Labour market shortages take their toll on Central Eastern European economies

Tomas Hudcovic

Kia Cee´d cars stand on the production line during an opening ceremony of production at Korean company Kia Motors Slovakia in Teplicka nad Vahom near Zilina, Slovakia, Thursday 07 December 2006. Kia Motors Slovakia plans to produce 300,000 Kia Cee´d cars in this plant per year.

Labour market shortages take their toll on Central Eastern European economies


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The labour market in Central Eastern Europe is continuing to tighten despite a worldwide economic slowdown, with unemployment below 4% in the Czech Republic, Hungary, and Poland and 5.7% in Slovakia.

Tight labour market conditions are hurting labour intensive industries, like construction and retail, while manufacturers are turning to automation and even deals with prisons to address worker shortages. According to Eurostat, 92,3% of Hungarian industrial groups, 48,1% of Polish, and 25% of Czech project a shortage of workers in the next quarter.

The shortage of labour is also tilting the balance in industrial relations, with wages in manufacturing surging across the region, putting pressure in industries with low margins or fixed long-term contracts, such as construction.

The labour market across the region is especially vulnerable given a history of emigration in the 2000s and extremely hostile regimes towards immigrants. Poland is home to approximately one million Ukrainian citizens, who are on six-month residence permits that makes investment in their training impossible.

Like Japan, local industries are now heavily investing in robotics and automation, with sales of industrial robots to Poland, Hungary, the Czech Republic and Slovakia up by 39 per% in 2017, according to the Financial Times.

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