International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online)

Labour Costs and Productivity Analysis of East-European Countries
Lembo Tanning, Toivo Tanning

Abstract
After the opening of the European Union (EU) labour markets, some EU countries started facing the problem of partial work force drain to richer countries with higher wages. From Estonia, the main migration is to Finland. At the same time, East-European countries face quite a high unemployment rate on the one hand, and many vacant jobs on the other hand – there is a lack of qualified work force. Hence the objective of this article is to analyse the labour market of new member states of the EU coming from East-Europe, with emphasis made on Estonia, more specifically the productivity, labour costs and salaries, problems associated with labour market, and to compare it with the EU levels. The article focuses on the analysis of whether the low wages of Eastern European countries, including Estonia, are justified when compared to the wages of Western European countries, and what are the possibilities and possible benefits of raising them.

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