Inga Blaziene

Boguslavas Gruzevskis

Vilnius-Brussels, 2012

Economic and social situation in Baltic countries: LITHUANIA

INSTITUTE OF LABOUR AND SOCIAL RESEARCH

CONTENTCONTENT

Evaluation of Lithuanian economic potential (GDP);

Unemployment developments;

Population income and living standards;

Emigration and demographic perspectives in Lithuania;

Conclusions.

Treaty on European UnionTreaty on European Union

The Union […] shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress […].

It shall combat social exclusion and discrimination, and shall promote social justice and protection […].

It shall promote economic, social and territorial cohesion, and solidarity among Member States.

(Treaty on European Union, Title 1, Article 3)

GDP per capita in PPP in GDP per capita in PPP in 20120111 (E (EU27U27 = 100%) = 100%)

274131

129127126125

120118

116108107

10199

92848382

8077

73676665

6258

4945

0 50 100 150 200 250 300

LuxembourgNetherlands

AustriaIreland

SwedenDenmarkGermanyBelgiumFinland

United KingdomFrance

ItalySpain

CyprusSlovenia

MaltaGreece

Czech RepublicPortugalSlovakiaEstonia

HungaryPoland

LithuaniaLatvia

RomaniaBulgaria

Annual GDP growthAnnual GDP growth (% (%))

3,2

0,3

-4,3

1,5

6,8

10,3 9,8

2,9

-14,8

5,9

3,32

2,5

1,41,3

2,2

2

1,4

7,87,87,4

6,7

-15

-10

-5

0

5

10

15

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

EU-27 Lithuania

Unemployment indicators in LithuaniaUnemployment indicators in Lithuaniain 2004–20in 2004–201111

69,0

248,5

291,1

225,1

94,389,3

132,9

184,4

20,7 13,7 12,022,1

46,7 52,7 45,331,0

11,4

8,35,6

4,35,8

13,7

17,8

32,9

29,2

13,4

8,29,8

15,7

22,5

0

50

100

150

200

250

300

350

2004 2005 2006 2007 2008 2009 2010 2011

0

5

10

15

20

25

30

35

40Unemployed, thous.

Young unemployed (15-24 years), thous.

Unemployment rate, %

Youth unemployment rate, %

%Thous.

35,1

15,6

Unemployment rate in EU in 201Unemployment rate in EU in 20111 (%) (%)

Source: „Eurostat“

21,7

17,7

16,215,4

14,413,6

12,912,511,310,9

9,79,68,48,28,07,97,87,67,57,47,2

6,76,55,9

4,84,44,2

0

5

10

15

20

25

Sp

ain

Gre

ece

Lat

via

Lit

hu

ania

Irel

and

Slo

vak

ia

Po

rtu

gal

Est

on

ia

Bu

lgar

ia

Hu

ng

ary

Po

lan

d

Fra

nce

Ital

y

Slo

ven

ia

Un

ited

Kin

gd

om

Cy

pru

s

Fin

lan

d

Den

mar

k

Sw

eden

Ro

man

ia

Bel

giu

m

Cze

ch R

epu

bli

c

Mal

ta

Ger

man

y

Lu

xem

bou

rg

Net

her

lan

ds

Au

stri

a

%

Youth unemployment rate in EU in 2011 (%)Youth unemployment rate in EU in 2011 (%)

Source: „Eurostat“

46,444,4

33,532,931,030,129,429,1

26,125,825,023,722,922,922,422,321,120,118,718,1

16,415,714,213,8

8,68,37,6

0

5

10

15

20

25

30

35

40

45

50

Spa

in

Gre

ece

Slo

vaki

a

Lit

huan

ia

Lat

via

Por

tuga

l

Irel

and

Ital

y

Hun

gary

Pol

and

Bul

gari

a

Rom

ania

Fra

nce

Sw

eden

Cyp

rus

Est

onia

Uni

ted

Kin

gdom

Fin

land

Bel

gium

Cze

ch R

epub

lic

Lux

embo

urg

Slo

veni

a

Den

mar

k

Mal

ta

Ger

man

y

Aus

tria

Net

herl

ands

%

Average annual gross earnings in business Average annual gross earnings in business economy in EU ineconomy in EU in 2009-2010 2009-2010 (euro)(euro)

5604449316

4520744412

4240040008

3919738047

3413233384

2916026316

252511735217168

1131210777

101009712

85968399

72345891

4085

0 10000 20000 30000 40000 50000 60000

DenmarkLuxembourg

IrelandNetherlands

GermanySwedenFinland

United KingdomFranceAustriaGreece

SpainCyprus

PortugalSlovenia

Czech RepublicSlovakiaHungaryEstoniaLatvia

PolandLithuaniaRomaniaBulgaria

531654605145284

42382

3870038659

3771636871

3611432413

234062131021150

1534514625

1166990718952

84008119

674566906417

48282626

6745

0 10000 20000 30000 40000 50000 60000

DenmarkUnited

LuxembourgGermany

IrelandNetherlands

BelgiumAustria

SwedenFinlandFrance

ItalyCyprus

SpainPortugalSlovenia

MaltaCzech

HungarySlovakia

PolandLithuania

LatviaEstonia

RomaniaBulgaria

Average annual gross earnings in business Average annual gross earnings in business economy in EU ineconomy in EU in 2006-2006-20020077 (euro)(euro)

Average gross monthly wages and salaries in Average gross monthly wages and salaries in Lithuania inLithuania in 2001-2011 2001-2011

2001 2005 2007 2010 2011

Average gross monthly wages and salaries (LTL)

