Latviski English По-русски
Tuesday 20.03.2018 | Name days: Made, Irbe

Why Estonian salaries are getting increasingly higher than the Lithuanian?

(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULinas Jegelevičius for the BNN

The encroaching autumn has triggered a number of new job offers, but the hirer’s and to-be employee’s expectations are often starkly different, say human resources experts.

As a rule, says Rita Karavaitienė, marketing director of CV Online, an online job database service, the preparation of fresh job market participants is not often up to the employer’s requirements and, in that case, the job seeker has to be additionally apprenticed to get started off.

Job seekers unskilled, employers skimp

«That is a reason why most of the employers are looking for a ready-to-start-working person. In other words, companies out there yearn for a know-how worker», she told.

Employers, meanwhile, are very selective with the candidates, and the threshold of the requirements in pretty high, while the salary, meanwhile, is on a lower end.

«The typical requirements we’re seeing are these: high education, age in the range of 30s, good English and Russian skills, a valid driving license and, sure, good computer and communication skills,» the online service rep told.

But the salary offered for the suitable candidate hovers around 1300 litas, or 376 euro, per month.

«That kind of person with the aforementioned requirements usually wants to start off from 2000 litas (580 euro), » Karavaitienė noted.

As long as there will be job seekers willing to toil for the offered 1300 litas, the employer will hardly offer a higher salary.

The market rules!

But perhaps not only it if we were to look at the gaping range of wages and salaries within the same jobs across three Baltic States of Latvia, Lithuania and Estonia.

A 400 euro gap in pay

According to Estonian statistics, the average Estonian salary in private sector was 997 euro in the second quarter of the year, while in Lithuania it was respectively a little bit over 600 euro.

But just a mere 20 years ago, when the countries had just started off their independent path as the former Soviet Empire breakaway republics, Lithuania boasted a better pay than the Estonia.

Twenty years into the states’ independence the gap between the average Lithuanian and Estonian pay is gaping- is nearly 400 euro to be exact.

And the Latvians, who, among the three neighbours, were hit the hardest by the 2009-2010 economic downturn, not only have successfully bounced back, but also have outstripped Lithuanians on the account.

How on earth this has been possible in a tiny region playing effectively by the same rules?

Estonia stuck with the West from scratch

Žygimantas Mauricas, Nordea bank chief economist, believes several reasons have to be taken into account searching for the explanation.

First, Estonia‘s economy level and, therefore, the GDP is higher, roughly 20 percent than in Latvia and Lithuania. Second, the “pie” that Estonia is producing is being distributed more effectively, meaning that the Estonians slice off a larger chunk from it than the fellow Lithuanians and Latvians. Third, the « black market» in Estonia is smaller than in the other two neighbour countries.

And, finally, comes the impact of Finland. The latter has become very obvious after the crisis was over.

Besides, the salary distribution in Estonia is more even and closer to that of the Scandinavian model, Mauricas noted.

In that regard, Lithuania falls in comparison with Central European countries or even Russia, where the salary range is extremely high and where the grip of «black economy» is tighter, he said.

Estonia had particularly noticeably leaped forward in the size of salaries around the outset of the new millennium.

«It is related to the strategy that Estonia chose- get closer to the West and be on par with Finland. Meanwhile, Lithuania and Latvia had tried to be a bridge between the East and the West. The Estonians turned effectively their backs against the East and trod westward, while Lithuania and Latvia courted both directions. The difference has become especially distinct during the Russian crisis in 1998-1999, by which the Estonians had already re-oriented their exports to the West, particularly towards Finland,» the expert said.

Shadowy economy is larger in Lithuania

The Estonians’ second leap forward was during the 2009-2010 economy shrinkage, the economist noted.

«They were really well prepared for it- had a smaller state budget deficit, had accrued some budgetary surplus and were further sticking with the West,» the economist said.

No surprisingly, Estonia’s GDP is 18 percent higher than that in Lithuania and the salary difference in the countries is in favour of the former at a staggering 44 percent.

«It means that the economy alone doesn’t explain such a difference in the salaries. But, also, we cannot affirm that the whole difference is about the shadowy economy,» Mauricas commented.

