According to the Ministry of Economy and Innovation (EIMIN), the figures that have grown by about one and a half times over the last four years are telling: the export of Lithuanian goods has increased from 17 billion up to 24.4 billion euros. Lithuania’s GDP – from 49.5 billion up to 72 billion euros. The average salary is from 1429 to 2014 euros.
“This result was greatly influenced by the fact that the Lithuanian economy held up well during the pandemic, during the inflation shock, during the geopolitical situation – it continues to grow, our GDP increases.
Attracted foreign investments also led to an increase in wages, as Lithuanian companies have to compete with foreign investors for highly qualified employees. When salaries rise, the purchasing power of the population increases, greater opportunities open up for companies serving this demand, goods and service providers, as a result of which their salaries also rise,” says EIMIN Minister Aušrinė Armonaitė.
Photo by Greta Skaraitienė/BNS/Minister of the Ministry of Economy and Innovation of the Republic of Lithuania Aušrinė Armonaitė
According to the data published by the OECD, from the beginning of 2020 to 2024, real wages in Lithuania increased by about 16.5 percent, that is, above inflation. and has grown the most among the 38 OECD countries. The OECD average is only 1.5 percent. per year.
“Historically, due to the structure of the economy and the situation in the labor market, the share of added value attributable to employees in Lithuania was lower than in other euro zone countries, but the situation has now turned around – Lithuania already exceeds the EU average”, – EIMIN Deputy Minister Ieva Valeškaitė.
Fuller wallets
According to Tito Budreikas, head of EIMIN’s Public Policy Decisions and Data Analysis Group, the growth rate of the average wage “in hand” in Lithuania is accelerating in the long term: in the period from 2012 to 2019, the average wage grew by 8 percent. every year, from the 2020s – by 11 percent, when the average salary rose from 880 to 1,333 euros “in hand”.
Author of the message photo/Titas Budreika
EIMIN constantly implements measures aimed at maintaining Lithuania’s competitiveness – it works with the attraction of foreign capital to Lithuania, promotes the creation and development of high value-added businesses, encourages business investments in measures that increase labor productivity, technological development, and innovation through tax and financial means.
“All these measures contribute to the promotion of Lithuania’s competitiveness and the ability of businesses to pay higher wages. Foreign investors who create well-paid jobs in our country contribute to the increase in wages. In the first half of 2024 alone, 22 foreign direct investment projects were attracted, which will create almost 1,200 new jobs and invest 239 million euros. EUR to long-term assets”, says T. Budreika.
The highest salaries are recorded in the sectors that employ the most skilled workers, including information communications and technology, finance or health care. According to T. Budreika, when the minimum monthly wage, which is usually paid for unskilled work, increases, it also affects the remaining wages, which also increase.
Upskilling is a must
Evaluating the positive trends in the increase in remuneration, EIMIN does not hide the fact that it also sees threats in this area. According to EIMIN Vice-Minister I. Valeškaitė, Lithuania risks falling into the “middle income trap”.
“This happens when wages are high and the productivity of the economy is relatively low, which leads to a decrease in the competitiveness of the economy. Long-term changes in labor productivity and average wage growth show that Lithuania is becoming less competitive in terms of wages. In the years 2012-2022, salaries in Lithuania increased by 131 percent, and productivity by 83 percent,” said the vice-minister.
Greta Skaraitienes/BNS photo/Minister and Deputy Ministers of the Ministry of Economy and Innovation of the Republic of Lithuania
According to her, EIMIN’s activities of promoting the creation of high value-added businesses and attracting direct foreign investments contribute to the growth of labor productivity. However, the companies themselves, in order to remain competitive, must invest more in technological development, innovations and raising the skills of employees.
Encouraging competitiveness results
According to T. Budreikas, head of EIMIN’s Public Policy Decisions and Data Analysis Group, it is extremely positive that, according to the IMD competitiveness rating, Lithuania has become the leader among the Baltic countries for the first time.
“Analyzing this ranking, it is exceptional that Lithuania has strongly improved its position in the area of government efficiency. In the field of business efficiency, we are also ahead of Estonia – Lithuania rose to 24th place, while Estonia remained in 31st position. Also, Lithuania is better rated in the areas of basic infrastructure and technology”, assures T. Bureika.
The Vice-Minister emphasizes that Lithuania’s leadership in the region is an important achievement of our country and the result of consistent work.
“During the year, we made the biggest jump in the area of efficiency of the public sector and, having risen by 7 positions, we are in 26th place. The business regulatory environment, the creation of new businesses in the country, and the management of public finances are also highly valued,” says Vice-Minister I. Valeškaitė.
Lithuania’s business efficiency, management practices, productivity, international trade and technological infrastructure are considered by the rating makers as the main competitive advantages of the country.
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2024-09-01 17:49:15
