Flash comment: Lithuania - May 25, 2016
Wage growth accelerated to 6.9% in Q1

In the first quarter of this year annual nominal growth of gross wages accelerated to 6.9%, while real net wages increased by 6.3%. Wage growth was driven by continued rise in the demand for qualified labour force and shrinking supply of such employees. A hike in the minimum wage by 7.7% to EUR 350 in January also had a significant effect on the acceleration of wage growth, especially in some sectors. Net wages were also affected by higher non-taxable income threshold as of January 1st.

Wage growth continued to diverge in private and public sectors. Private companies increased gross wages by 7.6%, whereas wages in the public sector increased only by 5.7%, in annual terms. Most rapid annual wage growth was recorder in sectors with the highest share of employees receiving a minimum wage, namely accommodation and food services, arts and entertainment, real estate activities, etc.

Outlook: wage growth will continue

Developments in the labour market will remain positive. However, due to the lack of qualified employees, the build-up of wage pressures will become even more pronounced. We expect gross wages to grow by 6.5% this year and by 6% next year. Although this will support further growth in household consumption, unit labour costs will continue increasing as well.

For more information about this report, please contact Mrs. Laura Galdikienė, +370 5 258 2275, Laura.Galdikiene@swedbank.lt

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