982,3 1276,2 1802,4 1988,1 2042,0

Growth of average gross monthly wages and salaries (%)

101,2 111,0 120,5 96,7 102,7

Real growth of average gross monthly wages and salaries (%)

99,6 106,8 117,0 95,7 98,5

Average monthly income in Lithuania in the 1Average monthly income in Lithuania in the 1stst quarter, 2012quarter, 2012

LTL per month Euro per month

Average gross wage 2138 620

Average net wage 1662 482

Average old age pension 815 236

Minimum monthly wage (gross) 800 232

Average unemployment social insurance benefit

556 161

Social benefit (for single person) 130 38

Price level index of selected consumption goods Price level index of selected consumption goods and services in Lithuania and EU-27 inand services in Lithuania and EU-27 in 2010 2010 ((%%))

ES-27 Lietuva

Clothing and footwear 100 99

Electronical appliances 100 97

Personal transport equipments 100 92

Household appliances 100 91

Electricity, gas and other fuels 100 80

Alcoholic beverages and tobacco 100 77

Furnishings and household equipment 100 77

Food and non-alcoholic beverages 100 72

In work at-risk-of-poverty rateIn work at-risk-of-poverty rate in EU in in EU in 2010 2010 ((%%))

17,213,8

12,712,3

11,410,6

9,79,7

9,47,7

7,67,2

6,96,8

6,56,56,5

6,25,75,7

5,35,3

5,15

4,53,73,7

0 2 4 6 8 10 12 14 16 18 20

Romania Greece

Spain Lithuania

Poland Luxembour

Latvia Portugal

Italy Bulgaria

Ireland Germany

Cyprus United

Denmark Estonia Sweden France Malta

Slovakia Hungary Slovenia

Netherlands Austria

Belgium Czech

Finland

%

Austerity measuresAusterity measures

increased VAT (from 19% to 21%);

decreased old age pensions;

decreased unemployment social insurance benefits;

tighten conditions for payment of unemployment social insurance benefits;

decreased salaries of public sector employees (by 4-12%);

low minimum monthly wage was not increased, etc.

Unemployed and unemployed receiving Unemployed and unemployed receiving unemployment benefits in Lithuania in 2008-2010unemployment benefits in Lithuania in 2008-2010

307100

268838

209911

175273

12493894984

3264268000

74100792566895642804

0

50000

100000

150000

200000

250000

300000

350000

December2008

January 2009 March 2009 June 2009 January 2010 March 2010

Unemployed Unemployed, receiving unemployment social insurance benefit

Recipients of sRecipients of socialocial benefits in benefits in Lit Lithhuuania inania in 2005-2011 (t2005-2011 (thoushous.).)

54

38 37 37

76

181

221

0

50

100

150

200

250

2005 2006 2007 2008 2009 2010 2011

Declared eDeclared emigramigration fromtion from Balti Baltic countriesc countries ( (personspersons))

21970

83157

53863

1701510702

60077388

52944406 4658

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

2008 2009 2010 2011

LithuaniaLatviaEstonia

Persons, emigrated from Lithuania:

2004–2011 – 330 thous.

1990–2011 – 668 thous.

Acceleration of demographic ageing in some Acceleration of demographic ageing in some EU countries in 2006-2011 m. (%)EU countries in 2006-2011 m. (%)

0,0

0,0

2,9

3,9

7,7

9,7

13,2

18,3

0 2 4 6 8 10 12 14 16 18 20

Ireland

Estonia

Italy

Greece

Latvia

Poland

Germany

Lithuania

LLithuanian population by gender and age inithuanian population by gender and age in 20102010 and forecasts for and forecasts for 2060 2060

050001000015000200002500030000

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95+

0 5000 10000 15000 20000 25000 30000

Men, 2010

Women, 2010

20601

in 2060 – 2 million 548 thous. (by 697 thous. less comparing to 2011)

1

1

LitLithuanianhuanian perspe perspectivesctives

in 2060 Lithuania:

will have 2,5 million residents,

out of them youth (15-29 years) – 339,6 thous. (13%)

Social Social iinsurance nsurance sstatisticstatistics in in Lithuania Lithuania in 2006-2011 in 2006-2011

At the end of 2012 m. State social insurance fund debt will reach LTL 12 billion(3,5 billion euro).

2006 2007 2008 2009 2010 2011

Insured population (thous.) 1421 1467 1463 1309 1253 1303,4

Pension and benefit payments recipients (thous.)

1785,8 1921,6 1943,3 1792,6 1613,0 1580,0

Old-age pensions (thous.) 591,0 590,9 595,0 597,9 598,8 599,2

Revenue of the State Social Insurance Fund Board (million)

7800 9759 11217 11357 10487 5226,7

Expenses of the State Social Insurance Fund Board (million)

7245 92830 12654 14236 13268 6492,3

Net result of the current year (million)

555 476 -1437 -2879 -2781 -2650,6

Causes of such a situation include:Causes of such a situation include:

low labour productivity and low wages;

low living standards and “poverty trap”, high rate of economic inactivity;

decrease in number of enterprises (especially – large, small and medium) and low technological level of production;

imbalances in vocational education and training and structural unemployment (in 2011 as much as 11% of large enterprises declared shortage of qualified labour force);

unattractiveness of the national labour market comparing to the EU one.

ConclusionsConclusions

the fastest depopulation in the EU;

the fastest ageing society in the EU;

decreasing economic capacity/potential of the country (number of enterprises and economic activity of the population);

increasing poverty;

inefficient social security policy;

huge distrust in public authorities (especially – the Parliament and the Government).

WHO IS WHO IS RESPONSIBLERESPONSIBLE??????