Central European carmakers confront skills shortages

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 17.0 percent increase this year for its 23,000 employees. Management has offered 6.1 percent over two years, albeit sweetened with an increasingly developed series of fringe benefits such as soft home loans.

"Localised 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 told AFP.

Pottle said he did not believe the skills problem will brake the 6.0 billion dollars' 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 centre of the country, has already provided negotiating ammunition for Skoda unions by agreeing an annual 7.5 percent increase for workers from April, taking average monthly pay to 23,000 koruna (818.5 euros, 1,084 dollars).

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 labour market."

"We would like to have a lower turnover of workers," Matolin added.

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.

But this should change once cars start rolling off the production line in 2009 with wage reviews planned every six months.

"We are competing in the same labour market and will have to offer the same benefits as well," spokesman Petr Vanek told AFP.

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.

Historically, Slovaks and Poles flooded into eastern Moravia's coal mines and steelworks, but Hyundai is at best expecting a trickle this time round.

Around 50 Slovaks and Poles have already applied for work at the plant sited only around 30 kilometres (19 miles) from each country's borders, but Vanek warns the company is not making any special provision for their transport or housing.

Around 50 kilometres away, Slovakia's third major auto manufacturer, Kia, a Hyundai daughter company, has problems recruiting suitably qualified staff, according to local spokesman, Dusan Dvorak.

Immediate vacancies for shop floor assembly, construction, engine and painting jobs, are posted on the plant's website, as well as a series of management posts. New manufacturing recruits, straight out of school, are paid 14,600 Slovak koruna (around 430 euros, 568 dollars) a month.

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.

Among the fringe benefits boosting a worker's average monthly wage of 15,000 koruna is an extra 1,500 koruna premium rewarding those who regularly turn up for work and individual bonuses. Company housing benefits can cover as much as half of the costs of renting a flat.