Economy
Labour shortages threaten growth all over central Europe - FT
The region is grappling with how to respond to the labour problem, the FT said. While countries have been raising national minimum wages sharply, political pressure for foreign companies, in particular, to increase pay could grow, it added.
Thousands of workers at Volkswagen’s huge auto plant in Bratislava, Slovakia, walked out last Thursday, demanding an immediate 16% pay rise. Prime Minister Robert Fico backed the strikers, asking: “Why should a company making one of the highest quality and most luxurious cars, with high labour productivity, pay its Slovak workers half or one-third of the amount it pays to the same workers in western Europe?"
The Czech PM Bohuslav Sobotka has warned that multinationals are “taking advantage" of low wages, and called for them to retain more profit at local units to invest in higher pay.
The FT said it would be less risky for competitiveness to encourage immigration. It reminded that Poland has offset pay pressures by issuing almost 1.3m six-month work permits last year alone to Ukrainian migrants, although they are mainly hired for basic roles, as unqualified workers.
The Czech Association of Exporters wants the government to loosen visa policy to help attract workers from Ukraine, Vietnam and Russia.
“The model which [the region] had in the past is probably not going to be sustainable going forward. The only [solution] is to raise people’s skill levels, but that’s going to take time. So overall, it seems that potential growth rates will fall in the medium term," the FT cited him as saying.
Thousands of workers at Volkswagen’s huge auto plant in Bratislava, Slovakia, walked out last Thursday, demanding an immediate 16% pay rise. Prime Minister Robert Fico backed the strikers, asking: “Why should a company making one of the highest quality and most luxurious cars, with high labour productivity, pay its Slovak workers half or one-third of the amount it pays to the same workers in western Europe?"
The Czech PM Bohuslav Sobotka has warned that multinationals are “taking advantage" of low wages, and called for them to retain more profit at local units to invest in higher pay.
The FT said it would be less risky for competitiveness to encourage immigration. It reminded that Poland has offset pay pressures by issuing almost 1.3m six-month work permits last year alone to Ukrainian migrants, although they are mainly hired for basic roles, as unqualified workers.
The Czech Association of Exporters wants the government to loosen visa policy to help attract workers from Ukraine, Vietnam and Russia.
“Opening up to longer-term immigration to address skills shortages could be tricky in a region where the political rhetoric has been sharply opposed, for example, to admitting migrants from Syria," the FT said.
Labour mobility is extremely low in the region, which also does not help solve the labour shortage. Citing a headhunter from Matchtech, the FT said it is a problem that when people are asked about moving for a job, they say: ‘But this is where I live, this is where my house is.’A final way to address the tight labour market would be to increase productivity through technology, and invest in increasing skills.
Whereas governments across central Europe say they are committed to improving education and training, this is a “slow-burn thing", warned Tomasz Wieladek, an economist at Barclays.“The model which [the region] had in the past is probably not going to be sustainable going forward. The only [solution] is to raise people’s skill levels, but that’s going to take time. So overall, it seems that potential growth rates will fall in the medium term," the FT cited him as saying.
