Facts and Analysis. Wages, Unemployment and Social Benefits Across Municipalities

Unemployment rates three times as high, significantly lower average wages and 23 times as many people living on social benefits, a recent analysis by the Lithuanian Free Market Institute reveals huge disparities between Lithuanian regions and points to the root of the problem, i.e. particularly low levels of investment reaching just a few euro per capita in some municipalities.

Though in 2016 the average net monthly wage increased by 9 per cent exceeding 600 euro country-wide, it remains below 500 in one fifth of municipalities. For example, Šalčininkai Municipality had the lowest net average wage of 451 euro which is 234 euro less as compared to the neighboring Vilnius District Municipality. This is particularly alarming as the gap is growing on a yearly basis. To add, recently there has been much discussion about labor shortages in many sectors, but more than one fifth of Lithuanian municipalities are plagued with high unemployment levels. For example, one in eight of the working age persons were unemployed in Ignalina, Lazdijai and Kalvarija district municipalities, half of whom for a long-term. The lowest unemployment of roughly 5 per cent was observed in Elektrėnai, Kretinga, Neringa and Šiauliai municipalities.

The analysis revealed a link between poor social indicators and low investment levels. In 2016 the unemployment rates in Utena and Zarasai municipalities were 10 and 15 per cent, respectively; however, foreign investment in Utena was 69 times as high, boosting the economy of and reducing unemployment in the region. Clearly, both central and local governments should be concerned with attracting investment and creating favorable business conditions, be it a zero tax rate on reinvested profits or a reduction in bureaucracy.

Read the full analysis (in Lithuanian) Wages, Unemployment and Social Benefits Across Municipalities