Lack of skilled workforce costs EUR 358 billion to companies in the region, PwC says
Business leaders in central and eastern Europe are growing increasingly concerned about talent and skills shortages and their hampering effect on growth. The loss in revenue resulting from the increasing lack of skilled workforce is estimated to amount to a staggering EUR 385 billion, according to a study conducted by PwC. That is more than the combined GDP of Hungary, Croatia, and Slovakia. Private companies in CEE face stiff competition for staff from multinational companies with bigger budgets and strong employer brands. Demographic factors are compounding matters. These include low birth rates, aging populations, and mass economic migration to Western countries, and also to Russia, the study, entitled CEE Private Business Survey 2019, says. ”The lack of skilled labor hampers companies in their expansion by reducing revenues and significantly impacts economic growth in the CEE region,” says Gergely Juhász, partner in charge of private businesses at PwC Hungary. Despite labor force concerns, most decision makers expect revenue growth in the next 12 months, while just 8% expected lower revenues. Optimism appeared highest in Croatia, followed by Eurasia. Overall, the mood was hopeful, tinged with a bit of uncertainty, the study says. ”The cautious mood possibly reflects global sentiment that storm clouds are looming. Many economists note evidence of an economic slowdown in 2019, which looks set to continue, driven largely by slowing growth in China and amid uncertainty caused by the US-China trade war. Concerns about Eurozone stability and weakness in Western European economies are also undermining confidence in CEE.” Even though 63% of business leaders surveyed recognise that digitalisation will have a high impact on the long-term viability of their businesses, only 35% appear to have a more sophisticated take on digitalisation. „Our findings suggest that many company leaders see digitalisation as a technical fix to solve specific issues in areas such as supply chains, when there are benefits to viewing it as a holistic strategy to transform an entire company - especially at a time when the economic cycle demands reinvention and renewal in preparation for the next era of growth.” To thrive during disruptive times, private businesses should employ a digital strategy that addresses every area of a company to meet present and future needs. If owners and managers don’t think strategically now about how to transform their companies (and manage the trade-off between rising cost constraints and investment needs), they risk being unprepared for whatever future lies ahead: one marked by digitalisation, Brexit, a full-blown recession – or all three. The study is based on interviews conducted recently with 600 key decision makers in 15 countries in CEE, including the Baltics and three countries in Eurasia (Ukraine, Georgia and Moldova).