Volkswagen Slovakia employees attend a strike in demand of higher wages in Devinska Nova Ves near Bratislava, Slovakia, June 20, 2017. REUTERS/Stringer
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Central and Eastern Europe faces the end of an economic era. With employment rates at record highs, and workers demanding wages closer to western levels, the cheap-labor model that has driven growth since the fall of communism is on the way out.Today Volkswagen's 12,300 workers in Bratislava earn an average of 1,804 euros ($2,102) a month.The moves by the carmakers are particularly significant because the auto industry represents the lion's share of foreign investment in Central and Eastern Europe.Filip Eisenreich, CEO of Czech ventilation and cooling system producer Janka Engineering, a unit of India-based Lloyd Group, said his company was raising wages by 7-8 percent this year and was "pretty much on the edge" in terms of labor costs.In the EU, wages on average accounts for 47.5 percent of economic output, according to Eurostat – but while that figure reaches 50.9 in Germany it drops to just 40.4 in the Czech Republic.But workers in Central and Eastern Europe are less financially productive. According to OECD data, an hour of work in Germany produces 52.7 euros of German economic output, but just 19.4 euros in the Czech Republic.
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