Central European Carmakers Confront Skills Shortages

Unions asking higher wages and better fringe benefits.

Car manufacturers crowding into Central Europe are confronting higher demands for wages and fringe benefits as local skills shortages strengthen the hand of workers and unions. Skoda Auto, the region's biggest auto manufacturer and profit pillar for parent company Volkswagen, is facing down a union claim for a 17% increase this year for its 23,000 employees. Management has offered 6.1% over two years, albeit sweetened with an increasingly developed series of fringe benefits such as soft home loans.

"Localized skills shortages are emerging as a one of the major issues for the auto industry in the Czech and Slovak republics," PricewaterhouseCoopers' Central European auto sector specialist Matt Pottle said. Pottle said he did not believe the skills problem will brake the $6.0 billion worth of auto production expected to relocate to Central and Eastern Europe over the next five years to take advantage of low, but fast accelerating, wages.

The Toyota-Peugeot-Citroen Automobile (TPCA) joint venture at Kolin, in the center of the country, has already provided negotiating ammunition for Skoda unions by agreeing an annual 7.5% increase for workers from April, taking average monthly pay to 23,000 koruna (US$ 1,084). It is also boosting its fringe benefits, starting at 3,000 koruna a month.

Finding the 3,500 workers needed to produce 300,000 cars a year is not the problem. The problem is keeping them, according to TPCA spokesman Matej Matolin. "There are an increasing number of investors coming into the Czech Republic and let's say that the demand at the moment is higher than the offer on the labor market.We would like to have a lower turnover of workers."

In unemployment-plagued eastern Moravia, where Hyundai will produce 300,000 cars a year with 3,500 workers from 2011, the South Korean company says it will not initially match wages offered by its Czech-based rivals.Hyundai wants to hire 600 staff by year end, half of them managers and half workers and technicians. So far, it has seen no signs of problems. "We have had 3,500 applications, most for the workers' positions," Vanek said. "There is a whole army of unemployed people in this area," he added.

Slovakia's third major auto manufacturer, Kia, a Hyundai daughter company, has problems recruiting suitably qualified staff, according to local spokesman Dusan Dvorak. Kia expects to produce around 150,000 cars this year with 2,000 workers, half of its final production targeted for 2009-2010 with 3,000 workers.

Slovakia already hosts French-based Peugeot Citroen, which arrived in 2003, and Volkswagen, which opened a plant outside Bratislava in 1991. With manufacturers declaring a total yearly production target of 840,000, the small former communist country hopes to become the world's leading car producer per inhabitant by the end of the decade.

Management at the French-based carmaker's Trnava plant in West Slovakia have adopted an active recruitment policy to fill 3,3000 posts, including cooperation with Bratislava's Technical University and technical schools as well as nationwide trawls for talent at job fairs.

Copyright Agence France-Presse, 2007

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