CEE labor market trends
After a fast catching-up process, the CEE region continues to offer a relative labor cost advantage vs. Western Europe, with companies benefiting from a similar regulatory environment. At the same time, accelerated know-how and technologies transfer within the single market have resulted in much faster productivity convergence in CEE relative to income convergence.
The main trends that have been affecting labor market development over the last two decades are:
- Migration: Number of CEE-born population living abroad has increased fourfold since EU accession, i.e. almost 9mn people have emigrated from the region.
- Education: Currently, one third of the working age population has a tertiary education, compared to only 10% in 2000.
- Aging society: Low fertility rates and an increase in life expectancy result in a rising share of the population over 65.
Youth employment gap
While employment rates in CEE do not differ significantly from the EU average, we look at Sweden as a benchmark target, as it has one of the highest employment rates in the EU27. Firstly, the youth employment gap is quite visible. While in the case of men this gap closes at the age of 25 (CEE has an even higher employment rate than Sweden), in the case of female employment, the gap persists for another 10 years, due to particularly lengthy maternity and parental leave in CEE. Low female employment before the age of 35 is another distinctive feature of the region. The gap compared to Sweden closes between the age of 35 and 50 and opens up again for the 50-64 age group, due to the relatively low retirement age, among other factors.
Integration of the young generation into the labor market is a factor that could also ease pressure for employers, especially in Slovakia, Romania and Bulgaria. The high share of young people (aged 20-34) neither in employment nor education and training (NEET) in these countries could also be partially explained by the significant marginalization and segregation of Roma population.