True Lithuania

Economy of Lithuania

The average Lithuanian is richer than 85% people in the world. He or she earns more than an average person in every nation of Africa, Latin America and most of the countries in Asia. However, Lithuania is lagging behind countries like those of Western Europe, the United States, Canada, Japan or Australia.

Countries richer than Lithuania (GNP per capita 2017) are green in this map while those poorer than Lithuania are red. ©Augustinas Žemaitis.

Among the member-states of the European Union and NATO Lithuania is one of the poorer countries. But it is richer than or on par with other Eastern European members of the said international organizations with the exception of the Czech Republic, Slovakia, and Slovenia.

Lithuania is a post-industrial society with some two-thirds of the population working in the service sector. The society is relatively egalitarian with healthcare, primary and secondary education being funded by the state. Undergraduate, graduate, and postgraduate education is also state-funded for the better students.

However, corruption is a major problem in the healthcare sector as many doctors expect bribes to be paid to them by patients so that they would receive preferential treatment. Corruption is rampant in other sections of the society as well, especially traffic police and government purchases (e.g. road construction for taxpayers' money). These practices are largely a legacy of the Soviet regime. However, Transparency International places Lithuania at some 50th place of 182 countries in its Corruption Perception Index (the higher the place - the less corruption there is), ahead of all states formerly behind the Iron Curtain save for Estonia and Poland (but far behind the West, Japan or Australia).

The largest employer in Lithuania is the MAXIMA group that owns a chain of retail shops well visible in Lithuania as well as Latvia, Estonia, and Bulgaria. This is the largest company in Lithuania and its owner Nerijus Numavičius is the country‘s richest person. Just like many Lithuanian businesses MAXIMA is primarily owned by a single person (or a single family) rather than being a publically traded company.

Largest industries in Lithuania are oil refinement (Mažeikių Nafta in Mažeikiai; 36,2% of total 2011 exports) and fertilizer manufacturing (Lifosa in Kėdainiai and Achema in Jonava; 8,9% of exports). Processed and unprocessed food amount for 16,9% of exports. Traditionally strong clothing industry has been hit by outsourcing to Asia.

The agricultural sector now employs only some 12 percent of the population but they are good at lobbying. Therefore the government generally subsidizes agriculture. The European Union adds to this although the European Union subsidies are significantly lower than for farmers in countries like France. Typically Lithuanian farmers grow grain, pigs, chicken, and cows. The "traditional agriculture" where a family owns a single cow, a single pig and some pastures (rather than combining land to form a large business) is declining but still well entrenched in the Lithuanian countryside. Village tourism offers a new opportunity for Lithuanian farmers and tourists alike.

Click to learn more about Lithuania: Economy, History&Today 18 Comments
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  1. This website is very helpful for a school project i wish it could provide a little more exports to the human brain!!!!!!!

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  2. Hello, Dear I am much happy to find this website. In next month i have plan to come in Vilnius for working purpose. I want to know the present situation of Lithuania. Is this helpful country for earning purpose? Guide some important points which are useful for me. I highly appreciate those who help me.

    • The situation in Lithuania depends on what you compare it to.

      Lithuania is poorer than most Western countries, therefore if you plan to move to European Union you would likely earn way more in Western Europe than in Lithuania.

      Lithuania is also poorer than the following muslim countries: UAE, Oman, Qatar, Bahrain, Saudi Arabia, Brunei and Kuwait.

      Lithuania is, however, richer than the other muslim countries and it is also richer than most other Eastern European countries.

      See the map on Economy of Lithuania article to see which countries are richer and which are poorer than Lithuania.

      Also, as in every country, there are legal restrictions of foreigner work. A foreigner should find a job in Lithuania *before* actually moving in here, then his/her company would sponsor a work permit. The permit will be granted (for up to 2 years) only if there is no Lithuanian citizen capable of doing the same job.

  3. Lithuania is much poorer country and has big issues with alcoholism, suicides, domestic violence and homicides. Meanwhile richest bureaucrats enjoy life.

    • This is only partly true.

      1.Lithuania is indeed significantly poorer than the USA, Western Europe, Japan and other countries that did not recently suffer occupation, colonialism or communism. However, Lithuania is richer than most of the world, including nearly all ex-communist or recently occupied/colonized countries.

      2.Lithuania did indeed lead the world in suicides-per-capita in some years, competing for this “honor” with South Korea. The suicides, however, are often not economy-related and, in fact, many rich countries (such as South Korea) have high suicide rates. Currently, Lithuania is ~8th in the world by suicide rate.