But it does play an important card in the structure of economy and, subsequently, the size of wages and salaries.

Some other peculiarities also have to be considered.

«In Lithuania, for example, there’s a big sector of transport, which tends to cast the shadow (on the whole economy). Since we’re seeing more of it, therefore the distorted statistics,» Mauricas mulled.

Another thing, the bank official paid attention to, is the rate of the salary and GDP in the countries.

«Look, in Lithuania, it stands at 44 percent, meanwhile in Estonia at 54 percent. It essentially means that that the Estonians get a larger piece of the «pie»; there’s a lot of money in Lithuania circulating and creating an additional value, but the money do not necessarily end up filling the pockets of the employed,» the economist emphasized.


Leave a reply

  1. Estonian says:

    Good Articel. Only one thing cross my mind, about Lithuania boasted a better pay than the Estonia. I was just curious to find is it true, because I think it was opposite.

    Information from Wikipedia:
    Per Capita GDP 1973 1990
    United States $16,689 $23,214
    USSR (all) $6,058 $6,871
    Russian SFSR $6,577 $7,762
    Ukrainian SSR $4,933 $5,995
    Byelorussian SSR$5,234 $7,153
    Estonian SSR $8,656 $10,733
    Latvian SSR $7,780 $9,841
    Lithuanian SSR $7,589 $8,591
    Moldavian SSR $5,379 $6,211

    Thumb up 0 Thumb down 0

  2. Linda says:

    I agree don’t where they get the figures from, pay is abysmal in most newly re-independent states after all they have 50-70 years of soviet to shake off and find markets.

    Thumb up 0 Thumb down 0

Minister: it is not impossible for banks to reduce number of risky clients to 5%

It is not impossible for Latvian banks to reduce the number of risky clients to 5%, says Finance Minister Dana Reizniece-Ozola.

Syrian Afrin left by 220 000 civilians, Turkish-supported rebels loot town

After seizing the northern Syrian town of Afrin from Kurdish militia, Syrian rebels supported by Turkey have been looting properties, journalists have reported. The town has been left by estimated 220 000 civilians.

Ministry orders Riga City Council to lift restrictions on questions

Latvia’s Environment Protection and Regional Development Ministry has asked Riga City Council to act and fix violations of democratic principles in the newly approved rules for deputies.

Observers of Russia election see lack of genuine choice, numerous irregularities

Official results of the Russian presidential election showed that Vladimir Putin received in a competition of eight candidates over 76% of votes and European observers have found the election has been conducted efficiently, but that there has been a lack of choice.

Olainfarm: tax law does not allow applying for tax discount in investment projects

Rushed changes to the Corporate Income Tax Law, approved as part of the expansive tax reform, do not allow businesses with prior permission from the government to apply for CIT discounts in investment projects to receive said discounts if their historic profits are not divided into dividends.

EU agrees to UK's transition period before Brexit

In a breakthrough in the Brexit talks, the UK gave its consent on Monday to an agreement with the European Union that a tangible border would not be established between British-ruled Northern Ireland and Ireland to have the bloc agree to retain most EU advantages for close to two years leaving the union.

Latvia experiences one of the most rapid export rises among EU member states in January

In January 2017, Latvia experienced one of the most rapid export increases among EU member states when compared to the same month of the previous year, according to data published by Eurostat on Monday, 19 March.

Russian citizens living in Latvia provided more support to Putin than citizens in Russia

During the presidential elections in Russia last week, support provided to President Vladimir Putin by Russian citizens living in Latvia turned out considerably larger than it was in Russia.

Every third illegally downloaded software programme – infected with a virus

Data compiled by International Data Corporation shows: every third illegally downloaded software programme is infected with malicious software. Nevertheless, 69% of consumers and 33% of businesses in Europe procure computers with software from unsafe sources.

Russian economy has grown stable along with oil prices

Higher prices of oil have allowed the Russian economy to recover despite European Union's and U.S. sanctions and in time to benefit the Russian President Vladimir Putin, who has secured his next term in office.

