Topic: Does EU accession mean higher wage inflation in Eastern Europe?

Outsourcing to Central and Eastern Europe (CEE) has grown rapidly in the last four to five years with both buyers and suppliers exploring low-cost locations to host their service delivery centers. In addition to cultural similarity with source countries (such as France and Germany), the EU accession of a number of CEE countries led to their increased acceptance from a business environment and regulatory point of view.

In the recent past, there has been increasing concern about the potential inflationary impact of EU accession due to increased outward migration from CEE countries, as well as wage parity resulting from the free-market movements. However, our analysis indicates that these fears may be misplaced.

An analysis of wage trends in the Czech Republic (one of the earliest EU accession countries) shows little or no correlation with EU accession.

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