Medium Business: The Key Force in Ukraine's Economic Recovery

The co-founder of companies Fibermix, Savex Minerals, and Pack For Business believes that medium-sized enterprises in Ukraine deserve greater recognition for their significant contribution to employment and their positive performance amid the ongoing war. When discussing economic recovery, large corporations or the stories of micro-businesses struggling to survive often take center stage. However, medium-sized businesses, which, according to the Institute of Economic Research, provide one in five jobs in Ukraine, frequently remain overlooked.

Currently, there is no clear classification of medium-sized businesses in Ukraine, but for the authors of this article, medium-sized enterprises are defined as those with a monthly turnover ranging from 5 to 15 million hryvnias and a workforce of 10 to 50 employees. They describe this segment as the golden mean, where businesses possess enough capacity to undertake serious projects while maintaining flexibility and a human touch.

Medium-sized businesses demonstrate the highest Business Activity Recovery Index, standing at 0.41. In comparison, this figure is 0.35 for small enterprises and only 0.26 for large corporations. The key reason for this difference is the speed at which medium-sized businesses respond to market changes. When production needs to be adjusted, large corporations may take months to reach consensus, whereas medium-sized enterprises can swiftly alter their product range, reallocate resources, and identify new niches.

Another crucial factor contributing to the success of medium-sized businesses is diversification. For instance, in the company mentioned in the article, the main products are polypropylene fiber and yarn. When demand for one product decreases, the company can ramp up production of the other. In spring, during the construction season, demand for fiber rises, while in autumn, yarn sales increase. This model allows the company to avoid dependence on a single product category and ensures stable profits despite market fluctuations.

Medium-sized businesses not only shape economic indicators but also influence consumer culture by setting development trends. They create demand for innovations, support manufacturers, and invest in the development of new niches. Unlike large corporations, which operate within their own realities, micro-businesses strive to survive, while the middle class of entrepreneurs represents the dominant force that dictates the rhythm of economic processes in Ukraine.

The impressive scale of the impact of medium-sized businesses is evident from the example of 2022, when they employed 2.6 million Ukrainians, accounting for nearly half of all employed individuals in enterprises. Moreover, medium-sized companies make up only about 5% of the total number of businesses in Ukraine, indicating that a small number of enterprises bear a significant share of employment and economic activity.

In 2022, when large businesses suffered the most significant losses due to the war, medium-sized enterprises became the backbone of the economy. The share of products sold by medium businesses constituted nearly half of the total output in the country. This highlights a paradox: medium-sized businesses are the foundation of the economy, yet their numbers are critically low.

Why do small companies hesitate to transition into the medium category? According to the authors' observations, there are three main reasons. First, there is the fear of losing the simplified tax system. Even with lower tax rates, administration becomes more complex, and the risks of inspections increase. Second, the conditions for doing business involve certifications, approvals, and inspections from numerous regulatory bodies, such as fire services, environmental agencies, geodesy, and sanitary standards. Medium-sized businesses are particularly sensitive to this pressure, as they lack the resources to engage with each regulatory body, leading to operational downtimes. Third, there is a labor shortage: according to the European Business Association, over 70% of companies today experience a shortage of qualified personnel, hindering the development of not only individual companies but the entire medium business segment.

For effective recovery of the country, it is essential to focus on medium-sized businesses. To achieve this, it is necessary to simplify the transition from small to medium-sized enterprises, make administration clear and predictable, and reduce the number of approval procedures. Additionally, it is crucial to continue and expand financial support programs, such as the 5−7−9% initiative, which have already proven effective. As of mid-2025, Ukrainian entrepreneurs had received over 52.8 billion hryvnias in preferential loans, which is critical for conducting business and development.

Furthermore, investment in quality competition is necessary, as competition fosters niche development and raises the overall quality standard. The more strong mid-sized players that operate professionally and transparently in the market, the higher the standard for all. This stimulates growth and prevents stagnation. The ideal structure of the economy, according to the authors, would consist of 60−65% medium-sized businesses, 20% large businesses, and 15% small businesses. Currently, the situation in Ukraine is the opposite: there is a critical shortage of medium-sized enterprises. However, if this ratio can be reversed, there is hope for an economy that not only recovers from the war but also becomes competitive in international markets.