The 18th wave of the study of the state and needs of micro, small and medium-sized businesses (MSMEs) in the context of the great war in Ukraine has been completed. The survey was conducted by the Innovation Development Centre, the Entrepreneurship and Export Development Office, the national project Diia.Business, and AdvanterGroup in cooperation with the Ministry of Economy of Ukraine, the Ministry of Finance of Ukraine, the Ministry of Community and Territorial Development of Ukraine, the Ministry of Digital Transformation, and the Coalition of Business Communities for the Modernisation of Ukraine.
Survey period: 20.08.2024 – 31.08.2024 р.
A total of 544 respondents – owners and CEOs of MSMEs–were interviewed .
Key findings of the survey
1. State of the business environment
The index has slightly decreased compared to May 2024 and equals 39.9 (out of 100). Manufacturing businesses have better expectations than non-manufacturing businesses. Thus, the level of UBI for manufacturing companies is 41.9, while for non-manufacturing companies it is 35.2.
The decline in the index is explained by a slight decline in the number of orders from customers, to which companies responded by reducing their output. The situation with inventories and the number of employees is stable.
For reference: UBI indicates business activity, its ability to increase turnover and create jobs. If the index is below 50, this indicates negative expectations of the business from further developments.
2. The work of enterprises
Only 2.8% of respondents said that their companies had completely stopped working. In May 2024, this figure was 4.2%. 22.6% showed an increase in the first eight months of 2024 compared to the same period in 2023.
The share of companies whose production volumes increased significantly increased. In August, there were 5.1% ofsuch companies , and in May – 2.8%. The weighted average percentage of work volumes compared to the same period in 2023 is 91.8%. Almost half of the companies indicated that the volume of work had decreased (48.5%).
Businesses do not expect an increase in work volumes in 2024. Only 29% of companies have a positive growth forecast . 37.1% of respondents said that their results in 2024 would be worse than in the previous period.
The weighted average percentage of work volumes compared to the same period in 2023 is 98%, which is higher than the result of the May survey (94.1%).
5.5% of companies expect that their companies will stop working at the end of 2024, which is higher than the current figure of 2.8%. The companies’ outlook for 2024 has remained almost unchanged compared to the results of the May wave of the survey.
3. Outlook for 2024
22.5% of the surveyed managers and business owners consider the financial and economic situation of their companies to be poor, 57.7% – satisfactory or mediocre. The situation is considered excellent or good by 19.7% of respondents.
6%of companies believe that their financial and economic situation will deteriorate significantly, while 41.2% are convinced that it will improve or significantly improve.
4. Preparedness for blackouts
One third of respondents (29.8%) said that their companies have taken all measures to prepare for possible blackouts in winter, while 37.7% are actively preparing. 3.5% believe that possible blackouts will stop their operations, while 17% do not have the resources or knowledge to prepare for winter outages.
5. Key business concerns
Businesses report three key challenges: unpredictability of the situation in the country (54.6%), unpredictable government actions (53.9%), and lack of skilled labour (52.4%). Lack of effective demand (44.9%) and lack of sufficient capital (31.4%) are somewhat behind the main challenges.
The situation with labour resources is showing the most negative trend. While in May 43.2% of respondents mentioned this problem , in August it was 52.4%.
28.3% of companies faced blocking of tax invoices. The top three problems also included difficulties in booking key personnel (18%) and abuse of regulatory norms by government officials (15.8%).
48% of respondents indicated that their companies are under pressure from law enforcement and regulatory authorities. Two-thirds believe that the dynamics and intensity of pressure have not changed, while 28.1% indicated that the situation has worsened.
6. Staffing situation
Businesses are taking care of their staff. 48.5% of business owners and managers said that the number of employees remained unchanged in the first eight months of 2024. The weighted average indicator of changes in the number of employees is -4.4%. In August, the downward trend in the number of employees who received salary cuts (8.3% vs. 12.9% in May) and were sent on forced leave (6.6% vs. 7.5%) continued.
Companies are experiencing an acute shortage of labour, estimated at 29.1%.
The issue of mobilisation is extremely relevant. 80.6% of companies do not have a single booked specialist, and 10.8% have tried e-booking. 48.3% are satisfied with the tool , and 39.7% said the system should be improved.
The study was conducted within the framework of the United Nations Development Programme (UNDP) Support to Ukraineproject by the Innovation Development Centre, the Entrepreneurship and Export Development Office, the national project Diia.Business, and Advanter Group in cooperation with the Ministry of Economy of Ukraine, the Ministry of Finance of Ukraine, the Ministry of Community and Territorial Development of Ukraine, the Ministry of Digital Transformation, and the Coalition of Business Communities for the Modernisation of Ukraine.