Wage convergence in south-eastern European countries KODA AUTO - - PowerPoint PPT Presentation

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Wage convergence in south-eastern European countries KODA AUTO - - PowerPoint PPT Presentation

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Wage convergence in south-eastern European countries KODA AUTO University September 2019 Countries analyzed Bulgaria, Romania, Turkey, Albania Other countries for comparison Czech Republic, Slovakia, Hungary, Poland Spain,

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Wage convergence in south-eastern European countries

ŠKODA AUTO University

September 2019

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30.9.2019

Countries analyzed

  • Bulgaria, Romania, Turkey, Albania

Other countries for comparison

  • Czech Republic, Slovakia, Hungary, Poland
  • Spain, Portugal
  • Germany

2 Wage convergence

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Indicators for evaluation

  • development of total labor cost per hour in industry in

1998–2018 and its forecast for 2019–2030

  • development of total labor cost per hour in the

automotive industry in 2008–2018 and its forecast for 2019–2030 (Bulgaria, Romania and Turkey only)

  • development of the ratio of the country’s total labor

cost per hour in industry to Germany’s one in 1998– 2018 and its forecast for 2019–2030

  • comparison of the development of total labor cost per

hour in industry and of GDP per capita in 1998–2018

3 Wage convergence

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Data

All data – in nominal value, in euro

  • Albania – low availability of data, impossibility to create

forecasts

  • Turkey – time series 2007–2018
  • Romania – time series 2000–2018
  • ther countries – time series 1998–2018
  • automotive industry – data for 2008, 2012 and 2016 only

Data sources

  • Eurostat
  • national statistical offices

4 Wage convergence

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Note

  • In countries with their own national currencies, the

development of their total labor cost in euro depends

  • n fluctuations in their exchange rates. In particular,

the exchange rate of the Turkish lira against the euro is highly volatile.

  • Forecasts are created using exponential smoothing.

5 Wage convergence

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Exponential smoothing

Adaptive approach to fitting time series Calculation of each fitted value is based on all available past observations The trend is locally linear, its slope is gradually changing. Its parameters are estimated by weighted least-square method where the weights exponentially decrease towards the past, i.e. more recent observations are weighted more heavily than distantly past observations. Forecast at time t for time t + h Minimization Recurrent calculation of parameters Starting values and are obtained by fitting several initial observations with a straight line. Smoothing constants

1 α < <

ˆ

t h t t

Y a b h

+ =

+ ⋅

( )( ) ( ) ( )

1 1 1 1

1 1

t t t t t t t t

a Y a b b a a b α α β β

− − − −

= + − + = − + −

a0

6

1 β < <

2

[ ( ]

j t j t t j

Y a jb α

∞ − =

− −

b0

Wage convergence

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Total labor cost (TLC) per hour in industry (in EUR)

7 Wage convergence

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1 2 3 4 5 6 7 8 9 10 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Bulgaria

Data Upper 95% Forecast Lower 95%

Wage convergence

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2 4 6 8 10 12 14 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Romania

Data Upper 95% Forecast Lower 95%

Wage convergence

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1 2 3 4 5 6 7 8 9 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Turkey

Data Upper 95% Forecast Lower 95%

Wage convergence

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5 10 15 20 25 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Czech Republic

Data Upper 95% Forecast Lower 95%

Wage convergence

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2 4 6 8 10 12 14 16 18 20 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Slovakia

Data Upper 95% Forecast Lower 95%

Wage convergence

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2 4 6 8 10 12 14 16 18 20 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Hungary

Data Upper 95% Forecast Lower 95%

Wage convergence

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2 4 6 8 10 12 14 16 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Poland

Data Upper 95% Forecast Lower 95%

Wage convergence

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5 10 15 20 25 30 35 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Spain

Data Upper 95% Forecast Lower 95%

Wage convergence

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2 4 6 8 10 12 14 16 18 20 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Portugal

Data Upper 95% Forecast Lower 95%

Wage convergence

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10 20 30 40 50 60 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Germany

Data Upper 95% Forecast Lower 95%

Wage convergence

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Total labor cost (TLC) per hour in the automotive industry (in EUR)

18 Wage convergence

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1 2 3 4 5 6 7 8 9 10 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Bulgaria (adjusted for automotive industry)

Data Upper 95% Forecast Lower 95%

Wage convergence

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2 4 6 8 10 12 14 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Romania (adjusted for automotive industry)

Data Upper 95% Forecast Lower 95%

Wage convergence

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2 4 6 8 10 12 1995 2000 2005 2010 2015 2020 2025 2030 EUR per hour

TLC Turkey (adjusted for automotive industry)

Data Upper 95% Forecast Lower 95%

Wage convergence

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The ratio of the country’s total labor cost (TLC) per hour in industry to Germany’s one (in %)

22 Wage convergence

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30.9.2019 23 Wage convergence

2 4 6 8 10 12 14 16 18 20 1995 2000 2005 2010 2015 2020 2025 2030 %

TLC Bulgaria / TLC Germany Ratio

Data Upper 95% Forecast Lower 95%

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30.9.2019 24 Wage convergence

5 10 15 20 25 30 1995 2000 2005 2010 2015 2020 2025 2030 %

TLC Romania / TLC Germany Ratio

Data Upper 95% Forecast Lower 95%

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30.9.2019 25 Wage convergence

5 10 15 20 25 1995 2000 2005 2010 2015 2020 2025 2030 %

TLC Turkey / TLC Germany Ratio

Data Upper 95% Forecast Lower 95%

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30.9.2019 26 Wage convergence

10 20 30 40 50 60 1995 2000 2005 2010 2015 2020 2025 2030 %

TLC Czech Republic / TLC Germany Ratio

Data Upper 95% Forecast Lower 95%

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30.9.2019 27 Wage convergence

5 10 15 20 25 30 35 40 1995 2000 2005 2010 2015 2020 2025 2030 %

TLC Slovakia / TLC Germany Ratio

Data Upper 95% Forecast Lower 95%

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30.9.2019 28 Wage convergence

5 10 15 20 25 30 35 40 1995 2000 2005 2010 2015 2020 2025 2030 %

TLC Hungary / TLC Germany Ratio

Data Upper 95% Forecast Lower 95%

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30.9.2019 29 Wage convergence

5 10 15 20 25 30 35 1995 2000 2005 2010 2015 2020 2025 2030 %

TLC Poland / TLC Germany Ratio

Data Upper 95% Forecast Lower 95%

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30.9.2019 30 Wage convergence

10 20 30 40 50 60 70 80 1995 2000 2005 2010 2015 2020 2025 2030 %

TLC Spain / TLC Germany Ratio

Data Upper 95% Forecast Lower 95%

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30.9.2019 31 Wage convergence

5 10 15 20 25 30 35 40 1995 2000 2005 2010 2015 2020 2025 2030 %

TLC Portugal / TLC Germany Ratio

Data Upper 95% Forecast Lower 95%

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Comparison of total labor cost (TLC) per hour in industry and of GDP per capita (in EUR)

32 Wage convergence

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TLC, GDP – Bulgaria

33 Wage convergence

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TLC, GDP – Romania

34 Wage convergence

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TLC, GDP – Turkey

35 Wage convergence

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TLC, GDP – Czech Republic

36 Wage convergence

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TLC, GDP – Slovakia

37 Wage convergence

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TLC, GDP – Hungary

38 Wage convergence

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TLC, GDP – Poland

39 Wage convergence

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TLC, GDP – Spain

40 Wage convergence

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TLC, GDP – Portugal

41 Wage convergence

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TLC, GDP – Germany

42 Wage convergence