Central Europe is proving a manufacturing blessing - and a headache - as countries compete for scarce labour - pushing up wages

Central Europe is proving a manufacturing blessing - and a headache - as countries compete for scarce labour - pushing up wages

Nexteer says simply bowing to surging wage inflation across Central Europe is not the only way to address severe labour challenges currently besetting the region.

Intense competition for workers across the Visegrad 4 countries of Poland, Slovakia, Czech Republic and Hungary has seen staff costs spiral, offsetting some of the reasons why Western OEMs and suppliers have set up in the first place and leading companies to think of more creative ways to retain employees.

"The feeling is there is a tension on the market," Nexteer VP COO EMEA, Herve Boyer told just-auto at the supplier's Tychy plant in Southern Poland, where further details were also released concerning its new factory in Kenitra, Morocco, initially used for manufacturing Single Pinion-assist Electric Power Steering (SPEPS) systems.

"We need to be competitive to manage this situation. Wages inflation is one option, but that is definitely not the only way and certainly not the most sustainable way when it comes to competitiveness long term.

"We are working a lot to provide best in class working environment, company culture, leadership and people development. Training people and offering them business opportunities and job opportunities beyond Poland.

"We are fortunate to be a global group, so this opens opportunities other companies might not be able to offer. [Also] One of our priorities, we pay real attention [to] make sure our people operate in a safe environment. When people have to make a choice about selecting a job, these are elements; so far it works out well."

The Visegrad 4 countries have been highly successful at drawing in hundreds of OEMs and suppliers anxious to capitalise on their educated workforce and competitive wage structure, although they are increasingly seeing salaries rise as competition increases.

All four have individual and varied attractions for companies wishing to invest, with Hungary for example stressing its retention of the Forint currency, a point emphasised to just-auto by the country's Hungarian Investment Promotion Agency president, Robert Esik, who also stressed a competitive taxation system and foreign direct investment.

Meanwhile in nearby Slovakia, the country's Investment and Trade Agency highlighted how the arrival of Jaguar Land Rover would galvanise the country's GDP by a significant amount.

The ripples of the Visegrad 4's success are starting to spread wider as the effect of labour competition triggering higher wages is seeing companies look to further flung regions.

Serbia, Slovenia and Romania are also attracting attention, with the latter directing a total of 50% of its State aid to the automotive sector using EU guidelines.

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