Procyclicality of changes in labour productivity - labour hoarding in CEE countries

Abstract

Purpose: This paper aims at the identification of labour hoarding, which is one of options of employment adjustments to changing production in companies, in enterprises in Central and Eastern European countries (CEE countries) from 1998 to 2016. It tries to answer the basic question concerning the occurrence of labour hoarding in enterprises and the direction of its changes. Design/Methodology/Approach: The occurrence of labour hoarding was researched through analysing the relation of real GDP and dynamics of employment productivity and dynamics of hourly productivity. Type and strength of relation was defined with use of correlative analysis. Analysed variables were prepared by clearing time series from seasonal fluctuations with use of the Census X-12 ARIMA procedure and from the trend with use of the Christiano Fitzgerald (CF) filter. Findings: Assessment of changes in correlation of the dynamics of GDP and of labour productivity allowed for the conclusion that in CEE countries there occurred three periods of finer adjustment of employment to changes in production volume, i.e. period from 1998 to 2000, from 2002 to 2005, and from 2008 to 2015. The first period constituted the post-transformation time, when process marketisation forced enterprises to apply adjustments of employment volume to production changes. The second moment concerned the accession of CEE countries to the European Union - all analysed countries accessed the European Union in 2004. The 2008 financial crisis constituted another event that affected stronger adjustment of employment to decreasing production in CEE countries, while in Czech Republic and Slovenia that reaction was delayed. Practical Implications: The results indicate that labour hoarding information is primarily relevant for long-term decisions. In short-term decisions, adjustment mechanism on labour markets is of relatively small importance. Originality/Value: Research results can be useful from the point of view of shaping instruments for influencing the labour market in the field of employment policy, to assess the changes that have taken place in the labour markets in Central and Eastern Europe.