Lithuanian government’s emigration plan: ‘Cold water subsidies will not make people want to come back’

The government document is officially named “The Plan on methods to reduce emigration and to increase repatriation” and outlines five key areas: “quality jobs, social and other guarantees, service accessibility and quality, simple, rapid and smooth migration procedures, dissemination of targeted and detailed information about Lithuania and living as well as working conditions in it”.

Some of these tasks are discussed in detail, outlining means and terms of implementation as well as responsible institutions.

But some statements in the document give a sense of déjà vu. Like providing consultations and information for individuals planning to start a business; organising events on entrepreneurship; cutting red tape for starting a business and similar ones that could be found in virtually any strategy document for a variety of aims.

Or creating new employment opportunities, encouraging entrepreneurship in areas hit by high unemployment, raising the minimum wage, improving wage payment reglamentation, encouraging lifelong learning programmes, strengthening cultural, economic and other relations with the Lithuanian diaspora.

Some provisions look like they were lifted from other documents: providing financial support to low-earners or compensations for heating, drinking water or hot water expenses; support for students: free school meals, grants to buy school supplies; ensuring that social benefits are paid on time.

A number of measures look new, however, for example the provision of online psychological counselling for returnees or those intending to return to Lithuania; more opportunities for foreigners with skills that are in short supply in the local labour market to come to Lithuania; publishing an online journal called “Life and Work in Lithuania”; polling people about emigration.

Will cold water subsidies do?

When asked to comment on the emigration reduction plan approved by the government, chief economist for the Nordea bank Žygimantas Mauricas could barely hold back his laughter.

“How should I word this more gently? I carefully read it twice. The beginning of the plan is about encouraging entrepreneurship. This is commendable, but I saw nothing new there, the same initiatives that have been going on for many years. It is good that it’s happening, but that alone is apparently not enough,” he mused.

According to the economist, the plan then proceeds with some strange points: raising the minimum wages, social benefits, water and heating subsidies. “Such things should not be in the plan at all. I personally pay for cold water every six months, it isn’t worth the transaction fee, because the sums aren’t big. Expats are sent a weird message: you’ll return to Lithuania and be risking not to be able to pay your utility bills,” commented Mauricas.

He was also surprised by other points in the plan, like the pledge to pay social benefits in time.

“If expatriates read such a plan, it will encourage them to not return to Lithuania. Sometimes we joke about the job ads, which are becoming rare nowadays, where employers promise to pay salaries and social insurance contributions on time; these are mandatory for all.

“The plan says that social benefits will be paid on time. How can they not be paid on time? Such promises will definitely not encourage those abroad to return. It displays the government’s attitude. It is as if it’s playing the role of the benevolent uncle who will supposedly hand out social security payments with a generous hand and that will be why people will want to return to Lithuania. I think that is a reason why they will definitely not be back,” said the economist.

He highlighted several other things that might push people to emigrate and not return. “First, official incomes. People leave because they can see that when they work legally and pay their taxes, they will earn low wages. This needs to be resolved now, with no further ado. Not just by raising the minimum wage (it needs to rise a little), but also by reducing the cost of employing and by pulling the labour market out of the shadow economy. It is particularly demotivating that the average wage in Lithuania after taxes is €570 and €550 in the private sector, even less than the public sector. In reality, it should be and is the opposite, it is just paid in ‘black’ money.

“Some of the expats state that perhaps incomes in Lithuania have become bigger and perhaps they would return, but they don’t like the system. When they get their pay ‘in the envelope’, one day you get paid, another day you don’t and there’s also no social guarantees provided. What happens if you lose your job and if you get sick?” commented Mauricas and added that the social security system should be reformed so that benefits would be bought closer to what people paid into the system.

Another reason people emigrate is corruption, the economist believes. People are apparently fleeing perceived injustice – not just corruption, but also nepotism.

“A third thing is a vision for the country. It cannot about the minimum wage. The vision should encourage expatriates to return. Take what Estonia says: ‘We will become the first country in this and that. Funds will be purposefully invested in these sectors and specialists are invited to come.’ When solving problems of emigration, Ireland found three key things: it aspired to become a finance hub, an IT hub, it massively cut employment costs and made wages rise. That is how expatriates are encouraged to return,” he explained.

It is necessary to provide information about employment and life in Lithuania, Mauricas continues, but it is more useful to do so once the economy advances further. “What is the point of informing people that they will be paid on time?”

Lack of patriotism

In her evaluation of the anti-emigration plan, chief economist of the DNB bank Jekaterina Rojaka also fails to spot any breakthroughs. The plan, she says, is based on short-term solutions, on hole-patching, and is strategically shallow – it says nothing about education reform and changes to the state finance model.

“The plan lists measures that have existed and work, they just haven’t been put into a single document. It is good to see them in a more structured and more developed form, because normally one measure is ‘plucked’ and ‘pushed’ around. Nevertheless, this area is showing no big breakthrough,” said the economist.

She highlighted that the country’s labour market has reached a peak – employment figures and the number of those employed have reached their highest level. Even raising the retirement age would do little to help. “I believe the main problem driving emigration is education and this plan makes no mention of any education reform. Everything should be decided from the ground up on education, what are we want from the school level to the highest institutions,” Rojaka says.

She agrees that emigration could be reduced by higher wages. For this reason, she welcomes the notion expressed in the plant that the minimum wage should be paid for unskilled labour only.

“The current situation is shocking. Those working in healthcare, support staff, nurses – they all earn close to the current minimum wage. Over the past four years, their salaries have stagnated, while the minimum wage was raised five times. This encourages permanent or at least temporary emigration. Groups of medical workers leave for Dubai or Western Europe for 2-3 years. After that, they return more relaxed, strengthened financially, morally and psychologically. When comparing conditions here and there, there’s little reason to stay in Lithuania,” Rojaka believes.

According to the economist the government is currently incapable of solving the emigration problem. What it can do is create conditions that attract investment to the state.

“If there’s investment, if jobs are created and every school or university graduate has employment to look forward to, That is when emigration rates will decrease. If well-paid employment cannot be found, then there’s no way of halting emigration. If you don’t have an adequately paying job, if the system gives you education that is useless in the market or cannot be adapted, then emigration will not cease,” ponders the economist.

She continues that providing information on employment opportunities and living conditions could be useful, this could increase repatriation.

“For example, my colleague returned from the UK to Lithuania. Individuals of certain qualifications, for example, the finance sector, return more often because there are employment opportunities here, relatively decent wages are paid. But those from the IT sector almost never return as even in Western countries they experience little competition. Employment opportunities there are the same as in Lithuania, but the wage difference is vast,” Jekaterina Rojaka comments.

Finally, she adds, a lack of patriotism may also be a factor. “We identify very strongly with Europe. To some extent this is an issue of lost identity. We think we are part of Europe and therefore there is nothing wrong in emigrating, since we are going to that same unified Europe.”