Employment in the Border Regions

For five years Burgenland has posted record gains in employment; this development is surprising considering that a substantial part of Burgenland's manufacturing sector has been exposed to the opening of the East; as a result of the extremely large wage differentials vis-à-vis the East, many production facilities have been relocated to East-Central Europe. The current issue of the Austrian Economic Monthly has investigated the question of whether this development is typical for the border regions and what components have contributed to the expansion in employment. The data analyzed so far suggest that the employment gains in the border regions are at least as great as the increases in the other parts of Austria's eastern half; thus, the development in the border regions has become more dynamic. This was not the case in the past. Foreign workers, probably mostly commuters, constitute an important element of this development; only a relatively small number is employed in unskilled jobs. Particularly in manufacturing there has been a shift from branches with below-average skill intensity to medium and above-average skill intensity. This development can be interpreted as evidence that, given the supply of cheap labor, the border regions have also attracted enterprises which require labor with relatively high skills. But only if such enterprises also recruit local workers will the inference of sustained improvement in economic activity be justified.