Staff shortage in steel sector is getting worse

Representatives of iron and steel companies in Ukraine first talked about staff shortages in 2023. Since then, the problem has escalated to a critical level. Management’s efforts so far allow to mitigate the negative effect. But its solution requires support measures from the authorities.

Consequences of the war

Lack of labor resources remains the main obstacle for business in the conditions of a full-scale war, according to the April review of the National Bank of Ukraine. The main reasons are the shortage of employees caused by mobilization and the mass departure of the population abroad.4

The problem is relevant for all sectors of the economy. The results of a February survey conducted by the Institute for Economic Research and Policy Consulting show that it hits large companies most sensitively.

About staff shortage as the main obstacle to operational activities reported 75% of managers of large enterprises. Among medium-sized enterprises – 68%, among small enterprises – 63% and among microenterprises – 39%. It is easy to see that the severity of the problem decreases with the scale of business. The explanation is simple: it is much easier to mobilize men in a large “transparent” enterprise.

Obviously, the current situation, to put it mildly, is not very stimulating for the citizens remaining in Ukraine to find employment in the iron and steel industry. Currently, Metinvest Group has 3.7 thousand vacancies, ArcelorMittal Kryvyi Rih – over 1 thousand, Interpipe – 500 vacancies.

Metinvest’s staff deficit is 10-15% of the total number of personnel, taking into account the absence of mobilized employees. The most scarce specialties are the following: diesel locomotive driver and assistant driver, crane driver, excavator driver and assistant driver, control station operator, crusher, steel caster, doser, blast furnace mining engineer, conveyor operator, mill driver.

In January-April last year the number of employees of ArcelorMittal Kryvyi Rih decreased by 632 people (including contractors). At the same time, about 3 thousand representatives of the mill are already in the ranks of the AFU.

Interpipe managed to increase the total number of employees by 253 people in January-April. But even taking this into account, the company’s production processes now involve 1743 people less than before the full-scale war, as 1070 are now in the defense forces.

The labor shortage is pushing employers to rapidly increase wages. This includes steel industry. In this way, companies are trying to increase the attractiveness of their vacancies.

At the end of 2024, the average salary in the industry increased by 14.4% to UAH 27.3 thousand, according to the Federation of Metallurgists of Ukraine.

This year Metinvest Group raised salaries of its employees from April 1. Depending on the criteria, the raise reached 20% of the previous salary.

ArcelorMittal Kryvyi Rih raised salaries from May. Depending on the level of the current salary and working conditions, the increase ranged from 5% to 22%.

Interpipe since March increased salaries to employees of all divisions, most of which are located in the cities of the frontline region – Dnipro, Nikopol and Samara.

It is worth emphasizing that steel industry is geographically specific. Almost all enterprises are located in the South-East of Ukraine, not far from the front line. And Nikopol (Dnepropetrovsk region) is officially included in the zone of active hostilities since July 2024. Ukraine’s largest ferroalloy plant and a major steel pipe manufacturer Interpipe Niko Tube are located here. Also in Nikopol there is a plant producing stainless steel pipes Centravis.

The most intensive migration comes from the frontline regions, which means that it is much more difficult to find new personnel here than in the western or central regions.

Metinvest before the full-scale war had queues of people willing to work at the company’s enterprises, and the staffing centers could select candidates even for unqualified positions. Now the company cannot simply afford the competition – they are ready to take the majority of those willing to work.

The press service of AMKR confirms that now the search for a candidate for a vacancy can drag on for several months. That is why raising salaries at iron and steel enterprises is not an exhaustive answer to the problem of staff shortage.

According to the Federation of Metallurgists of Ukraine, about 20% of the industry’s workers are currently mobilized.

“At the same time, we realize that it takes years to train qualified specialists. And the question remains – where to get these people? All those who left to defend the country cannot be replaced by women”, – emphasizes the chairman of FMU Sergiy Belenkyi.

How companies survive

The majority of companies expect further growth of staff shortage until the end of 2025.

