Wages keep booming in Eastern Europe, expanding at +15% year-on-year (yoy) in Hungary and Romania in April-May 2017 and more moderately in Poland, Czech Republic and Slovakia. Unemployment rates reached historic lows and companies’ complaints about the shortage of skilled labour are increasingly audible in several branches.
With GDP growth rates among the highest in the EU and dynamic industries, the demand for labour has been growing fast. But negative demographic trends over the past 20 years - declining birth rates, ageing of the population – are now weighing on the active population. The latter is declining in Poland, Bulgaria and Romania and it is growing very modestly in other countries. In this context, the supply of posted workers - these countries are net suppliers of posted workers within the EU - exacerbates labour shortage in the short term.
Wages will therefore continue to grow, which will contribute to the catch up in revenues but carries a risk of eroding competitiveness.
by Anna DORBEC