Catherwood LibraryILR School

The fall of the Iron Curtain in 1989 resulted in massive investment growth in Eastern Europe, fueled by cheap labor and expansion into new markets, but the low-cost, high-growth model has also led to higher living standards, falling unemployment, and ultimately a labor shortage as workers seek higher wages by migrating to countries such as Britain and Germany. While countries such as Spain and Greece struggle with high unemployment, employers in the Czech Republic, Hungary, Poland, and Slovakia are facing a shrinking quality labor pool. Economists and policy makers suggest two short-term solutions – make it easier to import workers from other countries (legal economic migration), or raise wages, contrary to the traditional growth model in manufacturing. Some countries, such as Hungary, are trying to avoid switching to a service industry model, prioritizing industrial growth by encouraging students to attend trade schools.