Ukraine's demography: its future as a successful society depends on human capital, not population numbers

The demographic challenges of Ukraine are well-known and serious. However, many characterize the prospect of a smaller, older population as - inevitably - leading to a collapse of social protection systems, diminished potential for economic recovery, and even threatened existence itself. Despite the changes, these feared negative consequences are far from certain.

In some sense, the war has accelerated Ukraine's long-term demographic trajectory by a few decades. However, the basic path remains unchanged. Countries as dissimilar as Germany, USA, China, Japan, Brazil, Mexico, India, Iran, and Türkiye all face fertility that is below replacement level (under 2.1 children per woman) and population aging, despite their widely different cultures and economies. It is important to acknowledge the global reality of these trends when setting expectations for any possible turnarounds.

Family Support that is Responsive to Needs

In late 2024, Ukraine adopted the Demographic Development Strategy 2040, which is currently being implemented. Financial support for families has recently expanded, including increased 'birth bonuses' and the "YeYasla" program (ages 1-3) to either provide childcare for working parents or social security contributions if a parent stays at home. Overall, the package of benefits amounts to a value of at least 1.08 million UAH per child from birth to 18 years of age. The changes aim for systemic, all-encompassing support for health, education, and social welfare of children to reduce pressures on parents.

The new measures provide universal child benefits. While ensuring a minimum level of support for all helps fight against childhood poverty, this approach will likely be insufficient to broadly increase fertility. Importantly, family policy should prioritize enabling parents to continue working, particularly for the growing share of women who have joined the workforce. Otherwise, an emphasis on flat benefit amounts risks remaining primarily symbolic and relatively unconvincing for many would-be working parents who face the prospect of significant lost income.

Recent survey results show that highly educated and childless Ukrainians (groups who work at higher rates) are most likely to plan on having children either after war, or at an unspecified time in the future. This potential highlights the pressing need to improve work-family compatibility by guaranteeing access to trusted, high-quality kindergartens and flexible work arrangements. Such efforts are coherent with advancing a parallel state interest, lifting labor force participation.

Large-scale expansions of family benefits in Germany, Japan, and other countries suggest that programs can make some difference. The immediate impacts are mostly influencing when couples decide to have children which can create mini baby booms, while the longer-term impacts on fertility are more modest. To give a sense of scale, OECD countries typically dedicate 1-4% of GDP for family measures, with higher spending countries showing fertility that is moderately low (~1.8 children per woman), and those on the lower end of the spending showing very low fertility (~1.3 and below). Beyond financial considerations, it is clear that family formation heavily depends on other less tangible factors like competing life priorities, sense of stability, community and confidence in the future.

What should be the goal of any demographic strategy?

The purpose of support for families (or any other demographic policies) should not be a fixation on maintaining a specific, arbitrary population size. On one hand, Ukraine's Strategy recognizes the importance of considerations beyond such quantitative indicators. But still, it lists "the need to halt population decline" and secure "demographic stability" as core priorities.

Population size, for its own sake, is not a meaningful goal. What matters most are the characteristics of a population. Many of the most prosperous societies are not particularly highly populated, nor dense or young. In fact, their populations are often 'small' (i.e. Canada, Switzerland), with 'old' age structures (i.e. South Korea, Spain, Japan).

Instead, human capital – the collective health, skills, and abilities of a population – is the decisive predictor of well-being and strength, whether it's economic, cultural, or otherwise. Even for military considerations, the use of technology and/or tactics, not population size, was what ultimately decided conflicts such as those involving Finland, Afghanistan, Vietnam, and Israel.

Dependency burden ratios - which calculate the proportion of dependents to productive population - are a commonly used indicator for judging the sustainability of social systems. This indicator summarizes the imbalance between those who are economically independent and those who rely on assistance, such as pensions and social services. Ukraine's Strategy also uses this indicator, but simply defines these two groups based solely on age, which predictably shows a worrying increase in senior-driven 'dependency burdens'.

However, research on the European Union and China reveals that more nuanced definitions – looking at those who actually engage in work or not, rather than simply age – can completely change the outlook, making projected changes appear far more manageable than previously thought. Not only do the business-as-usual scenarios show increased dependency burdens of only about 20%, instead of the dramatic 60%, over the coming decades, but scenarios with improved labor participation find potential for avoiding any increase at all. This means that Ukraine may be in less severe of a demographic crisis than it otherwise appears.

Strengthening human capital offers a realistic, actionable way forward. Specifically, this means improving health by promoting healthier lifestyles and preventive medicine, particularly for Ukrainian men, who have lived shorter lives than their income group- or regional-peers for decades. It also means continuing to improve education, from access to early childhood development services to the quality of programs into adulthood. While the quantity of Ukrainians' education is quite high, evidenced by rates of tertiary educational attainment, the same cannot be said for quality, with students routinely performing below average in internationally-comparable testing.

Ukraine can also far better utilize its existing human capital. The population's activation in the labor force has substantial room for improvement, with Ukraine more than 10% below some of its regional peers. In particular, older adults, women, and internally displaced persons are key groups that can be more fully integrated into the labor force by encouraging flexible working conditions (part-time arrangements, phased retirement options) and providing targeted training programs, as in many OECD countries.

Given the limited resources, it is particularly critical to focus on meaningful demographic goals. The most efficient and far-sighted answer to demographic challenges is investing in the capacities of Ukraine's people (health, education, and labor force participation), rather than attempting to change the population size or structure itself. It is human capital that is behind successful, cohesive societies and key to any potential recovery, not population size.

Nithin Umapathi, Lead Economist and Program Leader for Human Development in Eastern Europe