“On paper” we will look more beautiful than in reality: I guess we do not succeed Estonians in terms of wages for 3 years

It also grew during the pandemic.

Euromonitor International data analyst Aistė Navaitytė Delfi stated that in the first quarter of 2020. The average hourly wage for work before tax in Lithuania was 8.1 EUR and compared to other Baltic countries it was more lower than in Estonia, when it amounted to 8.4 EUR, but higher than in Latvia: 6.6 EUR.

“In April and June, the average hourly wage increased minimally in all Baltic countries, between 1.2 and 2.4 percent.

As the available data shows the median hourly wage in the country, it is likely that the hourly wage has decreased or increased depending on the particular sector.

However, according to the data currently available, the COVID-19 pandemic and the quarantine period did not have a significant negative impact on the overall changes in the country’s average salary, ”said the analyst, adding that other trends were observed. in average hourly wages after the summer months.

“According to preliminary data, compared to the previous quarter, during the period from July to September, the average hourly wage in Lithuania grew by around 2.5 percent. and reached 8.4 euros on paper.

During the same period, the average hourly wage in Latvia was unchanged, while in Estonia it decreased by approximately 5%. and reached 8.2 euros.

The decrease in Estonia is related to seasonal work, when seasonal workers are paid less than the average hourly wage of about 5.3-6.1 euros, ”said A. Navaitytė.

According to her, compared to other European countries, the average hourly wage in Lithuania and other Baltic countries during the quarantine period maintained positive growth, while in neighboring Poland, the hourly wage before taxes fell by as much as 7%. in April-June.

“At the beginning of the year, the average hourly wage in Poland was 7.1 euros, and after the quarantine period it dropped to 6.6 euros.

The Western European country most affected by the crisis and the quarantine period caused by the COVID-19 virus is the United Kingdom, where the average hourly wage has fallen by around 9% since the beginning of the year and after the quarantine period, from 18 to 16.4 euros, ”he said.

Would Aplenksime be?

He was asked to forecast what Lithuanian wages expect in the last quarter of 2020. and in 2021 in general, A. Navaitytė said that in terms of the average growth of all quarters next year in Lithuania, hourly wage per job should stay the same at about 2 percent. increase.

“During the first quarters of 2021, the average hourly wage in Lithuania will be similar to the Estonian level and, by the end of the year, it is likely to become the highest among the Baltic countries and rise to 9.2 euros on paper.

This growth of the average salary in Lithuania is anticipated taking into account the growth trends of recent years and the small impact of seasonal wages on the total average salary, ”said the analyst.

We will not happen to Estonians for the next 3 years

Tadas Povilauskas, an economist at SEB Bank, noted that since 2019, when employer and employee taxes in Lithuania were combined, it is not possible to compare the Baltic countries in terms of gross wages.

In Lithuania, the so-called pre-tax salary includes almost all taxes paid by the employer and is very close to the labor costs incurred by the employer, while in Estonia or Latvia the employer still has to pay a lot of taxes on the so-called net salary.

Therefore, in order to correctly compare wages between the Baltic countries, it is necessary to compare the so-called labor costs per employer, that is, how much an average job costs when an employee receives the average wage in the country, or according to wages after taxes, ”he commented.

According to calculations, the average gross salary in Estonia in the second quarter was € 1,433, but the social security taxes paid by the employer would have to be added here, so the total labor costs for the employer would already be € 1,815.

“In the second quarter, the average gross salary in Lithuania was 1,399 euros, so compared to 1,815 euros in Estonia, the difference is still around 30 percent.

This year, the difference narrowed, as the median pre-tax salary in Lithuania in the second quarter was 8.5 percent, and in Estonia it was only 1 percent higher than a year ago. However, in the next 3 years, there are no thoughts that we can catch up with Estonians in terms of salaries, ”said T. Povilauskas.

According to him, what we can expect in the next two years is that Lithuanian salaries are Estonian, because according to the updated forecasts of the SEB Group, this year the average salary in Lithuania will increase by 5.5% and next year by 5% while the average salary in Estonia will increase this year. only 1.5 percent and 2.8 percent next year.

We won’t beat Estonia, but the pay will go up

Alexander Izgorodin, an economic adviser at SME Finance, said he agreed that wages in Lithuania would rise, but said he was very cautious about outperforming Estonians.

“I also believe that despite the COVID-19 challenges for the economy, wages in Lithuania may continue to rise and this is due to various reasons.

First, due to the ‘fair’ economic structure, dominated by industry and less dominated by services, and the relatively low number of COVID-19 cases, when Lithuania recorded the smallest drop in EU GDP in the second quarter of this year (Lithuania’s GDP fell by only 4%). Furthermore, the main economic sectors (industry, retail) have recently shown signs of sustainable recovery.

Another aspect is that despite rising unemployment, structurally, the situation in the Lithuanian labor market remains tense: Eurostat figures show that the long-term (chronic) unemployed accounted for up to 27% in the second quarter of this year . of all unemployed Lithuanians. High structural unemployment means that companies will continue to face a shortage of workers, especially skilled workers, which will increase wages. Thus, the small impact of COVID-19 on the Lithuanian economy, the beginning of the economic recovery and the structural problems in the labor market will determine that wages in Lithuania should increase, ”said the economist.

Speaking that Lithuanian wages in principle could hardly exceed Estonians in the near future, the economist assured that in this case not only half of the economic growth and various aspects of the labor market should be taken into account, but also very factors. structural factors such as the strength of the country’s innovation ecosystem. volume of foreign investment.

“For example, the volume of foreign direct investment accumulated in Lithuania per capita is 6.5 thousand. Eur, and in Estonia – about 21 thousand. EUR.

Estonia’s economy is also relatively more innovative than Lithuania’s, although data from the EU Innovation Scoreboard show this in 2012-2019. Lithuania’s innovation ecosystem is the one that has become the most strengthened in the EU. However, in Estonia, the total innovation index in 2019. accounted for 99 percent. since 2019 EU and Lithuania average – 79.7 percent. since 2019 EU average. Of the Baltic countries, Estonia is the only one that already belongs to the strong innovators subgroup and, despite the breakneck progress, Lithuania still belongs to the moderate innovators subgroup.

<...> Higher volumes of foreign investment per capita in Estonia and a stronger level of Estonia’s innovation ecosystem may be factors that will prevent Lithuania from quickly catching up with Estonia in terms of wages, ”he added, adding that wages in Lithuania will continue to rise in The near future. In terms of wages, Lithuania will overtake Estonia.