Flash comment: Lithuania - February 23, 2012: Positive developments in labor market continued at the end of 2011

1. Flash comment: Lithuania
Economic commentary by Economic Research Department February 23, 2012
Positive developments in labor market continued at the end of 2011
Wages, annual growth rates In the last quarter of 2011 the average gross monthly earnings in
25% the whole economy (except for individual enterprises) increased to
20%
LTL 2175 (EUR 630) and were 2.8% higher than in the previous
quarter. During this period average gross earnings in the public
15%
sector rose more than in the private sector, by 3.6% and 2.1%
10%
respectively. Gross wages, however, remain 6.3% below the pre-
5% crisis peaks. The increase in earnings in the fourth quarter was
0% influenced by higher irregular bonuses, premiums and one-off
-5% monetary allowances. The most notable quarterly growth in
-10% average gross monthly earnings was observed in enterprises
2006 2007 2008 2009 2010 2011 engaged in mining and quarrying (12.5%), information and
Gross nominal wage Net real wage communication (4.8%), transportation and storage (4.5%), human
Source: Statistics Lithuania
health and social work activities (4.4%), as well as education
Employed, unemployed person, activity
(3.9%).
rate of the population aged 15–64
1.8 78% Over a year, average gross monthly earnings increased by 2.5%:
1.5 75% by 3.1% in the public sector and by 2.2% in the private sector. The
1.2 72%
average net salaries grew by 2.4% to LTL1689 (EUR 489), while
the real net wages remain negative (1.5% lower than a year ago)
0.9 69%
for the twelfth consecutive quarter.
0.6 66%
0.3 63% The labour market has been positively influenced by the continuing
0.0 60% economic recovery. During last quarter Lithuania’s unemployment
2007 2008 2009 2010 2011 level declined to 13.9% from 14.8% in the previous quarter. In 2011
Unemployed persons, m (ls)
Employed persons, m (ls) the average unemployment level reached 15.4%. Youth (15-24
Activity rate of the population aged 15–64 (rs)
years old) unemployment remains high, while decreased slightly to
Source: Statistics Lithuania
32% from 35.1% in 2010. During last year employment increased
Unemployment rate by 0.9%.
40%
35%
30%
Outlook
25%
The internal devaluation, which lasted for three years, is likely to be
20%
over this year, and we forecast the 1.4% growth in real net wages.
15%
10% Overall, wage increases will be selective, as most companies are
5% wary of a negative impact from the euro zone problems and
0% employees’ negotiation power remains low due to high
2007 2008 2009 2010 2011
unemployment. We expect unemployment to decline at slower
Unemployment rate
The youth (aged 15–24) unemployment rate pace this year, down to around 13% at the end of this year. A lower
Long-term unemployment rate
Source: Statistics Lithuania unemployment and growing wages will have positive impact on
consumption, however households are expected to remain cautious
and increase their saving rate this year.
Lina Vrubliauskienė
Senior Economist
+ 370 5 258 2275
lina.vrubliauskiene@swedbank.lt
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