(Re)producing competitive advantage: workforce skills and automobile multinationals in East Central Europe

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Abstract:

This paper looks at the issue of workforce skills in the automotive sector of Central and Eastern Europe as part of a more general employment model which underpins the production strategies of firms in the sector. Drawing on the literature of varieties of capitalism and employment models, it identifies the elements of this relationship as comprising of low cost, high flexibility and relatively high skills. However, in contrast to some other observers of the region, I argue that although these features formed a relatively stable regional employment configuration for nearly two decades, they are not in any meaningful sense complementary or mutually enforcing, and that the very success of the region has become the source of internal tensions. These tensions, which materialise as labour shortages, workers’ dissatisfaction and wage pressures, have brought about a variety of responses from the automobile firms and other relevant actors. The overall direction appears to be that of a downward adjustment towards low skill-high flexibility-(relatively) low cost configuration, or the so-called “low-road employment model” (Juergens and Krzywidzinski: 2008), but insofar as the most prominent employers are eager to keep the advantages of the original configuration, there may be still some scope for the governments to steer the industry onto the higher path. On the other hand, the same factors which underwrote the competitiveness of the industry created disincentives for the new cohorts of future workers to invest in the manufacturing skills, making it more difficult for the governments to continue catering to the needs of these industries.