Page 23 - bne_newspaper_December_21_2018

Opinion
December 21, 2018 www.intellinews.com I Page 23
High tech investment the answer to CEE’s labour crisis
Clare Nuttall in Glasgow
As labour markets tighten across Central Europe and employers struggle to fill vacancies, economists say the best outcome for the region
is for companies to respond to worker shortages by investing into new technologies to make their businesses more efficient and move away from the old low cost model to a higher value added one.
Since the fall of communism, the countries to
the east of the former Iron Curtain were seen as attractive manufacturing destinations for West European companies thanks to their combinations of much lower costs, their proximity to Germany and other western markets, and their skilled workforces.
This type of investment was initially focussed on the most developed countries in Central Europe, leading to Slovakia, for example, becoming the world’s top country in terms of car production per capita. The auto assembly and components industries in particular have focussed on Central Europe, although companies of all types — from clothing production to aviation — have targeted the region, gradually fanning out southwards and eastwards as business conditions improved in less developed markets and costs started to rise in the Visegrad region.
A new McKinsey report refers to a “golden age of growth” in CEE during this period. The report, titled “The rise of Digital Challengers: How digitization can become the next growth engine
Robots are increasingly replacing workers in the automotive industry.
for Central and Eastern Europe", looks at 10 countries across Central and Southeast Europe — Bulgaria, Croatia, the Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia — which, it says, recorded on average a 114% increase in GDP per capita between 1996 and 2017, compared with an increase of just
27% in the EU’s “Big Five” economies, France, Germany, Italy, Spain and the UK. As well as labour cost advantages, this growth has also been driven by factors from ranging from traditional industries, strong exports and EU funding.
Overall, “[t]he CEE region has become one of the most attractive places to invest in globally,” says the report.
Slowdown ahead
Recently, however, this trend — combined with mass emigration from the region to Western Europe — has led to a sharp tightening of the labour markets especially in the Visegrad Four, with unemployment rates plummeting to post- communist lows in countries such as Czechia, where it dropped to a 21-year-low of 2.8% in October, and Poland where the rate of 5.7% recorded in September hasn’t been seen since the early 1990s. While this is mainly a phenomenon
in the most advanced economies in the region, a tightening labours market has also been seen to some extent in Southeast Europe’s largest economy Romania, where a ManpowerGroup survey released in June found that more than