Regional trade problems: quarantine is just the tip of the iceberg

After the announced quarantine in Lithuania, which suspended part of business life and caused waves of anxiety, the government was quick to announce financial assistance. However, additional financial incentives or tax exemptions and deferrals are only part of the difficulties faced by companies living outside of the main cities of Lithuania.

President of the Regional Association of Business Development Vaidas Šalaševičius for the portal Delphi He said that no significant change has been seen in regional business in recent years.

“I work in the Dzūkija and Sūduva regions. The challenges are similar everywhere. The problem of internal and external migration has not disappeared anywhere. In the regions, it is still felt and the purchasing power of people has decreased. This is very relevant for the security sector, “said the interlocutor.

Do you think other help was needed

At the same time, V. Šalaševičius noted that the regions continue to bleed due to the departure of the population: some change their homeland abroad, others choose Vilnius or another Lithuanian city.

“It just came to our attention then. Large companies do not invest in small cities or regions because not only the population but also the small number of employees. Look around and understand that it will be difficult to find employees,” continued the director of the association. .

Attracting good professionals to small towns and regions is also difficult. They have lower wages and compete with those of the capital at the moment.

The interlocutor did not deny that by joining the European Union (EU), the Lithuanian regions became more beautiful and seemed to have become more attractive to Lithuanians who wanted a more peaceful life. However, in the war, he said, investments went to infrastructure, and regions needed fishing rods instead of fish.

“The fact that our cities are embellished is a fact, but has it generated added value? Probably not. Now there is increasing talk that we need fishing rods, not fish. Both business and science have already actively participated in regional development. Everyone opens their eyes, but a little late. The regions are already feeling the effects, “he said.

V. Šalaševičius added that when communicating with entrepreneurs in the regions, he always advises them to think not locally, but globally: “And not just a city. The market must be at least the whole of Lithuania, and if everyone, even better. This is a recipe for the success of entrepreneurs in the regions. If they understand it and carry it out, they will find success and move forward. “

However, the president of an association representing entrepreneurs said at the same time that small and medium-sized enterprises have recently faced a credit problem as banks have severely reduced support to start or expand businesses.

The problem is not the creation of companies.

Vaclovas Macijauskas, who is establishing a business in Gargždai, sees similar problems in the regions. On the other hand, the man argues that problems arise more in the regions than in the creation of a business in itself, but in the search for a business niche.

“It is getting harder and harder every day,” he said, and immediately moved on to another regional problem, the workforce. The interviewee emphasized that the difficulties are not due to the general workforce, but to the adequate workforce.

“Of course, you can find people in the regions for unskilled work if the work is more responsible, more complicated, the difficulties begin,” he admitted. And here, as mentioned above, there are difficulties for those who wish to attract labor from the big cities. Until now, a small proportion of the region’s small and medium-sized companies can offer competitive salaries to metropolitan areas.

V. Macijauskas also added that he felt very little support for business in the region from the central government, which, in his opinion, supports business in big cities rather than looking back on the regions.

Jurita Zubauskienė, the director of ŽŪK Joniškio aruodas, noted that when it comes to supporting the regions, she would like to receive more attention from companies that already operate.

“Little attention is paid to business development, especially infrastructure development: wastewater and communications, because all the measures available so far are aimed at companies that want to establish themselves in state territories,” he said.

According to the company representative, there are few or no incentives for companies that are already established and operational.

“In other words, if you are now in state territories, we will help you, and if you are already working hard and want to expand, it is your own problem,” summed up the interlocutor.

There is also a lack of knowledge.

Inga Juozapavičienė, Director of the Entrepreneurship Department of Versli Lietuva, warns that companies in the regions are developing more slowly than in the capital or big cities.

“We note that financing to start a business remains a major challenge. Most programs have requirements that are very difficult to meet: age limits, activities, location, and the like. And the stricter requirements for issuing bank loans make it it is increasingly difficult to develop existing businesses, ”he said.

Of course, don’t forget to mention the lack of staff. Successful development in the regions is often hampered by a lack of qualified personnel with the necessary skills and young professionals. And in the regions, it is increasingly difficult to find them.

“The decrease in the local population, people who migrate abroad or move to big cities contribute to this aspect. This also determines the decrease in demand for goods and services from small and medium-sized companies,” reviewed I. Juozapavičienė. And the specialist forecasts higher prospects for those companies that manage to attract investment or if the company’s business is not limited to the consumption of the local population, and the goods are offered on a Lithuanian scale or are exported.

