Duration of working life in CEE mostly below the EU average

On the radar

• At 10 AM CET, Poland will publish industrial output growth, wage and employment growth in June as well as producer prices.
• At 10.30 AM Slovenia will release producer prices.
• Croatia is scheduled for release of June’s unemployment and May’s real wage growth.

Economic developments

In 2024, the expected average duration of working life for 15-year-olds and over in the EU was 37.2 years. Gender-wise, for men, the expected duration of working life was on average 39.2 years in the EU, with the shortest in CEE in Romania at 35.9 and Croatia at 36. As for women, the average duration of working life in the EU was 35.0 years (one of the shortest durations was registered in Romania at 29.2). Looking across CEE countries it should not come as a surprise that the lowest working life durations was recorded in Romania (32.7 years), followed by Croatia (34.8). Compared to the EU average only Czechia and Hungary have marginally longer duration of working life. Czechia, however, has one of the biggest gaps between male and female duration of working life. Romania and Poland also stand out in that comparison. In the face of demographic challenges, prolonging working life may become a necessity at some point. Health status will be one of the key factors allowing to prolong the duration of working life, however.

Market movements

Moody’s affirmed Czechia’s rating and stable outlook. According to Moody’s, rating reflects the Czech Republic's fundamental credit strengths: a moderate government debt burden and strong debt affordability metrics, high quality of institutions and policy effectiveness, and a competitive economy that generates growing wealth levels. Fitch Ratings warned Poland that it will be “difficult” to reduce its general government deficit below 3% of economic growth and stabilize debt at levels comparable to its peers given recent political development. Fitch projects that government debt will rise to 64% by 2027 from 55% at end-2024, “widening its gap above the ‘A’ median and reducing headroom at the current rating level”. This week, Hungary plans to tap international bond market with sales of so-called panda bonds (5 billion yuan). Further, the Hungarian central bank holds a rate-setting meeting, and the key rate is expected to stay at 6.50% amid recent inflation development. We maintain our view, however, that we may see some monetary easing at the end of the year. Despite some intra-week volatility, CEE currencies remain close to the levels we saw a week ago, but remain sensitive to global developments, similar to the bond market. Especially, ECB is set to meet, and the market does not expect any change in key interest rates at this week's meeting. Further, the central bank's next steps will be heavily influenced by developments in the tariff dispute with the US and the impact on growth expectations.

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