AFLA – Labour Mobility and Demand for Skilled Labour After the Opening of the Austrian Labour Market. Regional and Overall Economic Development in the Countries Adjoining Austria, 2000–2010

Pay gaps between Austrian, the Czech Republic, Slovakia and Hungary were considerably narrowed between 2000 and 2008. This was fostered by the rapid economic growth enjoyed by Slovakia, whereas growth was more muted in Hungary. The catching-up process came to a halt in mid-2008, due to the global financial market and economic crisis that hit the new EU countries more severely than it did Austria. Nevertheless, the development gap between these countries and Austria (with the exception of Hungary) was narrower by 2009 than at the time of the EU expansion. The EU forecast assumes that the process of convergence will continue, albeit at a slightly slower pace than before the credit crunch. Convergence at country level was, however, accompanied by an ongoing rise in regional differences within these countries. In addition, income differences, and in particular exchange-rate-based wage differences between the border regions in Austria and its neighbours, with the exception of Bratislava, are still high. Apart from the capital cities, NUTS-2 regions of the new EU member countries are mostly industrial regions with a small tertiary sector. In this they differ significantly from Austria, and these structural differences have become even more pronounced over the past years.