Cheap Foreign Labor Opens New Czech Rift as Clock Ticks on Vote

(Bloomberg) -- A Czech ruling party opened a new front for this month's general elections by declaring that it wants to stop bringing in cheaper labor from eastern Europe, clashing with its biggest rival in the polls who's called for more such workers.

“Hiring foreigners from eastern Europe is lowering the cost of labor in the Czech Republic,” Lubomir Zaoralek, foreign minister and the Social Democrats' election leader, said in an opinion piece published by the newspaper Pravo on Monday. “The numbers are confirming this and we are saying, enough. We don't want the import of cheap labor. We want proper salaries for our people.”

The Social Democrats, the senior member of the ruling coalition, have put higher wages near the top of their economic agenda for the Oct. 20-21 elections. But the push for higher salaries has so far failed to boost the party's popularity, leaving it behind billionaire Andrej Babis's ANO by a wide margin in opinion polls.

Robust economic growth has helped bring Czech unemployment to the lowest in the European Union, and many businesses complain that a lack of workers is a barrier for further expansion. Babis, whose chemical, food and media empire has earned him a fortune of more than $3 billion, has called for easier rules to employ people from countries close to the EU, such as Ukraine. The second-richest Czech has spoken out against hosting refugees from the Middle East or Africa, rejecting the bloc's decision to allocate quotas to its members for migrants arriving from outside Europe.

While the Social Democrats and ANO have repeatedly clashed over issues such as budget spending during their four-year coalition government, the two parties have agreed to raise public-sector salaries, increase the minimum wage and boost pensions. Zaoralek said Czech wages don't reflect the country's productivity when compared with that for Germany, and workers in the post-communist EU member deserve “western salaries.”

Last week, the government backed a blanket pay raise of 15 percent for teachers and 10 percent for all other state employees, saying the measures will also put pressure on private companies to compete for workers. The Czech average wage climbed 18 percent in the four years to June.

To contact the reporter on this story: Peter Laca in Prague at placa@bloomberg.net.

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net, Paul Abelsky, Kevin Costelloe