Page 42 - BNE_magazine_12_2019 dec19

42 I 30 Years of transition bne December 2019
Estimated hourly labour costs, 2018
Source: Eurostat
affected at the moment because of
the tight labour markets and rising wages. Over the medium term, though, I think it’s not very good news for convergence prospects. A lot of our region especially Visegrad and some of the Western Balkans have gone all in on this German model – manufacturing, especially automotive, is very tied
in with the German economy ... this
is a very export reliant model and if
Southeast European EU member
states, especially the poorest nations, Romania and Bulgaria. According to Eurostat's latest data for Q2 this year, the highest annual increases in hourly labour costs were registered in Romania (+12.4%), Bulgaria (+11.0%), Slovakia (+10.6%) and Hungary (+10.1%).
During the November 6 webinar, wiiw’s Astrov noted the easing – or
According to UN long-term popula- tion projections published earlier this year, all the CEE countries are going to lose population between 2020
and 2100. The worst affected will
be Bulgaria which is forecast to lose 48% of its population through to the end of the century; Czechia, the least affected country, will lose just 4%.
By contrast, a number of countries in northern Europe are forecast to see a population increase this century. First is tiny Luxembourg (up 57%), followed by Sweden, Denmark, Ireland and the UK.
But the population crisis isn’t limited to Central Europe. Southern European nations that were badly hit by the international economic crisis of the last decade are also heading for major population declines. Greece, Italy and Portugal are all expected to lose over 30% of their populations in the next
80 years. Germany, the Netherlands, Finland, Spain and Austria are also heading for population declines.
The new European consumer
As incomes rise across Central Europe, the region has been enjoying a con- sumer boom. Aside from setbacks during successive economic crises, consumption has been on an inexo- rable rise for the last three decades. Its physical manifestations have been hard to miss: the arrival of designer brands and mass market retailers set- ting up in newly built malls, cafes and restaurants, cinemas, gyms, and so on.
“Millions of people have already left the region, most of them moving to Western Europe”
we are really at an inflection point in trade and globalisation, if the China- US trade war goes on for years and Germany continues to suffer, our region will suffer too,” said Astrov.
There has already been some debate as to whether this model can in
any case continue, as wages rise steadily across Central Europe, and unemployment falls to record lows, though there has been some easing of this trend in the last few months.
Still, Eurostat data shows that as of 2018 every one of the CE states except for Slovenia had lower wages than every one of the older EU member states.
This is despite the fact that wages are growing faster in the Central and
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even reversal – of labour shortages recently at least in more advanced countries of CEE, and puts this down
to a combination of three factors: the matching process of supply and demand in the labour market that takes time
to play out; employers now have more pessimistic exceptions about the future so demand for labour has dropped recently; and finally, labour migration.
Demographic disaster
This final factor could help to some extent to address the biggest crisis facing all of Central, Southeast and Eastern Europe today, what has been termed
the region’s demographic catastrophe. Millions of people have already left the region, most of them moving to West- ern Europe. This is set to continue, and comes on top of falling birth rates.