New directions of salary are worrying: this is a growing trend

Indrė Genytė-Pikčienė, chief economist of Artea Bank, told about salaries trends and « unemployment trap ».

– What does the slowing pace in the salary sector signal?

– December should not be emphasized, as 9 % There is still a rapid annual increase in salary over the years. He is one of the fastest, and is likely to remain in the European Union region. Inertia is fueled by our own decisions made by our own politicians, as we see that last year there has been a very pronounced trend in public sector wages, and the minimum monthly wage is raised, which is also partly dependent on average and, as the knowledge, now has a much faster growth in public sector salaries than the private sector.

Photo by A. Ufarto / ELTA

– Is it better to work better in the public sector now? Perhaps even there are no problems like before? Because it was difficult to invite people to work in the public sector.

– This is not the case, because there are also a holy profession in the public sector – as teachers, doctors – where there are many structural problems, and salaries alone are not apparently a solution. And they are still inadequate in certain areas to seduce the residents to choose those professions. Still, there is a slower cyclic period in the private sector – we see that the salary rises sluggish. We also see that new jobs are created modestly per month. The number is significantly descending into the number of registered unemployed, and this trend has been going on for more than a year, which is really worrying for economists – economic activity, which with decreasing interest rates should prevail and speed up and not yet accelerated as expected.

– Could it be that the public sector and the private sector – as contacting dishes: if they start to grow more salaries in the public sector, they can, conversely, in the private sector?

– Because those dishes contact, it is natural that if you succeed in attracting more employees in the public sector, it will probably start to lack in the private sector in certain areas. Competition between employers will only exacerbate. There will certainly be no risk that salaries are reduced or redeemed in a very long period of time in the private sector. Because its labor market is very shallow, and in recent years it has been slightly enriched with immigrants from Ukraine and elsewhere. But there are risks that if the war ended or the migration trend turned around, Lithuania’s structural labor market – labor mismatch between demand and supply – problems would only exacerbate.

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– Sodra provides interesting data that most of the recipients are among people under 25 years. What happened to our youth and what is that? In the past, as if it were, « anywhere, not at the Labor Exchange, » he said.

– It is common for youth unemployment rate to be higher than the average unemployment in the country. Young people usually tend to look for themselves, try different fields, various professions, and occur in such unemployment episodes. But it is worrying that this is a growing trend, and the incidence of unemployment among young people is much higher than before pandemic.

It is worth noting, because in Lithuania there is a significant problem with the so -called « unemployment traps ». Now we are the leader in the European Union, which is distorted by statistics and otherwise calculate the gross wage system. But even before the amendment, the « unemployment trap » indicator in Lithuania was one of the highest in the European Union. This shows that entering the labor market and abandoning various unemployment benefits, benefits and similar support measures, start paying taxes from the very first earned euro – that leap is enough demotivating and not including those who want to.

– And maybe young people are using it? But every eighth pensioner works – the question, why? When you could really rest. Do you need or want?

– There are different situations – there are those who really want to contribute to pension and have health, and opportunities allow for it. The ability to work and create added value is both useful for personal reasons and for the economy. But when it comes to higher qualifications, it is also part of self -realization. Because working, having some daily routine is both healthy, useful and economically convenient for all of us.