. Both women and children can be soft victims of violence, abuse and sexual exploitation. A report by IOM[iii](International Organisation for Migration) cites limited data and research as a significant hindrance in formulating effective policies and intervention measures to prevent human trafficking and rescue the victims.
In the aftermath of the Russian invasion, Ukraine implemented martial law, which has prevented many able-bodied men from leaving the country. Consequently, most refugees now comprise women, children, and elderly individuals. Host countries have prioritised children's education and the support of elderly populations. However, many refugees still lack housing and job opportunities. Affordable accommodation is urgently needed, with numerous free housing arrangements are set to expire soon. Additionally, there is an immediate need to offer support to vulnerable individuals, including children and adults with special needs, who require regular medical attention, specialised education, and suitable housing. UNHCR has also warned about the persistent risks in this regard[iv].
Social integration is a common problem for any refugee community, requiring additional support to adapt to a new country. European nations have recently experienced a huge influx of refugees and asylum seekers from other parts of the world, stretching public services and creating social and political tension. Although there is a strong political commitment to the Ukrainian refugees, the EU and member state governments are in desperate need of integrating the refugee population to drive positive economic impact and ensure social cohesion and inclusion until their safe repatriation when the war ends.
6.0 Policy measures
Improved childcare facilities for Ukrainian women refugees cannot be overstated in encouraging more women to join the workforce. It is simultaneously crucial to focus on enhancing women's capacity and employability skills. Refugees often take on entrepreneurial roles due to their inability to compete for mainstream white-collar jobs. Encouraging Ukrainian refugees to start their businesses could be beneficial. Organisations working with refugees, such as charities and non-governmental organisations, can significantly provide employability and entrepreneurial training programmes. Both government and third-sector organisations have to work closely to dismantle the network of illegal traffickers and rescue the victims. Sexual exploitation of Ukrainian refugee women on online platforms requires immediate attention.
Access to children’s extra-curricular activities has been identified as an effective way to integrate migrant and refugee communities. This provision may be beneficial for Ukrainian refugees. Cross-community interaction is essential in providing social and psychological comfort to refugees. It is important to assist them in overcoming the trauma caused by their experiences and ongoing challenges. Dialogues between communities and recreational events can be effective, with churches and religious institutions playing constructive roles. Furthermore, allocating additional resources to support individuals with special needs is vital.
Dr Bidit L. Dey
Associate Professor in Marketing
Sheffield University Management School (the University of Sheffield), UK
LinkedIn: Bidit Dey | LinkedIn
[ii] Refugees could help Germany’s labor market, but Ukraine's skilled workers are needed at home (cnbc.com)
[iv] UNHCR warns worsening conditions and challenges facing vulnerable Ukrainian refugees in Europe | UNHCR UK