Eastern European business leaders predict rise of salaries and GDP
KPMG's opinion survey, based on the feedback from business leaders in the three Baltic states, the Czech Republic, Hungary, Poland, Romania and Slovakia, predicts GDP growth in all of these
countries, and an increase in salaries between 2-5 percent in 2015.
In terms of the GDP growth, Estonian business leaders were the most cautious, with 35 percent estimating that the GDP will increase 1 to 2.9 percent in 2015, and 51 percent thinking it will increase by less than 1 percent, or remain unchanged. The most positive moods are in Hungary and Lithuania, where 79 and 77 percent respectively estimate that the GDP will rise by more than 1 percent.
Estonian business leaders cite skilled labor, external demand and tax and legal system as the key drivers of economic competitiveness, while traditional industries, domestic demand and monetary policy are seen as playing a minor role in GDP growth.
Compared to the average 75 percent, only 55 percent of Estonian respondents said that shadow economy poses a problem in Estonia. The greatest concern were the smuggling of excise goods and VAT fraud.
When asked which areas require more fiscal expenditure from 2015-2018, the general consensus said that education and science and innovation. Estonian respondents differed from others by calling for an increased spending on social security and less on infrastructure and the national health system.
In terms of enterprise outlook, 84 percent of Estonian respondents found that retaining good employees is one of the key factors of business sustainability. Estonian business leaders also prioritized research and development more, but cutting the cost base less, than others.
In order to retain talent, 69 percent of all, and 80 percent of respondents from Estonia, plan to increase salaries in 2015. Around 50 of those estimated the pay rise to remain below 5 percent.
In Estonia, the predicted hike in salaries is driven by shortage of qualified staff in the market, and somewhat less by the pressure from the employees, whereas in many other countries, higher productivity and company's improved financial performance are seen as the driving factors.
KPMG conducted an online poll of 456 eastern European business leaders to find out their opinions on their countries' economy, tax policy, labor market, foreign investments and the adoption and strength of the euro.