TALLINN — Both Lithuania and Estonia have reported significant drops in average wages for the fourth quarter of 2009 compared to the year prior.

Lithuanian workers on average experienced a drop in net earnings of 7.1 percent and Estonians earned 6.5 percent less.

Unemployment rose significantly in both [private_supervisor]countries over 2009 and while prices in Estonia eased slightly, consumer prices continued to rise in Lithuania in what one economist described as “textbook” stagflation.

In Lithuania the sectors that suffered the most were construction, the public sector, real estate and the financial sector. Estonians in the public administration and defense industries saw their wages cut most severely.

Swedbank analyst Maris Lauri said the Estonian figures fit with trends, but added that wage cuts should be ending in the northernmost Baltic state.

“In some companies the salary payments might have been increased already at the end of 2009, when the share of part-time work reduced,” Lauri told Baltic Reports.

Lauri said some cuts would likely be made at the beginning of 2010, although wage expenses could reduce as work decreases and the need for extra staff drops off.

“It will take a while before the wages start increasing again — in companies it may happen at the end of the year,” said Lauri. “Anyhow, initially the the rise will be modest.”

In Lithuania SEB economist Vilija Tauraitė told Baltic Reports that the bank still expects a slight contraction in wages because of “the space for optimization of labor costs.”

“Unemployment will still increase and wages should therefore decrease. We expect minor growth in 2011 of about 3.5 percent of gross domestic product,” Tauraitė said adding that this projected growth would not lead to major rises in wages because of the size and maturity of the economy.

“This would be considered good, stable growth in a mature economy, but here people are used to 20 percent,” she said.

SEB Bank expects cost push inflation to continue in 2010, but combined with shrinking demand the overall effect should be zero net inflation. In 2011, demand should push inflation up 2 percent, Tauraitė predicted.

The shut down of Ignalina nuclear power plant will continue to have an effect on the Lithuanian economy for the next few years through secondary inflation. Now Lithuanians pay more for electricity and heating because of the need to import fuel at a higher cost.

Statistics on wages for Latvia are expected to be published by early March.

— Baltic Reports assistant editor Adam Mullett contributed to this article.
[/private_supervisor] [private_subscription 1 month]countries over 2009 and while prices in Estonia eased slightly, consumer prices continued to rise in Lithuania in what one economist described as “textbook” stagflation.

In Lithuania the sectors that suffered the most were construction, the public sector, real estate and the financial sector. Estonians in the public administration and defense industries saw their wages cut most severely.

Swedbank analyst Maris Lauri said the Estonian figures fit with trends, but added that wage cuts should be ending in the northernmost Baltic state.

“In some companies the salary payments might have been increased already at the end of 2009, when the share of part-time work reduced,” Lauri told Baltic Reports.

Lauri said some cuts would likely be made at the beginning of 2010, although wage expenses could reduce as work decreases and the need for extra staff drops off.

“It will take a while before the wages start increasing again — in companies it may happen at the end of the year,” said Lauri. “Anyhow, initially the the rise will be modest.”

In Lithuania SEB economist Vilija Tauraitė told Baltic Reports that the bank still expects a slight contraction in wages because of “the space for optimization of labor costs.”

“Unemployment will still increase and wages should therefore decrease. We expect minor growth in 2011 of about 3.5 percent of gross domestic product,” Tauraitė said adding that this projected growth would not lead to major rises in wages because of the size and maturity of the economy.

“This would be considered good, stable growth in a mature economy, but here people are used to 20 percent,” she said.

SEB Bank expects cost push inflation to continue in 2010, but combined with shrinking demand the overall effect should be zero net inflation. In 2011, demand should push inflation up 2 percent, Tauraitė predicted.

The shut down of Ignalina nuclear power plant will continue to have an effect on the Lithuanian economy for the next few years through secondary inflation. Now Lithuanians pay more for electricity and heating because of the need to import fuel at a higher cost.