Number of vacant jobs in Latvia grew 17.9% in 2017

In 2017, there were 17.0 thousand job vacancies in Latvia, which was 2.6 thousand vacancies or 17.9 % more than in 2016. In public sector there were 6.1 thousand job vacancies van in private sector 10.9 thousand vacancies.

Latvian cosmetics producers exports goods worth approximately 20 million euros

Cosmetics producers in Latvia export products worth EUR 20 million every year. Volumes increase 5% every year. The main export partner states are located in Europe. Still, there has been a significant increase of export volumes to third countries – to some countries this increase was as large as 60% -70%, according to data from Latvian Cosmetic Manufacturers Association.

US Chamber of Commerce worried that Latvia’s political culture has not changed since Ridzene talks

American Chamber of Commerce in Latvia (ACCL): «We are concerned that Latvian society’s and its government’s political culture has not changed much since the publication of information detailing events associated with Ridzene talks in 2009-2011. The state capture detailed there may still be possible...

Latvia’s prime minister open for talks regarding MPC system’s liquidation

Prime Minister Māris Kučinskis is prepared to discuss the possible liquidation of the mandatory procurement system, but not for all businesses at the same time.

Air temperature in Latvia to remain mostly positive throughout the week

On Monday, 19 March, weather in Latvia will change, as a low atmospheric pressure area together with an atmospheric front will approach the country from the north. The day will be sunny for the most part, but the amount of clouds will increase as hours go by, as reported by State Environment, Geology and Meteorology Centre.

Ukraine: British diplomats expelled from Moscow could work in Kyiv

In a reaction to Russia's announcement that it would expel 23 British diplomats from Moscow as part of the UK-Russia argument over poisoning of double-agent in an English city, Ukrainian Foreign Minister has suggested to his British counterpart that the 23 diplomats could now work in Ukraine.

UGF leader confirms: Lembergs will not be proposed for prime minister post

Aivars Lembergs, who is accused of serious crimes and is currently suspended from his post as chairman of Ventspils City Council, had proposed his candidacy for the post of prime minister of Latvia multiple times in the past. The moment has come at long last when Lembergs will not be an official candidate for the aforementioned post, as BNN was told by the leader of Union of Greens and Farmers’ Saeima faction Augusts Brigmanis.

NATO's defence spending benchmark met by three EU member states

Despite the current demanding security situation, in the NATO military alliance, no more than three member states of the European Union have reached the recommended defence spending sum in 2017 and Estonia is one of them.

In fight for northern Syria, Turkish-backed forces take city from Kurds

In the fight for northern Syria between forces led by Turkey and Kurdish fighters, Turkish-backed units had gained control of the heart of the Syrian-Kurdish city of Afrin.

Russian presidential election pronounced won by Putin

Russian President Vladimir Putin been announced as the winner of the Sunday, March 18, presidential election, as the politician has pledged to devote his new term in office to strengthen Russia’s defences against the West and to improve the quality of life.

Week in Lithuania. Some 5,000 gather in protest rally outside Lithuania's Parliament

Some 5,000 people gathered outside the Lithuanian parliament in Vilnius on Thursday, March 15, to express discontent with the failed parliamentary vote to impeach MP Mindaugas Bastys and the performance of the ruling Lithuanian Farmers and Greens Union.

BNN summary of the week: oligarch talks’ ownership; scandals in Lithuania; Estonia wants direct democracy

BNN offers a summary of this week’s topical news in a variety of categories: Progress; Scandals; Invitation; Fight; Opinion; Decline.

Remembrance day of Latvian Legionnaires passes with shouts and two arrests

The Legionnaires’ remembrance procession in Riga on Friday, 16 March, passed peacefully. Nevertheless, several conflicts did take place among differently-minded people near the Freedom Monument. Two individuals were arrested by police.

Influenza intensity in Latvia – moderate when compared to other European nations

A comparison of influenza activity in Europe shows that it is high or very high in several countries. Latvia’s influenza intensity is considered moderate, as noted by epidemiologist Raina Nikiforova.

Hourly labour costs in Latvia grew 7.3% in 2017

Compared to Q4 2016, in Q4 2017 hourly labour costs rose by 54 cents or 7.3 %, reaching EUR 8.02. Seasonally adjusted data show identical changes – rise of 7.3 %.