Instead of handsome social spending that are unlikely to change the demographic decline, countries should invest in life-long learning to aid the aging societies in vocational training. Read a report from V/I monthly round table talks.
On 26 February 2018 V/I held it’s eight Breakfast Roundtable, and this month’s subject was on what the future of the work will look like in the region.
There were many notable attendees including Maciej Witucki (President of Work Service) and Her Excellency Mira Sun (Embassy of the Republic of Korea).
Victims of their own success
The Central European economies have been (in general) thriving since their accession to the EU, though they have faced drawbacks as well.
Significantly, the brain drain that the region experienced has perhaps delayed some of the societal development the V4 countries would have enjoyed.
That being said, most countries in Central Europe are experiencing incredibly low unemployment (CZ: 3.3%, HU: 3.7%, PL: 6.1% and SL: 5.3%) which highlights how active different sectors are in the region. However, this trend has led to a growing need of workers which, until now, has been mainly supplied by migrant labour from Ukraine.
Poland has been the largest recipient of Ukrainian migrants though they are in every V4 country. Moreover, regardless of any Hungarian government anti-migrant propaganda – a repetitive, long-running campaign of political messages meant for their domestic audience – they too are looking east for help filling their employment vacancies.
The situation is even more dire as soon their perceived lack of openness could affect the Hungarian economy’s potential for growth and could – on the basis of labour shortages – lead to a loss of production. Also, since there is a dearth of human resources, wages are increasing which will make them less attractive to businesses that rely on the relatively cheap labour source to maintain operations.
One of Viktor Orbán’s solutions to this conundrum was the implementation of the highly criticised “Slave Law”, which increased the amount of mandatory overtime employers can request of their workers as well as prolonging the payment for their work by up to three years.
The experts around the table did not expect to see similar laws passed in other V4 countries, as they would lack both the political and social capital for such reforms.
That being said, foreign investment in Hungary has not abated over the last several years despite these worrying trends, and the reasons for this are not fully understood.
Some in Central Europe are worried that if Germany decides to open itself up to the Ukrainian labours that they will steal away the lion share of qualified workers, and this could pose a serious threat to the V4 economies.
Surprisingly, this is not due to the actual number of available workers (since Ukraine’s population is around 45 million), and sadly the deteriorating security situation in the country will mean more and more people will want to relocate for work. But this also stresses the fact that this population is quite mobile, and if they are offered increased wages as well as a higher quality of life in Frankfurt, they would leave Warsaw quite quickly.
In these cases, the main issue is added value or a lack there of. If the quality of production decreases, the economies of Central Europe could be headed for catastrophe.
Similarly devastating would be if the V4 societies turn even more xenophobic than they have as this will greatly discourage any migrant workers from staying in the region for the medium-to-long term.
Looking further afield
One potential solution that has been suggested is for the countries of Central Europe – though specifically Poland – is to look towards the Philippines as a possible source for labourers.
However, there are many issues which would hamper this possibility. First, Filipinos have been working in the Arabian Peninsula for decades and their treatment there has been, in many instances, atrocious. This has led to the Philippine government recently making new regulations about which benefits foreign companies must provide their migrant labour, understandably including roundtrip travel expenses.
Second, the infrastructure Poland has in place in Manilla is wholly insufficient for even processing the number of needed work visas.
Third, there could be political pushback from the EU for specifically targeting a group/country based on their religious background (Filipinos are for the most part Christian), and excluding others from the process.
When taking into account the additional costs as well as logistical issues, Ukraine and the internal market will remain the most desirable locations for Central European companies to attract employees.
The future will not be coders
But what jobs will be needed in the future?
In the short term, focusing on training the next generation to be proficient in coding and IT specialties makes sense, but in the long term, these jobs will most likely also be automated (i.e. machine learning) as well.
Central European governments should focus on developing more vocational workers who can earn decent wages and whose services are – and will be – greatly needed. This is, of course, not just a regional but global issue.
There are a few difficult – albeit necessary – changes that could greatly benefit the V4 economies. First, there needs to be a cultural shift in the way business owners interact with their employees. Unfortunately, there is still the old master-worker mentality which is not suitable for the 21st century.
Second, the social capital of the societies must increase, but of course achieving this is never easy.
One potential solution for both issues would be if a large number of the Polish diaspora living in the UK were to return, bringing with them the habits and methods they have learned in the West to affect change in society. However, these same problems mentioned above are what has lead them to stay in the UK on a more permanent basis.