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2019.09.13 15:00

Lithuanian paradox: as wages grow, so does unemployment

LRT TV naujienų tarnyba, LRT.lt2019.09.13 15:00

Three-fourths of Lithuania's working population enjoyed growing wages this year, a study shows. At the same time, the country is seeing rising unemployment.

Artūras works as a manager in Klaipėda, Lithuania's port city on the Baltic coast. He says his income has grown over the last year.

“I can't complain, I can feel it myself and I've seen it among my friends that salaries are rising somewhat,” he says.

Indeed, Klaipėda is among the cities where pay grew the most, according to a study by Baltic Salary Survey.

Three fourths of the working population should have experienced a rise in their incomes. In Klaipėda, salaries grew 15 percent. In Lithuania's two biggest cities, Vilnius and Kaunas, the growth was about 10 percent, according to the study.

However, salaries in Vilnius remain considerably higher than in the rest of the country. The surveyed employers offered average monthly wages of €1,818 in Vilnius, €1,328 in Kaunas and €1,205 in Klaipėda, before tax.

“Vilnius has most of the service centres and almost all the IT companies,” explains Povilas Blusius, a spokesman for Baltic Salary Survey. “They are appearing in Klaipėda and Kaunas, too, but there is still a gap.”

Basic salary, excluding bonuses, grew 7.4 percent this year, according to Baltic Salary Survey, and is expected to keep growing next year, albeit at a slower pace, 5.1 percent.

Blusius says that talk of an approaching economic slowdown influences businesses' expansion and hiring plans.

However, growing unemployment is one of the reasons that will limit wage growth in the future, according to Žygimantas Mauricas, an economist at Luminor bank.

“There is also a rather intense flow of immigration from third countries that slowed down wage growth in some sectors. And third, we can already see from the second-quarter data that, in the private sector, pay rises slowed down and will, likely, slow even further,” Mauricas told LRT TV.

Economist Romas Lazutka says that rising pay and unemployment affects different sectors of the workforce. Employers are mostly looking for highly trained workers, while less skilled workers are the ones struggling to find a job.

“The supply of less skilled people is sufficient, while the demand is decreasing due to immigration from countries like Ukraine and Belarus. So, by the market principles, salaries [for low-skilled work] are not growing as fast and people who are looking for work cannot find it,” according to Lazutka.

Read more: End of fast pay rises as Lithuania's economy expected to grow slower

Read more: Gender pay gap narrows in Lithuania but remains significant