N. Mačiulis. Economy up, citizen’s moods down. A Lithuanian phenomenon?

Nerijus Mačiulis
Nerijus Mačiulis DELFI / Domantas Pipas

Currently there is much discussion that despite the almost fastest GDP growth in the Eurozone, citizen’s moods are continuing to decline. From bad to worse, deep economic crisis or GDP growth, it matters not. Nerijus Mačiulis, chief economist for Swedbank, attempts to analyse this phenomenon in a post on his Facebook profile.

More than a million have already emigrated, a third of those remaining are empoverished, almost no-one’s lives are improving, price increases significantly exceed income growth – these are all narratives repeated before, but how much truth is there to them? GDP or export growth says and means little to most, but what do other, more tangible metrics show?

Whatever point we start from – be it the adoption of the euro or the pre-crisis years – progress, at least material progress, is hard to deny. From early 2007 the average wage after tax has risen by 70%. During the same period, Statistics Lithuania shows that the average goods and services basket rose 30% in price.

Yes, there are goods and services that rose in price by more than a few tens of percent, but several folds, in most cases however these are not goods of primary importance or used every day. Steaks, macaroons and mimosa in the Old Town are affordable for only the select few and some tourists, why mind, let them buy it. Despite cafés being on every street corner nowadays, a cup of coffee also rose in price more than tens of percent, but only because there are enough of those willing to pay the prices. Yes, most professional services – dentist, plumber, plasterer, locksmith, teacher or hairdresser – these cost far more than they did a few years ago. But this is mostly linked with a lack of those specialists and their increasing wages, rather than a change in currencies.

Yes, there is a lack of people to employ because many emigrated and continue to do so. But from the beginning of the century there has not been a million emigres, but a little over 600 thousand. Furthermore many Lithuanians are already returning – around 15 thousand a year. Official statistics shows that emigration rose yet again this year, but Bank of Lithuania analysis shows that the number of Lithuanians declaring having emigrated abroad remains stable. This means that this year’s “jump” in emigration from Lithuania is fictional – those who departed earlier register in an effort to avoid taxation.

The average wage rose and yes, we have all heard the witty examples about averages – potatoes in Šakiai plus meat in Vilnius equals cepelinai in Lithuania; the average depth of Nemunas is only a metre, but if you try to ford it, you’ll probably drown; the average temperature of a hospital patient is 36.6 degrees centigrade – some are feverish, while others have already gone cold. Hilarious or sorrowful, it has little to do with the average wage shifts in Lithuania. There is not a single district where wage growth this year would be less than 7%, there is no sector where it does not reach 4%.

Yes, wages unfortunately did not increase for absolutely everyone, but the claim that economic growth is only felt by a third of those in employment or just the wealthy is, to understate, misleading. From the end of the crisis, the average wage rose 28% for the top 30% income earners, while for the bottom 30% income earners – exactly twice that, by 56% (mostly due to rapid minimum monthly wage increases). Income inequality among those in employment has declined though in society overall it has risen somewhat – the non-work related incomes of some rose more rapidly than wages and many social benefits did not increase at all.

What of poverty? Immediately on accession to the EU an entire third of the population was in absolute poverty. According to Eurostat data, now such people make up only 13.5% of the population. This is still a large number and twice the Eurozone average, but there is progress.

Yes, there still are unresolved issues – income and occupation in smaller towns and villages is rising slower than in major cities. Masses of qualified public sector employees have seen little or no income increases over the past decade. Yes, tax burdens are too high in some places and the resources of the public sector are distributed with little to no transparency or effectiveness far too often. Yes, the quality of public services is not satisfactory and the wages paid for them are even less so. Yes, there are still many Lithuanians choosing to emigrate – the opportunity to work, earn and realise oneself away from your place of birth. Yes, many Lithuanians still have more free time than money, thus they go shopping in Poland. It is tough, but all of these problems are very much within reach of solving and it is natural to demand they are.

It is also natural to seek to escape material insufficiency and strive for increases in income. But it is unnatural to ignore or deny progress, even if it has not (yet) touched everyone.

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