Foreigner employment incentives lead to uproar

On February 8 the government made it easier to employ specialists from third countries in Lithuania, a list of 27 professions in high demand in Lithuania was released. Opponents warn that easily allowing cheap labour from abroad to enter could halt Lithuanian wage growth, lzinios.lt reported

The list prepared by the Ministry of Economy lists 27 professions that will be easier to employ – they will have simplified work permit procedures and employers will no longer have to pay a wage that exceeds the average wage threefold, now only requiring a wage one and a half fold larger. Such provisions will apply for arrivals from non EU states. The government claims that this is done in order to improve the business environment and attract investment.

Opponents note, however, that the opportunity to bring in cheaper labour from abroad instead of preparing it locally will be a barrier to Lithuanian wage growth and will have a negative social impact. Some are also surprised that professions such as programmers, IT specialists, engineers of various fields, technicians, even sowing and food and drink technologists or graphics designers are identified as being in a deficit.

Reduced wage growth

According to advisor to the Minister of Social Security and Labour, economist Romas Lazutka, cheaper labour from abroad will certainly halt wage growth. “If the supply of specialists of a certain profession increases and demand remains the same, of course the price – the wage – will not rise or will decrease. If the demand grows and the supply grows due to arrivals from abroad, then the price will grow far slower than if extra specialists did not arrive. It is obvious, as if commenting that day follows night,” the economist told Lietuvos Žinios.

Nevertheless he noted that when evaluating the impact of incentives for employment of foreigners on the labour market and wage levels, it is necessary to keep in mind the current situation of each listed profession in the labour market. Those working in areas where wages are already high will nto suffer overly much. The same cannot be said of employees working in low paid spheres however. For them, R. Lazutka notes, wage growth should not be slowed.

“We should not forget that we live under conditions of market economy and wages show what professions are in deficit or not. If representatives of a profession earn only 500 euro, it is laughable to say that such specialists are in deficit. It is important that supply of labour is not increased in areas where it is already high, but wages are small,” R. Lazutka explained.

Member of Seimas, economist Aušra Maldeikienė stressed on news media that in a country that had a count of 152 thousand job seekers at the start of the year and unemployment well in excess of 8%, it is definitely possible to find people who have the qualifications mentioned in the list of professions or can obtain those qualifications.

She also warned that cheap labour from third countries will not only artificially reduce wage growth, but would also increase pressure on the public sector – education and healthcare.

Wages for foreigners based on market conditions

The Lithuanian Trade Union Confederation Chairman Artūras Černiauskas believes that high qualification employees do need to be brought in from abroad because the Lithuanian demographic situation is tragic and there is a real lack of employees. However minimum wages paid to them should not be smaller than the average wage in their sector. Otherwise wage dumping will occur. This is something other EU countries have faced. “An excellent example is that of Germany – in certain sectors where trade unions are not strong it implemented minimum hourly wage standards. Some try to explain that by inviting highly qualified specialists wages will not be dumped. But these specialists, for example programmers or welders, whose wages are fairly large, have a certain level of wages. No-one is guaranteeing that specialists from another country will not agree to work for wages that are unappealing to those in our country, for example in the several thousand euro paid in England or Germany appeal to our specialists, but are too low for the locals,” A. Černiauskas explained.

Sufficient safeguards

The Ministry of Economy claims that there are sufficiently many legislative safeguards regarding wage sizes. “Foreigners cannot be paid a lesser wage than a Lithuanian of the same profession. Furthermore when setting wages, the average wages paid in the company and the work area are observed. With this the safeguards come into play, not allowing employers to intentionally reduce wages for foreigners. In other words if a Lithuanian earns two average wages, then the foreigner will have to receive two average wages, regardless of whether the legislation designates one and a half times the average wage,” press representative for the Minister of Economy Mindaugas Janulionis told BNS.

Minister of Economy Mindaugas Sinkevičius claims in a press release that with changes in the labour market there has been observed an increased need for highly qualified specialists. The data presented to the government by the Labour Exchange shows that 56% of surveyed industrial companies lack qualified specialists. It is stated that the situation is particularly poor in textile, furniture, lumber and metal processing, as well as food processing industry sectors.

The Ministry of Economy predicts that annually some 200-300 specialists of professions in the list may arrive in Lithuania. “For example we can predict that in 2020 the country will need 10 thousand IT specialists, while overall all EU states will need up to 900 thousand IT specialists. The demand will rise in other areas as well, particularly in industry,” the Minister of Economy stated.

A. Maldeikienė calls the information presented by the cabinet chancellery on deficit specialists incorrect. The report claims that “the list includes professions most relevant for employers from sectors where the demand for specialists cannot be satisfied by those trained in Lithuania”. The member of Seimas, however, believes that the data from the Labour Exchange shows that the supply of specialists of those professions in the market exceeds the current demand. For example the supply of mechanical engineers exceeded demand one and a half fold (254 people seeking such a job, with 164 workplaces available), supply in the food product and drink technologist market exceeds demand almost threefold (respectively 252 and 87), while for graphics designers it exceeds threefold (respectively 357 and 117).

Enough foreigners

Are the discussions developing in the country pointless – perhaps Lithuania will not attract enough specialists from third countries to impact the state labour market?

A. Černiauskas believes that employees from abroad may not necessarily opt for the most developed markets in the EU. “Lithuania is particularly appealing for specialists from the former USSR because they can easily communicate in Russian here, furthermore the lifestyle and mentality do not differ greatly. They feel more comfortable in Lithuania than in Western European states. And the wage differences are fairly large,” the head of the confederation stated.

He stressed that even now, when the process of employing foreign staff is fairly difficult, fairly many Ukrainians, Belarussians and Georgians are working in Lithuania. That Lithuania will appeal to workers from third countries is also displayed by the example of Poland. According to A. Černiauskas around 1 million Ukrainians work there officially, with a similar number working unofficially.

According to Department of Migration data at the beginning of this year 44.5 thousand foreigners lived in Lithuania, an increase of 8% compared to last year. Currently around 300 highly qualified specialists from third countries work in Lithuania, they arrived based on the EU blue card directive. The latest Eurobarometer survey showed that immigration from third, non-EU, countries was viewed positively by 26% of Lithuanians, while 71% viewed it negatively.

Confirmed list of deficit professions:

• Production organisation engineer
• Printing technologist
• Device maintenance engineer
• Sewing technologist
• Production engineer
• Aviation engineer
• Aviation mechanical equipment engineer
• Mechanical engineer
• Constructor
• Food produce and drink technologist
• Avionics engineer
• Graphics designer
• Computer system analyst
• Business IT consultant
• Computer system consultant
• Computer system designer
• Computer application engineer
• Computer game programmer
• Programmer
• Engineer programmer
• Software tester
• Database administrator
• IT system administrator
• Computer system engineer
• Network analyst
• IT and communication security specialists
• Aviation technician