      3.Lithuania is indeed among the top users of alcohol, currently holding the 3rd place in the world (after Belarus and Moldova). Yet again, however, this is not economy-related but rather history-related, with many Eastern European and ex-Soviet countries being the top alochol-(ab)users. A lot of that dates to the alcohol culture of the Russian Empire and then Soviet Union. However, some Lithuanian politicians, including the current government, regularly attempt to change that culture, although to limited luck so far.

      4.Lithuanian murder rate is actually below the world average. It is comparable with the murder rate in the USA, for example.

      5.Domestic violence is less prevalent in Lithuania than in most other countries.

      6.It is true that a high level of bureaucracy and the costs to support it are a problem for the economy of Lithuania. That said, many ordinary bureaucrats earn mediocre wages, although the sheer number of them does indeed drain the national resources. A bigger gap is between the local workers (including bureaucrats) and those Lithuanians in the European Union institutions, who earn Western-European-level salaries which seem outrageous by the Lithuanian level. And the European Union is funded by its member states, including Lithuania.

    • That’s true

  4. im a lithuanian

  5. Very interesting and educational. I am currently visiting Lithuania for the first time and have found these articles very useful. I have not today at experienced any problems whatsoever and find the people keep themselves to themselves. I would very much agree with the comments on using taxis, the Son paid an extortionate rate to travel from Kaunas to Vilnius by taxi. Public transport such as buses are very overcrowded at peak times and also have no air conditioning. Once again thank you for this good article.

    • Thank you for your comment. In fact, most Lithuanians would not even consider / would not think it is even possible to go from Kaunas to Vilnius by taxi, as these cities are far away from each other (by Lithuanian standards, 100 km is quite far, as it is 1/3rd of the entire country). Taxis are used just for short hops within the city usually by Lithuanians themselves. Most Lithuanians own a car, so they would use his car to go from Kaunas to Vilnius for a fraction of the price and with much less hassle. Poorer Lithuanians or those without a driving license (typically students) would use buses and/or trains.

  6. What are the chances of starting an IT company in Lithuania? Maybe an applications for restaurant chains?
    One other question for a job seeker is the language necessary for getting a job there?

    • There are ways to start a company in Lithuania. However, as always, business should not be planned by choosing a country where to start it in. You should have a sound idea, create a team. In general, Lithuania is not keen on foreigners establishing companies just for the sole reason of providing a way for their owners to get Lithuanian (or European Union) residence permits. However, genuine companies that do real business and employ Lithuanian people are welcome.

  7. I think, it is need update map, it represent 2013 situation. Now Lithuania is richer than Equatorial Guinea 🙂

  8. But it is still very old data… 14 years ago.
    I wonder how it is now (a year or two ago), after crisiss.

    • It is data of 2017, just one year ago. See “Date of information” on the right, where it is written “2017 EST.” for most countries.

  9. I’m genuinely confused with all this “information” about Lithuanians income businesses or the explanations of their poor to average state. Yes, it’s quite poor but you’re comparing them to well more developing countries like Africa or Latin America…
    Nothing can really go wrong in Lithuania, it’s genuinely a safe country to visit or to stay in but for job finding.. you probably should move to a more influential country that offers more jobs.
    There’s really no downsides to it.. other than the fact it’s average to poor towards their income or economy. Most of the information that you’ve put on there is irrelevant and invalid.

  10. Lithuania is one of the fastest shrinking Nations in EU. This is the case not only with Lithuania but with many other nations in Europe, however in Lithuania it is quite extreme.

    The main disadvantage of Lithuania is that there is a huge gap between the Rich and Poor. Vilnius, Kaunas and Klaipeda Are three main cities and salaries there are 40 to 100 percent higher than in the rest of the country.

    All of the main industries are allocated in in these two regions, and they are growing by an influx of people from neighboring regions.

    Regional planning is poor executed, meaning that most of the universities and colleges are located in larger cities. The governing apparatus and institutional agencies also.

    Buying a house or an apartment is not an easy task also, as the job market it limited, and currently Vilnius is facing a huge real estate bubble. This is good for the economy on the short run, however a lot of apartments are bought “all in cash” meaning that the funds come from Lithuanians living in rich Scandinavian countries and UK for the most part. Real estate companies take advantage of the people who have money and thus property prices are very much inflated in the larger cities.

    Lithuania, together with Latvia and Estonia are virtually identical countries. There are some differences, however all three countries are the examplary Post-soviet states.