Statistics on wages for Latvia are expected to be published by early March.

— Baltic Reports assistant editor Adam Mullett contributed to this article.
[/private_subscription 1 month] [private_subscription 4 months]countries over 2009 and while prices in Estonia eased slightly, consumer prices continued to rise in Lithuania in what one economist described as “textbook” stagflation.

In Lithuania the sectors that suffered the most were construction, the public sector, real estate and the financial sector. Estonians in the public administration and defense industries saw their wages cut most severely.

Swedbank analyst Maris Lauri said the Estonian figures fit with trends, but added that wage cuts should be ending in the northernmost Baltic state.

“In some companies the salary payments might have been increased already at the end of 2009, when the share of part-time work reduced,” Lauri told Baltic Reports.

Lauri said some cuts would likely be made at the beginning of 2010, although wage expenses could reduce as work decreases and the need for extra staff drops off.

“It will take a while before the wages start increasing again — in companies it may happen at the end of the year,” said Lauri. “Anyhow, initially the the rise will be modest.”

In Lithuania SEB economist Vilija Tauraitė told Baltic Reports that the bank still expects a slight contraction in wages because of “the space for optimization of labor costs.”

“Unemployment will still increase and wages should therefore decrease. We expect minor growth in 2011 of about 3.5 percent of gross domestic product,” Tauraitė said adding that this projected growth would not lead to major rises in wages because of the size and maturity of the economy.

“This would be considered good, stable growth in a mature economy, but here people are used to 20 percent,” she said.

SEB Bank expects cost push inflation to continue in 2010, but combined with shrinking demand the overall effect should be zero net inflation. In 2011, demand should push inflation up 2 percent, Tauraitė predicted.

The shut down of Ignalina nuclear power plant will continue to have an effect on the Lithuanian economy for the next few years through secondary inflation. Now Lithuanians pay more for electricity and heating because of the need to import fuel at a higher cost.

Statistics on wages for Latvia are expected to be published by early March.

— Baltic Reports assistant editor Adam Mullett contributed to this article.
[/private_subscription 4 months] [private_subscription 1 year]countries over 2009 and while prices in Estonia eased slightly, consumer prices continued to rise in Lithuania in what one economist described as “textbook” stagflation.

In Lithuania the sectors that suffered the most were construction, the public sector, real estate and the financial sector. Estonians in the public administration and defense industries saw their wages cut most severely.

Swedbank analyst Maris Lauri said the Estonian figures fit with trends, but added that wage cuts should be ending in the northernmost Baltic state.

“In some companies the salary payments might have been increased already at the end of 2009, when the share of part-time work reduced,” Lauri told Baltic Reports.

Lauri said some cuts would likely be made at the beginning of 2010, although wage expenses could reduce as work decreases and the need for extra staff drops off.

“It will take a while before the wages start increasing again — in companies it may happen at the end of the year,” said Lauri. “Anyhow, initially the the rise will be modest.”

In Lithuania SEB economist Vilija Tauraitė told Baltic Reports that the bank still expects a slight contraction in wages because of “the space for optimization of labor costs.”

“Unemployment will still increase and wages should therefore decrease. We expect minor growth in 2011 of about 3.5 percent of gross domestic product,” Tauraitė said adding that this projected growth would not lead to major rises in wages because of the size and maturity of the economy.

“This would be considered good, stable growth in a mature economy, but here people are used to 20 percent,” she said.

SEB Bank expects cost push inflation to continue in 2010, but combined with shrinking demand the overall effect should be zero net inflation. In 2011, demand should push inflation up 2 percent, Tauraitė predicted.

The shut down of Ignalina nuclear power plant will continue to have an effect on the Lithuanian economy for the next few years through secondary inflation. Now Lithuanians pay more for electricity and heating because of the need to import fuel at a higher cost.

Statistics on wages for Latvia are expected to be published by early March.

— Baltic Reports assistant editor Adam Mullett contributed to this article.
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