Eastern Europe's Cheap Labor Disappearing

Speigel Online reports that Eastern Europe's dramatic economic boom is starting to drive calls for higher wages that would make the region uncompetitive with other "low wage countries". Most Americans would probably point to Singapore and Mexico as places where exactly the same phenomenon has already occurred and advise Eastern Europeans to enjoy their higher wages.

Growth in median hourly earnings has been tremendous since 2002. The Czechs have 45% higher wages, the Hungarians have 70% higher wages, and the Latvians have 168% higher wages. Obviously these trends cannot continue forever, but the average worker in Eastern Europe has witnessed a great increase in earnings and overall quality of life. Indeed, considering that entry into the European Union caused a migration of many of these countries best workers to higher paying jobs in France, England, and the Nordic countries, this broad-based rise is all the more impressive.

One of Eastern Europe's best selling points has been its highly educated workforce. If labor productivity continues to grow, the possibility for organic growth in living standards seems much higher for the region than the rest of the world in general.

Spiegel Online considers autoworkers at a Skoda plant that are demanding wages that approach those of Volkswagen in Germany. Skoda can certainly afford the 12% wage increase that the workers are proposing for now, but consider that Volkswagen workers are some of the highest paid in the world. One plant in Germany reduced the work week from 35 hours per week to only 32 in order to maintain wages that approach $70 per hour.

Not bad work if you can get it.