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2020.06.10 12:04

Lithuania’s crisis response ‘timely’, but future remains uncertain

Gabrielė Sagaitytė, LRT.lt2020.06.10 12:04

Lithuania may be looking to the deepest economic downturn in a century in the wake of the pandemic, even though the government has handled the crisis well, according to politicians. However, trade unions warn that the negative effects will be felt for a long time. 

The head of the Lithuanian Trade Union Confederation Inga Ruginienė cautioned that although the quarantine in Lithuania is nearing its end, the future for most is uncertain.

“Every worker experienced changes. Some were furloughed, some were fired or forced to voluntarily leave their jobs. […] The incomes are also being subtly reduced by slashing bonuses or part of it,” Ruginienė said during an online conference on the aftermath of the coronavirus pandemic on Tuesday.

Read more: Lithuania approves post-pandemic welfare package: €200 payouts, 6-month subsidies

Social Security and Labour Minister Linas Kukuraitis added that people were touched by the pandemic not only economically, but also socially.

“Economic consequences lead to social consequences. Especially because the health questions limit our social life. Part of the society was isolated and had to develop new habits, some of which will transfer to the future,” said the minister.

However, he noted, the coronavirus impact on the economy and society has been partially mitigated by government actions.

“We were ready for this period, we had social and health insurance reserves that gave some room for manoeuvre. We could immediately offer health benefits, […] we offered cushion to both people and firms,” said Kukuraitis.

In March and April, 15,000 more people lost their jobs than were hired. However, the trend reversed when 12,000 more people were hired in June, according to Kukuraitis. He said that there should not be significant unemployment fluctuations in the future.

But unemployment will depend on the overall health of the economy. According to the World Bank, the pandemic could lead to the deepest economic crisis since 1870. The Bank of Lithuania forecasts a 10-percent drop in GDP this year.

“Economically, this crisis might be one of the deepest in a hundred years or more. However, Lithuania is better prepared for this crisis than the previous ones,” said economist Vaidas Navickas.

Lithuanian MP Tomas Tomilinas also noted that Lithuania’s crisis control was “timely and correct”. Among the economically effective mechanisms, he mentioned one-time benefits to pensioners and freelancers.

However, another MP Monika Navickienė from the conservative Homeland Union pointed out risks associated with such payments.

“We need to efficiently target the benefits. Most of all, to the people, who are losing their income so that they could feel safe,” said Navickienė.

On Tuesday, Lithuanian parliament passed a ‘child money’ bill to help families deal with the coronavirus impact. However, the initiative that will offer 120 and 200-euro one-time payments was criticised for targeting both high and low-income families.

Read more: Lithuanian families to receive one-off child benefits as part of pandemic mitigation