In this regard, Metinvest Group works in the following areas:

1) Retraining of employees. Employees receive additional professions at the expense of the company, which allow them to perform various tasks and compensate for the shortage of personnel.

2) Attracting new personnel. Seeks workers by offering vacancies for both men and women, with and without work experience.

3) Working with military veterans. Offers training and job placement for former military personnel, helping them to adapt to civilian life and integrate into the workplace.

In particular, at ArcelorMittal Kryvyi Rih, women are already working at rolling mills.

At Interpipe, the staff shortage is compensated for by such measures:

• Overtime work – overtime on a systematic basis reaches 20-30% of working time per month.
• Recruitment of new employees – approximately 80% of new employees were hired without experience and received their specialty already at the production site.
• Outsourcing – outsourcing of simple production operations where possible.
• Involvement of women in production – the company already employs 30% women.
• Retention of age personnel – now the average age of employees at the company is 44 years. The company is also trying to bring retirees back to production.
• Work with young personnel – the company tries to attract promising young specialists while they are still in their last year of study at different accreditation levels.
• Work with veterans – the company has developed a set of adaptation measures for ex-military personnel, which allows them to successfully adapt after demobilization.

At the same time, Ferrexpo has a program “Ferrexpo Veterans Support Service”. Thanks to this program, 103 ex-military servicemen, participants of military operations, were able to return to work.

It should be separately noted that during mobilization, steel plants and mining and processing plants lose the most valuable qualified specialists. For example, among the most scarce specialties at Metinvest are “steel caster” and “blast furnace operator”, which are key for steel production.

AMKR is most short of fitters and repairmen, crane operators, electricians, diesel locomotive drivers, drivers, and technologists. At Interpipe – CNC machine operators, crane operators, repair mechanics, pipe cutters. There is also a shortage of adjusters, electricians, turners.

Therefore, companies are forced to devote considerable efforts and funds to training new personnel.

In addition to recruitment “from the street” and training “from scratch”, programs of mastering new specialties by existing employees are widely used. But, once again, these are emergency measures. They (so far) help iron and steel enterprises to survive. They do not ensure sustainable development.

“If earlier we trained a specialist for the position of a steelmaker’s helper in 6 months, now we have to train him in 2 months. That is, we have to revise all (training) programs,” says Tatyana Petruk, Metinvest Group’s Director for Sustainable Development and HR Relations.

Obviously, the training duration of 6 months for such a responsible specialty was not set “from the ceiling”. It is exactly how long it takes to obtain the necessary knowledge and skills. And now the program has been reduced by 3 times not from a good life.

The pace of mobilization is such that companies simply do not have time by peacetime standards to prepare new employees to replace those who have gone to the front. But this is fraught with a decrease in the qualifications of personnel. And, as a consequence, the risks of industrial accidents increase.

“The shortage of workers is one of the factors affecting the rate of production growth. The problem is also that it is difficult to replace skilled workers, professionals with experience are hard to find. A new person is not the same. Productivity has decreased because of new people, there are more mistakes,” commented the press service of AMKR.

Interpipe emphasizes: it is practically impossible to replace quickly departed personnel. For example, it takes up to a year to train a turner or a CNC machine operator.

At the same time, the existing reservation system is imperfect and needs to be improved taking into account the realities in which iron and steel enterprises operate.

The majority of employees in the iron and steel are men. Now the legislation allows booking only 50% of personnel, while for continuous operation of steel production it is necessary to book at least 80% of employees.

“At Metinvest, employment is official, but this often makes our employees a resource for Territorial Center for acquisition and social support, which enlist them. This discourages people from working at the enterprises of the industry. Now we are in dialogue with the Ministry of Defense to find a compromise and not to paralyze production,” the company stresses.

To the best of their abilities, companies are trying to fight the shortage of personnel, which is most acute in steel sector. However, the problem cannot be completely solved yet – many companies are at risk of ceasing their operations due to staff shortages. Now the ball is on the side of the state – the authorities have to find a balance between the volume of mobilization and preservation of the human resources potential of the economy. After all, if the economy does not work, the army will not have the resources to fight.