“We also learn a lot about the problems of entrepreneurs who develop business in the regions through the mentoring program started by Versli Lietuva. For example, mentors, experienced entrepreneurs who share their experiences for 6 months and help emerging entrepreneurs grow, discover that small, newly created regions in regions lack motivation, ambition and long-term vision or planning skills long-term business. Mentors point out that they often don’t have the basics in the fields of marketing, finance, business management, but they have overly ambitious goals – to expand the business quickly, to increase revenue. “A significant part of the income received is used for personal consumption and not for business development,” said the interlocutor.

I. Juozapavičienė noted that local government also contributes to the promotion of regional entrepreneurship through various projects: both by offsetting certain initial costs and by helping large companies adapt to infrastructure.

“The small and medium-sized business support funds established in the municipalities help and encourage entrepreneurs to apply for support. Unfortunately, that support is very small and covers only a small part of the initial costs, “he emphasized.

Verslios Lietuvos is convinced that assistance to entrepreneurs should be provided not only at the local government level, but also at the national level. After all, they create jobs.

“And this is the fundamental factor on which the efficiency of companies depends.” Increasing employment opportunities in the region and increasing the competitiveness of the workforce in the long term should be linked to investment in the development of new technologies and innovations, “he continued.

It is also important that regional economic specialization allow regions to exploit their strengths so that they can attract specific investments, create specialized jobs, and help create and grow competitive businesses.

“Of course, it is very important to have simpler and more accessible business finance programs that can be used by newly created entrepreneurs. No less important is the education of regional entrepreneurs: high-quality trainings, specialized events, business development seminars. competitions ”, mentioned I. Juozapavičienė.

There are municipalities where companies suffocate

Head of the Lithuanian Free Market Institute Expert Indrė Genytė – Pikčienė, speaking about the challenges for regional companies, first named the declining population.

“Only a sixth of all municipalities in Lithuania registered population growth last year. Among them are the cities of Vilnius, Kaunas, Klaip andda and Šiauliai, municipalities of large cities, whose development is determined by the neighborhood of the large cities and a more favorable tax environment for land and real estate (RE) At that time, the remaining municipalities in the demographic sense were reduced, some eg Pag ,giai, Ignalina, Skuodas, Jurbarkas, Kelmė, Pakruojis, Anykščiai , Pasvalys, even 2.4 to 3.4 percent. Per year “, – the specialist shared the numbers.

This is how the socioeconomic circle turns, when the declining population weakens the labor market, as more active and hard-working people go to the main Lithuanian cities or foreign countries to study or work in search of broader career prospects.

“The shallow labor market limits opportunities for economic activity, both in terms of its scope and variety of skills. Companies seek development in those regions where the workforce is sufficient and the range of skills meets the nature of the Activity Tight regions mean a shrinking market for services: When people are declining and their incomes are growing more slowly than the national average, it is extremely difficult for companies serving the population to stay. “Small businesses fall between two millstones: upward pressure to increase the monthly minimum wage (MMA) and increased operating costs, as well as decreased demand for their goods and services, “he said.

It is true that Lithuania is not the only country facing internal and external migration and urbanization. This is a global trend that could even be reckless to fight. However, according to I. Genytė-Pikčienė, Lithuania should assess demographic changes and consider whether the existing self-government structure is really excessive.

“In assessing global urbanization trends, the challenges of spatial planning are changing in many parts of the world. Modern ways are being sought to effectively solve the problems of public services (education, health care, etc.), communication and mobility, engineering infrastructure networks and to optimize the costs of regional self-government administration, continued the interlocutor – The recent history of the forced attempt to unite in Kaunas and the Kaunas district shows that this administrative clothing is no longer suitable for Lithuania Of course, administrative enlargement should not be approached from the bottom up, it should be part of the general territorial planning process of the country, valid for the whole territory of Lithuania and resolve the opposition problems of all the municipalities of the ring and of the city ​​and, in general, of the total number ”.

The expert also pointed out that there are municipalities where the economic pulse is weak and the municipality itself and the companies it manages are the largest employer. Such a situation stifles economic initiatives, creates unequal competition, and private companies suffocate in such circumstances.

“Another problem is the lack of specialization and competitive advantage. Municipalities should take advantage of the available competitive advantages, mobilize specific institutions for education and training and, consequently, strive to become centers of attraction for activities that could be developed here. Because business needs are so diverse and it is impossible to please everyone to attract investment. Municipalities that are traditionally industrial centers, have vocational and higher education institutions, and solve infrastructure problems efficiently and quickly will have more opportunities to attract industrial companies, “emphasized I. Genytė – Pikčienė.