Do you thrive on fast-paced growth? The EU accession countries continue to offer opportunities to ambitious expatriates — but there may be a downside.

The early and mid-1990s were a boom period for expatriate assignments in Central Europe. Billions of euros in foreign corporate investment were pouring into the top economies of the region and with these funds came sharp demand for qualified expats to fill upper- and middle-management positions. To sweeten the deal, many multinationals offered inflated salaries to workers who could set up new operations and get local employees orientated. But the demand and prospects for expatriate workers in top investment regions such as the Czech Republic, Hungary and Poland have shifted since this heady period, and one of the reasons for it is European Union accession. “EU accession is a bit of a double-edged sword,” says Mark Pautz, human resources director for Deloitte & Touche Central Europe. “Common legislation and common markets are all positive… But on the downside some of the investment incentives will change over the region and you’ll find increased [corporate] migration to the fringe or border countries.” Since the fall of the Berlin wall, transnational corporations from Western Europe — predominately Germany, France, the Netherlands and the UK — and the United States have invested heavily in Central Europe. But some of these businesses, particularly those in the low-tech manufacturing sector, have already relocated further east and south in anticipation of the increased labour costs that will accompany EU status in the 10 accession nations: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Since he arrived in the Czech Republic from South Africa eight years ago, Pautz has seen the expat employment outlook change considerably. “The US has basically come and gone. They set up and handed things over to local operations,” he says. “The biggest opportunities would be in the [former-Yugoslavian] countries, and Bulgaria, Romania, etc. It would be a golden opportunity to invest there now.” Moreover, many of the expatriate jobs that have not gone further afield have simply been absorbed by local staff. After all, one of the primary roles for expatriates in Central and Eastern Europe has been to work themselves out of a job by getting local workers up to speed. “The local talent pools are getting stronger and their skills are getting deeper. There are generally [no positions] available lower than the executive and strategic level. Nothing lower than that,” says Pautz. Finding the new expat growth areas But not all of the expatriate prospects in the accession countries have disappeared. While some jobs have moved to countries that are not yet due to join the EU (though Bulgaria and Romania have a target membership date of 2007), many expatriate employment opportunities have remained and others have sprung up. “There was a drop off in expatriates in the three big markets recently but apparently their numbers are levelling, so I’d say there is more room for expats to be there,” says Judy Warren, a human capital consultant for consulting firm Watson Wyatt Worldwide. Warren, who lived and worked for two years as a consultant in Budapest, also notes, “In terms of the skills needed, the ability to speak English, without question, is the biggest requirement, and general business skills… A real strong business approach is what you’re looking at." But she adds that it is increasingly required to be almost fluent in the regional language, particularly for expatriates who are vying for lower-level positions where the focus now is on recruiting local-language speakers. Outside of these multinational corporations, numerous technical, service and other industry sectors have grown in response to the influx of business investment, increased consumer choice and EU accession. Expatriates from EU-member states will soon be free from work permit red tape to pursue these growth areas. American Brendan Ian Burke, the executive English editor for the English-language news weekly The Warsaw Voice, arrived in Poland two years ago and has seen expatriates take up jobs in a variety of these industries. “The field is pretty wide open right now,” says Burke. “I would say within five years post accession, there might be some development in niche areas, but right now [the expatriate fields] are mostly related to languages, some marketing aspects, public relations, human resources, the financial community. A lot of German and Austrian banks are moving in… French retailing, and even some Japanese car and spare parts manufacturers. Expatriates will follow wherever the investments are.” Short-term assignments with small- and medium-sized enterprises are also on the rise as home-grown companies seek expatriate language and business expertise to deal with corporate counterparts from other countries, according to TransCulture, an Anglo-Hungarian cross-cultural consulting company that specialises in Central and Eastern Europe. Expatriates who seek work in the accession countries independently will soon note however the large salary discrepancies between West and East. Except for the top corporate jobs, salaries tend to be lower in the accession countries, although so is the cost of living. Threat from the East? By now expatriates in Western Europe might have encountered trepidation from the current 15 member states over the loss of manufacturing and other industries to accession countries that offer cheaper labour and access to what is arguably the world's biggest market. There has also been fear of a massive flood of job hunters from the East, adding to the around 14 million already out of work. While it is true that many big manufacturers have already moved to accession countries — and beyond in search of cheaper labour – their migration may be slower than feared or not occur at all, as factors such as transport links are equally important to businesses, according to a report by global logistics firm Exel. What may prove significant however is the high level of technically skilled labour in the East and the growth of its technology markets. Public and private tech spending is projected to expand in an effort to close the technology gap with the West, reported market researcher IDC. IT markets in the region are forecast to grow by 9.25 percent, to EUR 43.7 billion in 2003. Software, one of the fastest growing segments, is expected to rise by 13.8 percent in 2003 to nearly EUR 2.3 billion. And demand for IT services, which reached a value of EUR 3 billion in 2002, is expected to increase by a further 12 percent this year, according to research from EITO, the European Information Technology Observatory. Research and development operations, for companies like Nokia, Siemens, Ericsson and Honeywell, are also moving East to take advantage of an educated workforce (Science and mathematics schooling remained solid throughout the communist era.) Risto Enbusko, head of Nokia's R&D centre in Budapest, told Business Week that software engineers in Eastern Europe come at only a 10- to 20 percent discount to their Western European counterparts. Nokia was not interested in cheap labour, but rather quality engineers, he said. Western fears over a massive influx of job seekers are more likely to prove unfounded. “When Spain and Portugal joined the EU there were the same fears about masses of workers going into France and Germany. It didn’t really happen,” says Burke. To ensure this, countries most concerned about labour influx, Germany and Austria, spearheaded the development of a seven-year transitional arrangement for the free movement of persons that will limit the access of workers from new member states to the Western labour markets. So far Germany and Austria appear to be the only countries that intend to use this transitional arrangement while Denmark, Sweden, Ireland, the United Kingdom, the Netherlands, and even EEA countries such as Norway and Iceland have decided to open their national labour markets. But all of the fuss over migration may be a moot point. So far it appears that as accession economies continue to outperform the West, the best policy to counter large flows of economic migrants is to strengthen growth and investment in the East — by enlarging the EU. Kristine Garcia is a former editor of Expatica Netherlands. Subject: Expats and European expansion