WorldWatch received regional reports indicating that Eastern Europe's investment- led boom is now a fizzle...Three years after Toyota Motor Corp. and PSA Peugeot Citroen opened their Czech auto plant, Jiri Cerny, the venture's vice president, says it's getting harder to find workers and he may have to import them from Mongolia.Companies that were attracted to formerly communist nations in eastern Europe by the promise of cheap and plentiful labor are finding less of both, as faster growth drives up wages and open borders encourage emigration. That is leading some businesses to rely more on automation and others to look for employees abroad or even quit the region..the Baltics and Balkans regions threatened by a ``hard landing,'' the International Monetary Fund and Standard & Poor's warn.
TPCA, the Toyota-Peugeot joint venture about an hour outside of Prague, shows the strains created by this new investment. Along with average wage growth of more than 40 percent since the Czech Republic joined the EU in 2004.
TPCA said ``It's difficult; we are always looking for employees, we're thinking about Vietnam right now, as well as Mongolia,''
The Czech economy and those of most other former East Bloc countries expanded in the fourth quarter at several times the 2.2 percent rate of the 15 EU members that use the euro. Neighboring Slovakia had the fastest annual pace, at 14.3 percent. Bulgaria, the EU's poorest member, and the former Soviet states of Latvia and Lithuania grew at rates above 6 percent.
The region's hottest economies also have some of the highest inflation rates, led by Latvia's, at 16.7 percent in February, and Bulgaria, with a rate of 13.2 percent. Since 2001, the average monthly gross wage in Latvia has soared 139 percent. At the same time, wood costs rose and finding affordable labor became almost impossible....
Latvia went from being one of the cheapest places in east Europe to do business to one of the most expensive.
Even though wages in the region are rising, workers are leaving for still-higher pay in richer western European nations such as Ireland and the U.K. In Latvia, the average monthly gross wage of 403.9 lati ($908) is a fraction of the 2,915 euros ($4,575) in the 15 euro nations, according to Eurostat, the EU's statistical office.
Some companies will just keep moving east in search of cheaper labor, the local government of Lodz, Poland, is trying to head off such an exodus by offering incentives including tax breaks to keep workers and companies in the country.
Just a few years ago, Germans and other Europe nations like Portugal were worrying that companies will go to Romania or Poland, now in Romania or Poland, they are worrying that companies will move to Ukraine, Belarus or further east.
This is like a huge snow ball, in a couple of years they will be back in Portugal or Germany...but the company profits will have decreased by then...
The region's hottest economies also have some of the highest inflation rates, led by Latvia's, at 16.7 percent in February, and Bulgaria, with a rate of 13.2 percent. Since 2001, the average monthly gross wage in Latvia has soared 139 percent. At the same time, wood costs rose and finding affordable labor became almost impossible....
Latvia went from being one of the cheapest places in east Europe to do business to one of the most expensive.
Even though wages in the region are rising, workers are leaving for still-higher pay in richer western European nations such as Ireland and the U.K. In Latvia, the average monthly gross wage of 403.9 lati ($908) is a fraction of the 2,915 euros ($4,575) in the 15 euro nations, according to Eurostat, the EU's statistical office.
Some companies will just keep moving east in search of cheaper labor, the local government of Lodz, Poland, is trying to head off such an exodus by offering incentives including tax breaks to keep workers and companies in the country.
Just a few years ago, Germans and other Europe nations like Portugal were worrying that companies will go to Romania or Poland, now in Romania or Poland, they are worrying that companies will move to Ukraine, Belarus or further east.
This is like a huge snow ball, in a couple of years they will be back in Portugal or Germany...but the company profits will have decreased by then...
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