Lithuania's gross wage keeps rising, real earnings still shrinking

25.05.2012, 14:14

Lithuania's gross average wage advanced at the fastest rate in Q1 2012 since the end of the recession but even this failed to produce an increase in net earnings, although the tipping point could be near, reports news2biz.

Gross wages rose by 2.9% y/y in the private sector and by a notably faster 4.1% in the public sector, producing a 3.2% increase for the whole economy. In all three cases, the growth rate was the fastest since Q4 2010-Q1 2011 when gross wages began rising after a 1.5-year contraction.

Real earnings grew by 0.2% in the public sector in the beginning of 2012 but a decrease of 0.9% in the private sector brought an average contraction of 0.6%. This means that employees in Lithuania have seen their purchasing power diminishing for more than three years now, whereas employers have been able to keep increasing their cost competitiveness.

Analysts expect this trend to be finally broken in the coming quarters as the gross wage rise is forecast to outpace the slowing inflation rate.