CEE Special Report: How to remain competitive?

Over the last decade, most of the CEE countries experienced cumulative real productivity growth in double-digits, with Romania, Serbia and Poland even approaching 30%. More importantly, real productivity gains exceeded the real labor cost increases in most of the CEE countries. Productivity gains are part of the convergence pattern, but there is still room for catching up. Relative competitiveness is intact, as labor costs remain lower compared to EU27. In other words, the CEE region still offers a cost advantage, i.e. low labor costs compared to productivity levels. From that perspective, Romania remains a sweet spot: low labor costs compared to a decent productivity level relative to the EU average.