Colliers International have released a new report on CEE migration patterns entitled “Labour Force Boomerang” The report states:
The emigration of at least 7 million mainly young people to Western Europe has negative demographic and economic consequences for the CEE-6 countries. Labour shortages and wage inflation are impacting CEE-6 economies and real estate markets even in 2017. We believe that the emigration wave has peaked and that workers will start to return eastwards to CEE-6: we term this dynamic the “labour force boomerang”.
Every skilled worker returning adds to productivity and growth (good for industrial/office demand), tax take, demand for consumer products (good for retail/logistics sectors as demand from mid-high spend consumers is boosted) and their experiences of living as citizens in Western Europe should aid the progress of CEE societies.
Workers, families and students left the CEE-6 countries to earn higher wages but also to experience what they perceived as a “better life”. The economic impulse to move was clear in most cases. As was the desire to try a life in a more “advanced”, yet unfamiliar society. We address the pull of the homeland and the “tug-of-war” equation shifting in CEE’s favour with a “SWOT” analysis.
Looking at the financials, tighter labour markets in CEE are forcing wage inflation for skilled workers especially. Minimum wages are rising significantly (7 percent-c.15 percent) this year in the CEE-6. Currency effects (including a weaker Pound in Brexit Britain) and tax rates are pointing towards a faster closing of the still-yawning net wage differentials over the next 5-10 years. CEE’s cost of living is rising but that factor is increasing faster in places such as the UK. The marginal worker should return.
Emotional factors, such as use of native language or education as young people progress into family status are up to each individual to judge. Arguably, some of the prior CEE “push” factors, such as corruption, political instability and institutional weakness have ebbed somewhat.
OECD data suggest a deterioration in the “quality of life” in some Western European countries. Despite these “push and pull” factors pointing in favour of a repatriation of CEE workers, employee surveys in CEE still point to a desire of young people to follow their peers westward. Only the governments of Hungary and Slovakia are as yet systematically active in this “tug-of-war”, to entice workers back home. Is an opportunity being missed by CEE-6 governments?
Embarking on active policies to retain and attract workers back and continue to improve conditions (and funding) for small businesses, in the physical environment and for society in general would be a good sign.
