Rising Visegrad 4 automotive industry wages are squeezing margins but could ease, says GlobalData

Relentless pressure on workforce availability, and in some cases governmental decrees, is continuing to drive up wages in Visegrad 4 countries* in Central and Eastern Europe, says GlobalData, a leading data and analytics company.

Visegrad 4 countries are continuing to reap the benefits of a manufacturing boom in the past few years as a significant number of automotive suppliers and vehicle manufacturers have beaten a path to the region keen to capitalise on a low-cost but well-educated workforce.

Simon Warburton, Automotive Business Editor at GlobalData, comments: “While the Visegrad 4 still remain cost competitive compared to Western Europe, they have nonetheless seen significant wage increases as their economies have grown. Labour markets have tightened with some shortages, but there have also been political directives coming from governments such as Hungary, which has mandated salary increases in a bid to drive up living standards. This, in turn, has emboldened some trade unions to maintain wage pressure.

“What may blunt that rising curve, however – to the benefit of automotive companies seeing higher costs and their bottom lines squeezed – is a labour supply boost from a nascent trend for ex-pat Visegrad 4 workers to start to return home, attracted by higher pay packets. Couple that with increasing automation in manufacturing and the soaring wage bills may start to reduce, albeit slowly.”

* Hungary, Slovakia, Czech Republic and Slovakia

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