12 percent salary increase at Skoda: Skills shortage forces VW and Co. to extreme wage increases in Eastern Europe

04/12/2018

12 percent salary increase in Skoda Skills shortage forces VW and Co. to extreme salary increases in Eastern Europe

Skoda

The rich salary increase in the Volkswagen Show stock market chartSubsidiary Skoda has decided: The wages of the approximately 25,000 tariff employees in the Czech Republic will increase retroactively to April 1 by 12 percent. In addition, a one-time payment of the equivalent of approximately 2600 euros is provided. The new collective agreement is valid until the end of March 2019. Then the company agreed with the unions.

The hefty serve reflects one general trend in Eastern Europe, However, in view of the good economy, the demand for cars is growing. In countries such as the Czech Republic – strongholds in the industry – companies must expand production. But skilled workers are now scarce in many countries.

“In general, the wage level is rising in Eastern Europe,” says auto industry expert Jens Haas of the global consulting firm AlixPartners. “The growth rates there are higher than in Western Europe, but come from a partly much lower base.”

In addition, the competition for qualified employees between suppliers and car manufacturers is intensifying at numerous locations in Eastern Europe, according to Haas. “A competition that naturally also affects the wage level.”

Skoda generates rich profit

The exceptionally high result reflects the economic situation and the competitive environment in the Czech Republic, confirmed Skoda CEO Bernhard Maier. The EU country is almost full-time. With about 10 percent margin also the profit at Skoda fell recently high.

The average salary of a Skoda salaried employee last year was around 1700 euros, about twice as high as the general wage level. In Germany, VW employees earn on average more than 4200 euros.

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The Eastern European locations are losing their labor cost advantage with current wage increases, as in the Czech Republic or Slovakia not yet. But the weights are slowly shifting slightly. Thus, the cost level in Portugal is already lower than in Slovenia. The Czech Republic should also catch up soon.

With the agreement at Skoda a strike could be averted at the last minute. The unions had decided against extending the working hours in the main plant Mlada Boleslav on the weekend and thus ultimately prevailed.

Skoda delivered the record number of more than 1.2 million vehicles in 2017. Best-selling model is the mid-size car Octavia. In addition to the main plant, the VW subsidiary has two further production plants in the Czech Republic and also produces in Russia and China for the local markets.

with dpa-afx

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