Labour shortages and costs halved the FDI in the Czech Republic in 2018

Labour shortages and costs halved the FDI in the Czech Republic in 2018
The number of FDI projects in Czechia halved in 2018 due to labour shortages says EY
By bne IntelliNews June 26, 2019

Foreign direct investment (FDI) in the Czech Republic has dropped by half (51%) in 2018, due to the lack of labour and constantly increasing wages, EY Czech Republic reported on June 25, based on data from the annual EY Attractiveness Survey.

“A drop in foreign direct investments in the Czech Republic is connected mainly with a tense labour market in the past years and related fast growth of labour costs. Nowadays, foreign investors in the Czech Republic find it extremely difficult to find an available and qualified labour force, which discourages them from major investments,” the head of Czech EY's Mergers & Acquisitions team Stepan Flieger said. 

FDI has fallen in all Europe over six consecutive years by 4% to 6,356 investment projects. Investments into the Netherlands and Sweden has posted a double-digit drop in investments among others countries. The two biggest European markets that together made up a third of all FDI – UK and Germany - both recorded decreases of 13%. In Britain the manufacturing industry was hit hardest, while in Germany it was the automotive sector that suffered the most.

“Foreign, and American investors in particular, have always seen Britain as a gateway to the rest of the EU. Of course, there is a number of other competitive advantages that Britain has kept, such as flexible labour market and stable law and order. However, the uncertainty over the past 3 years since Brexit started forces investors to look for other markets because they don’t want to wait to see how the negotiations end,” commented the Country Managing Partner Magdalena Soucek.

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