Labor shortage haunts Eastern Europe

Labor shortage haunts Eastern Europe

access_time2021-06-10 14:21:34

Central Europe's economies are recovering more quickly than expected from the coronavirus pandemic and industrial output is rising, but a chronic shortage of workers that pre-dates the crisis could be a bottleneck to future growth.

The labour squeeze caused by years of emigration to Western Europe and an economic boom across the region is already pushing up wages and inflation, prompting the Hungarian and Czech central banks to flag possible interest rate hikes.

As investment and European Union funds flow in, companies across the manufacturing, information technology and construction sectors are jostling to attract employees.

Eurostat methodology shows three of the European Union's five lowest jobless rates in April, at 3.4% in the Czech Republic, 4.3% in Hungary and an EU-low 3.1% in Poland.

In the same month, inflation rates in those countries were three of the EU's four highest, led by an 5.2% annual rate in Hungary and 5.1% in Poland.

"Temporary demand-supply frictions due to the rapid restart of the domestic economy, (and) renewed tightening of labour market capacities expected in certain sectors combined with dynamic wage growth have increased inflation risks," the National Bank of Hungary said after its May rate meeting.

The bank flagged a possible hike in its 0.6% base rate on June 22 to tame inflation, which would make it the first EU country to begin a tightening cycle.

The Czech economy does not need further support from loose monetary policy, central bank governor Jiri Rusnok said on May 28, suggesting a rate hike might be on cards at its next policy meeting on June 23.


Similar News

EU unveils sweeping climate change plan

access_time 2021-07-17 17:42:39