Review: who were better of in 2016?

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With talks of “everything was better and cheaper with the litas” settling down, calculates who had the best 2016, compared to last year. Economists note that the greatest happiness visited the services sector, while the Ministry of Social Security and Labour (MSSL) notes that not just benefits and minimum wages rose.

Chief Economist for bank DNB in the Baltic States Jekaterina Rojaka told that the greatest wage rise this year was in the accommodation and catering service sector, that is to say in restaurants and hotels.

“The reason is simple – this sector is dominated by the minimum wage, thus rises in it made for a wage increase of 14%, while the entire economy saw an 8% rise. We have to, however, keep in mind that tax avoidance in this sector is also one of the greatest. Significant growth can be seen in the manufacturing sector, with wage rises nearing 10% in 2016.

The manufacturing industry is a broad sphere, which includes both Orlen and various small factories of textiles and pharmacy. The average of all industry is larger than the average in Lithuania and it had significant changes. Once again, it is fairly normal with the average wage being raised, but their profitability was also good this year, so they had room for wage raises,” explained J. Rojaka.

A thriving service sector

Chief Economist for bank Nordea Žygimantas Mauricas told that exporters working with Western markets, particularly Scandinavia did not meet any particular challenges. The service sector also achieved a positive rise.

“I believe that the majority of the service sector experienced only positive news. Citizens’ purchasing power rose, while prices for some services also rose significantly. Thus the service sector had a great year. I interact with many businessmen and they cautiously tell me that in fact things are too good. The main criteria for this is prices. Activity rose, there was a larger number of clients and people were more willing to pay more. While it is not at the level where the euro is equal to the litas, but service prices have risen and it shows statistically.

It was also a good year for trade, they should have no reason to complain about anything. Also the construction sector. While there are frequent mentions that the year wasn’t that great, but the construction sector managed through EU support and the government investment programme. Speaking of homes, 2016 was definitely not a bad year for the construction sector,” said the economist.

Leading municipalities

Association of Local Authorities in Lithuania Deputy Director – Advisor for Municipal Finance and Economy Rimantas Čapas pointed out to that most municipalities had little reason to celebrate in 2016. Nevertheless some managed to achieve their financial plans even ahead of time.
“Speaking of who managed to gather the largest budgets through the tax inspection, we have the Elektrėnai municipality, which did it over 11 months. This plan was also accomplished by the Utena region, Neringa, Druskininkai and Birštonas municipalities,” identified R. Čapas.

Compared with December 31, 2015, Vilnius had 101.6 million euro debt, while the debt of all municipalities reached in excess of 110 million euro. On October 31 the debt of all municipalities reached almost 90 million euro. Thus over a year the overall debt of all municipalities decreased by 20 million euro.

R. Čapas pointed out that a number of municipalities had no debt, stating that “The Birštonas, Druskininkai, Kaunas city, Neringa, Šiauliai city, Akmenė region, Alytus region, Ignalina region, Jonava region, Jurbarkas region, Kėdainiai region, Klaipėda region, Lazdijai region, Molėtai region, Panevėžys region, Radviliškis region, Šakiai region, Tauragė region, Trakai region, Zarasai region, Elektrėnai, Kalvarijos, Kazlų Rūda and Pagėgiai municipalities had no debt.”

Rising welfare payments

The MSSL provided a written response, stating that this year the livelihoods of a number of social groups improved, firstly pointing out the eased provision of illness grant: “If an illness grant is requested from the Sodra budget, it is necessary to present a request to Sodra once and then each time the individual becomes ill, the grant will be paid automatically. The request can be done directly over the internet or by visiting a branch.

Social insurance payments (pensions and grants) rose in 2016 due to increases in current year insurable income (431 euro to 445 euro) and base pension size (108 euro to 112 euro). Due to this, the average retirement pension, given the necessary work experience, rose by 8 euro, which required around 74 million euro,” writes the MSSL response.

In December 2016, the compensation process for the general pension reduction (when all pensions in excess of 650 Lt were reduced) for retirement and disability pensions was completed. 500 thousand pensioners received compensations.

In Jun 2016 the first part of compensations (33% of the calculated sum) was received by retirees (working retirees received further decreases in pension based on the size of their wage) and working state pension earners (who were met with vast reductions in state pension earlier). This compensation will impact 84.4 thousand pension earners,” say MSSL specialists.

Help at home

According to the ministry, the disabled and seniors had more opportunities to receive aid at home:
“In 2016 integrated assistance expansion projects were begun, which provide integrated assistance (social care and treatment) for seniors and the disabled in all municipalities across the country (except that in Neringa town). Mobile teams of specialists provide assistance at home, healthcare specialists were included in the social assistance process. In 2013-2015 such assistance was only available in 21 municipalities. It is planned that integrated assistance will be received by 4000 disabled or senior individuals and families,” states the ministry’s comment.

Renting homes

The Ministry of Social Security and Labour also pointed out that this year it was easier to rent a home – “Seeking to provide conditions for all individuals (families) to receive a partially state compensated mortgage for their bank of choice in 2016, the ministry reviewed the annual limits set for credit institutions and raised them by 6 million euro. As a result over 700 individuals (families) were provided mortgages partially compensated by the state,” says the ministry report.

Impoverished and students

Specialists say that poor citizens also received greater support.

“Changes to monetary social support for impoverished citizens ensured that proportional social welfare decreases are applied to only able individuals of working age who are not working (including independently unemployed), the list of circumstances when the social support proportional decrease scheme will not be applied was expanded, more favourable conditions to receive extra social support on employment were implemented and etc. This way more favourable conditions were provided for poor citizens to receive social support, the adequacy of monetary social support was ensured, the motivation of able, working age individuals to integrate into the labour market was raised,” states the ministry response.

Support for students also increased. According to the ministry from 2016 there was a 25% increase in funding for obtaining student supplies, from 1.2 to 1.5 of a base social welfare payment (45.6 to 57 euro). It is planned that in 2016 support for school supplies will have been provided to 60 thousand students from low income families.


Wages also rose – from January 1, 2016 the minimum monthly wage was set to 350 euro (from 325 euro prior), while from July 1 it rose to 380 euro. The increase in minimum wage impacted around 350 thousand employees.

The average monthly wage also rose. “According to data from the Statistics Department, in Q3 2016 the average monthly gross wage in the state economy (excluding individual companies) was 793.3 euro, compared to Q3 2015 (735.1 eur) it rose by 7.9%. Through the year the average monthly gross wage in the state economy rose in companies, institutions and organisations of all kinds,” the report states.

The ministry identifies that this year was also easier on families with disabled children. In their response to it is written that the right to obtain a compensation reaching up to 32 times the base social welfare payment (currently 1216 euro) six times every year for obtaining a car or compensating expenses of technical adaptation will also be provided to carers, who have been provided permanent custody of the child, for families raising disabled children who have been determined to need constant special care.

Violence in the family

According to the MSSL, those experiencing violence received more support from the state this year.
“State support for specialised assistance rose 2.5 times in 2016 compared to previous years, from 266 thousand euro in 2015 to 666 thousand euro in 2016. The competence of specialists were strengthened in teamwork, providing assistance for those experiencing violence, training was organised, which included municipal, police, NGO and other institution representatives. Over nine months of 2016, assistance was provided to 8000 people,” the letter writes.

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