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Why East Europe’s Wage Boom May Not Be a Job Killer
Salary increases have lagged behind productivity since fall of communism
A female employee, right, works on an automobile door panel on the production line inside the Suzuki Motor Corp. plant in Esztergom, Hungary.
Photographer: Akos Stiller/BloombergThis article is for subscribers only.
Surging salaries from Prague to Budapest may not pose the threat to eastern Europe's cheap labor model that some doomsayers predict.
The main cause for optimism is productivity. While wage increases are currently outstripping efficiency gains, the opposite has been the case for much of the region’s transition from communism.