Lithuania’s greatest struggle – affluent countries will not understand this

The affluent EU member states have seen population increases over the past decade and this has led to more rapid economic development among them. The less well-off member states experienced the opposite processes – a reduction in working age populations, which unfortunately includes Lithuania as well.

Over the past decade Belgium, France, Italy, Luxembourg, Holland, Denmark, Ireland, the UK, Spain, Austria, Finland, Sweden, Cyprus, the Czech Republic, Malta, Slovakia and Slovenia have experienced population growth, while the German population remained at a stable 82 million.

Greece, Portugal, Estonia, Hungary, Latvia, Lithuania, Poland, Bulgaria and Croatia experienced a decline in their populations at the same time. Meanwhile economists unanimously assure that immigrants, particularly correctly chosen, are beneficial to economies.

“Immigrants benefit a state regardless of whether they compete with locals. Of course looking from the perspective of individuals who are aiming for specific jobs and fail to get them due to immigrants taking them, it will appear as a bad thing. However regardless of this, competition in the labour force allows employers to select the most suitable staff, irrelevant of their nationality,” SEB bank economist Gitanas Nausėda says.

At the same time he adds that he does not favour “opening the doors and windows” for immigration in spheres where Lithuanians are seeking work and cannot find it.

“I believe that the view on immigration should be very selective. Immigration could be channeled for the spheres where staff was already lacking yesterday. I see no reason why we should leave jobs unoccupied or excessively struggle for ways to find staff, perhaps attracting from other companies, if there is a clear lack of candidates. It is irrational from an economic perspective,” he explained.

Regarding the concerns over socio-cultural composition, the economist admits they are understandable, however for now there is little reason to be concerned over it in Lithuania. Nausėda quips that it would be naïve to expect that immediately upon becoming more flexible over immigration procedures, there will suddenly be more foreigners in Lithuania than Lithuanians.

“I believe we have to act pragmatically, as do many states that are far more developed than Lithuania,” he notes.

The Chief Economist for Swedbank Nerijus Mačiulis says that the economic models of almost all developed countries rely on large flows of immigrants and that Lithuania is lagging behind in immigration rates.

Financial analyst, professor Rimantas Rudzkis points out that immigration should not be perceived so one-sidedly, however Lithuania will also have to allow in more foreigners if there are to be any expectations of continued economic growth.

“On one hand Lithuania will have to take the same path as many developed countries because the Lithuanian economy is already nearing the level of higher development, but a lack of labour force is gradually appearing, while social structure is greatly changing due to emigration and poor demographics. Due to this we have a rapid increase in pensioners, while businesses are starting to lack employees. On the other hand, businesses are unable to reduce production because then they will be unable to fulfil their social obligations, which are only going to rise in the future because average lifespans are on the rise,” he says.

In the professor’s belief, it will be necessary to accept immigrants, the question is only how many and of what qualifications.

According to R. Rudzkis, there can be no doubt that we will have to allow in such immigrants whose employment will create further jobs. This is not just people with engineering qualifications, but also highly qualified craftsmen.

“For example we have automated machinery in production and lacking a specialist to oversee those production lines, if you fail to find such a person, the whole line will stay idle, but if you do find one, then supporting staff will also be able to work. And in Lithuania we have already long been lacking people of qualifications such as welder for a long time, we have only recently started speaking of Ukrainian builders, but Ukrainian welders were invited to Lithuania already many years ago, for example in shipbuilding,” the professor explains.

At the same time he says that it is important to learn from other EU member states who have already invited numerous migrants.

“There is almost no free labour left in Lithuania, what will happen here on? There will be ever fewer entering the labour force and not emigrating, compared to those departing it. If we compare Lithuania to other EU member states, we allow in very few immigrants. Of course it is important to learn from the experience of other states, so as to avoid the mistakes of France and other countries,” the expert summarised.

States that are doing well

A number of developed countries have been successful in attracting greater flows of immigration and integrating them into their labour market.

“So far the possibly most obvious examples have been the USA, UK, Sweden and Australia. That said currently some of them, say the US and UK, are intent on limiting immigration, but this is more due to populist factors, rather than any negative economic consequences. Immigration is one of the factors which helps developed countries not only quickly replenish lacking labour force, but also slows the processes of aging societies via the immigration of young and able individuals,” N. Mačiulis said, noting that it is clear that a slower pace of aging in a society equally lowers pressures on state finances and social security systems.

“Lithuania is one of the fastest aging countries in Europe and the world. By the end of the next decade there will be another 400 thousand inhabitants fewer in the country, while the percentage of individuals at retirement age will rise. This means that the state finances will struggle – the demand for public services and costs of social security will remain, but tax revenue will rise slower, if at all,” Mačiulis said.

In his opinion Lithuania’s goal should be not to simply open to any immigrants, but become an appealing destination for highly qualified individuals.

G. Nausėda explains that currently we can witness the crystallisation of the United Kingdom’s immigration policy in a Brexit context and it is worth taking lessons from it.

“If the country was more liberal in its views of immigration before, not even setting a transition period for labour force migration from EU member states, then now they are clearly distinguishing between different categories of immigrants. The first category is those that the country is lacking and will continue to be welcomed post-Brexit and those who do low qualification jobs or more accurately the sort of jobs where there is little demand and little necessity to seek staff from abroad. The latter will have a very different regime applied to them,” Nausėda points out.

He outlines another example – that of the USA, which keeps its doors open to highly qualified labour, similarly to Canada, Germany and other economically developed countries.

Who could immigrate to Lithuania? G. Nausėda says that there are already cases where foreigners successfully work in the country.

“There have been cases already where hard-working Filipinos and Thais have been employed in Lithuanian businesses. In my opinion the people of Southeast Asia are adaptable, disciplined and adept at adapting to any conditions, it may just be a cultural trait of theirs. Of course in terms of language and sympathies, Ukrainians would likely fare well in Lithuania, as likely would Belarussians and other peoples once forced into the Soviet Union. The Russian language has not been forgotten in Lithuania, thus they will find it easier to adapt, communicate and work. It could also be Bulgarians or Romanians, a number of whom are employed in Klaipėda Port, to my knowledge,” he said.

Nonetheless the economist believes it would be naïve to expect large flows of pensioners from Western countries headed to Lithuania because Lithuania is relatively expensive. He highlights that a retiree can live off of 300-400 euro perfectly well in Madagascar, something much more difficult in Lithuania and this is not even mentioning the differences in weather conditions.

The population of Lithuania has declined by just over 500 thousand from 2005, a decrease from 3.355 million to 2.849 million.

On average 30 thousand individuals depart Lithuania annually. If the situation does not change, it is forecast that by 2047 the country will only have a population of 1.99 million and only 1.65 million in 2080, the fastest decline in the EU.