Lithuanian salaries to grow strongly this year

Gitanas Nausėda
DELFI / Šarūnas Mažeika

The average salary in Lithuania this year will grow by 7% and next year by 6%, according to SEB Bank economist Gitanas Nausėda.

The economist said that the wage growth is now especially visible in the finance and insurance, IT and communications sectors.

“These are sectors where the average salary is higher than the overall average. On the other hand, and this is already happening due to the minimum wage adjustment, there is especially rapid growth in the sectors that employ a large proportion of minimum wage earners – hotels and service workers,” said Nausėda.

The economist pointed out that almost half of this wage growth will be determined by the minimum monthly wage rise. At the beginning of this year it rose to €350 and in July it will be increased by an additional €30.

“Salary growth will certainly not be moderate,” said Nausėda. “By rapidly increasing the minimum monthly wage we reached the point where the minimum monthly wage and average wage are in a ratio of 50%. I consider it an optimal ratio and it should not be exceeded. Therefore, in the future the monthly wage will be increased more moderately and the average wage growth rate may also remain a bit slower,” said Nausėda.

However, Nausėda said a trend of average wage growth being higher than labour productivity growth is already visible.

“The labour productivity gap from the average wage growth may become a competitiveness problem, but it is possible to achieve a better relationship between the two indicators not by stopping wage growth, but by accelerating productivity – investing in new technologies, the state could help by improving labour taxes, social security contributions, setting a Sodra (social insurance) ceiling, and increasing the non-taxable income rate. Then, I think all sides would win,” said Nausėda.

DELFI

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