Look Out London: Budapest, Prague, Wroclaw Want Your WorkersBy
Jobs in business services set to triple in CEE to 1 million
Business service industry raises hope of ending brain drain
When the world’s largest asset manager announced it was setting up a global hub in Budapest this year, it was inundated by applicants from an unlikely place: London.
Those interested in leaving Europe’s top banking center for the Hungarian capital made up a third of aspirants, said Melanie Seymour, managing director in Budapest for BlackRock Inc., which manages more than $5 trillion. Senior investment bankers and other top-earning Hungarians flocked to the company’s get-together in the City to hear about the 500 marketing, financial-modeling and other positions.
As London braces for a post-Brexit talent exodus, central and eastern Europe is preparing for the opposite. Following years of brain drain in which elite graduates fled ex-communist nations for higher paying jobs in the West, the region now has more to offer. Companies including Goldman Sachs Group Inc. in Poland and Pfizer Inc. in the Czech Republic will contribute to a more than tripling of the finance, legal, research, design and other posts in the region to 1 million by 2025, according to the Association of Business Service Leaders, or ABSL.
“Their ultimate dream is to come home,” Seymour said in an interview. “The only reason they’re not here is because there aren’t the career opportunities to satisfy their intelligence and career ambitions.”
At the center of the job boom are business-service hubs, where global companies do much of their heavy lifting in the European Union’s eastern wing. Initially focused on low-paying tasks such as call centers, the industry now employs highly qualified and multilingual staff to take on jobs once only handled in companies’ headquarters.
Poland is leading the way. The EU’s largest eastern economy boasts 936 centers employing 212,000 people, which should grow to 300,000 by 2020, ABSL said. The government says it will lure as many as 30,000 British jobs this year as companies seek to keep their operations in the EU after Brexit.
In financial services, UBS AG has a global hub in Krakow. Goldman Sachs, which is planning to halve its London staff to 3,000 workers, will expand in Warsaw to “several hundred” people over the next three years, Handelsblatt reported. JPMorgan Chase & Co., which may move as many as 2,500 jobs to central Europe, is also considering Poland.
The boom has boosted employment outside of traditional business hubs. Poland features 10 cities that employ at least 3,500 people in the sector, including Krakow, where Heineken NV has operations, and Wroclaw, which hosts Google Inc. Brno, the second-largest Czech city, has offices for U.S.-based AT&T Inc., while Romania’s Cluj-Napoca has Hewlett Packard Enterprise Co..
Salaries have risen across the region as a result. Software developers with three to five years of experience, for example, make an average of 28,500 euros ($30,275) a year in Prague and 33,200 euros in Budapest. That’s three times the Czech and Hungarian national averages but still less than the 65,000 euros a year they’d make in Dublin.
Although the service center trend has burgeoned independently of Brexit, more than a quarter of U.K. employers suspect EU citizens on their staffs are considering leaving this year, according to a survey by the London-based Chartered Institute of Personnel and Development. British companies are also considering moving, according to Jonathan Appleton, head of the Association of Business Service Leaders in Prague.
“We’re already seeing” a spike in interest among U.K. companies who are looking to move out of Britain, said Appleton. “As things get more difficult, they will look at relocating.”
Still, higher western salaries continue to draw workers abroad, regardless of Brexit. While about 1 million Poles live in the U.K., more Polish workers have moved to Germany than to Britain each year since 2012. The exodus of workers has created a labor shortage that’s hampering growth across the region, with Hungary, Poland, Romania and the Czech Republic boasting four of the eight lowest jobless rates in the EU, according to Eurostat. The Czechs have the lowest at 3.4 percent.
Business centers, at least, are helping raise productivity, which can keep record salary increases sustainable and keep some workers home. Back in Budapest, General Electric Co. plans to expand its service center to over 2,000 employees by end-year, from 1,900, making it the biggest of four hubs along with one in Cincinnati, Ohio, the company said. BlackRock’s future financial modelers will join “one of the highest-skilled quant teams” in the company, Seymour said.
“The work that happens there is both as important to the overall outcome of the firm and as complex as anything we do in London, New York, Hong Kong or Singapore,” she said. “We can hopefully help support keeping talent here as well as attracting some of it back.”