    I personally think that Lithuania is an ok country in Europe, however when it comes to salaries and the job market it is ok only in the 2 largest cities. However even there the rent is quite high compared to the salaries people are earning.

    Regions outside the big 3 cities:
    Low-entry jobs in regions outside the “largest 3 cities” are usually around 600 EUR (incl Taxes).
    Medium-to-Leadership jobs: 800-1000 EUR.

    Vilnius, Kaunas & sometimes Klaipeda:
    Low-end starts with 700 EUR.
    Medium expected 900-1200 EUR.
    Upper end expected 1200-1500 EUR.

    There is a stark contrast between the capital and the regions. Even though I like Lithuania as it is my home country, and it has improved a lot in the last 10 years I must say that the progress is visible mostly in the 3 larger cities, the villages and some small towns are dying out.

    Keeping in mind that the emmigration rate is still high, Lithuania will have to find incentives in the future for people from Ukraine, Belarus and perhaps Balkans and otge countries to come here and fill the demographic gaps as a lot of young Lithuanians have already established themselves abroad and are not planning to come back in the foreseeable future.

    In my personal opinion Lithuania is a bit of a gamble, so far it has achieved a lot, however with corruption in the government and the gap between Rich and Poor it is far from becoming a wellfare state it aspires to be.

    In 10 to 20 years Lithuania is to become a land of senior citizens (50 percent of population will be of retirement age) if demographic trends continue on a same scale.

    On the other hand, Lithuania is becoming more recognisable in EU and has become a worthy minor and major destination for larger companies that continue to establish businesses in Lithuania.

    Poor in resources, however strong in ambitions Lithuania is full of contrasts it has a lot surprises to offer. Mostly positive.

    • *While Lithuania indeed has its problems with e.g. emigration, the claim about the high rich/poor divide has little basis, even though it is often repeated in Lithuania, usually for political gain (i.e. by leftist parties before the elections). According to the Gini coefficient, the most commonly-used mean to measure income equality, Lithuania is actually well above the world average in terms of equality. According to the World Bank, the Lithuanian Gini coefficient is 37. In the most unequal counties of the world, it is 63; in the most equal countries, it is 25. That said, some of the most equal countries are actually poor countries: simply, everybody is equally poor (the most equal country in the world today is Ukraine). While Western Europe is generally more equal than Lithuania, Lithuania actually has a smaller rich/poor income divide than countries such as the United States of America (Gini 41,5) or Israel (Gini 41,4). So, in terms of the smallest rich/poor divide, Lithuania is, as in many economic criteria, not in the top 10% of the world, but still in some top 30%.

      What is more important is that income equality is just part of the story. Not less important is wealth equality. And, by wealth equality, Lithuania is actually in front of even countries such as Germany, France, Canada or Denmark. How could the Lithuanian wealth be so equal, if the income is less equal? That’s because of the privatization of the 1990s, when, soon after Lithuania became independent from the Soviet Union, every Lithuanian was given a rather equal amount of so-called “investment cheques” to buy up the Soviet-nationalised state property. This allowed every Lithuanian at the time to acquire significant (and comparatively equal) wealth, typically in the form of real estate. That way, for example, well more than 90% Lithuanians now own their apartments without any strings (i.e. bank credits) attached – something not seen in most Western countries. Time have passed and some Lithuanians (e.g. those addicted to alcohol or those who had fallen for various investment scams) may have lost the wealth of the 1990s but otherwise, it generally persists (e.g. apartments pass on from grandparents to their grandchildren after grandparents’ deaths, in which case there is no inheritance tax), leading to impressive wealth equality in Lithuania.

      *Regarding salaries, I’d say they vary greatly by profession. The upper end is higher up e.g. for programmers, who could basically offer services for foreign companies when living in Lithuania and thus earn near-Western salaries. For some of the occupations, it is no longer necessary to work at a single place and they could freelance from anywhere.

      *Indeed, the top three cities are well in front of the other Lithuania. That said, Lithuania is small – in fact, much of Lithuania is less than some 100 km from one of the three main cities. As suburbanization has been progressing, this means that a lot of smaller towns and villages are also doing quite well – as long as they are up to some 100 km from Vilnius or some 50 km from Kaunas/Klaipėda. That said, towns/villages further away have indeed been dying/emigrating out.

      *Because of the small size of Lithuania, I think the education opportunities are well spread. Every Lithuanian city above 100 000 people has its own university whereas smaller towns have colleges. It is not possible to have a viable university with e.g. just 100 students, therefore, there is no logic of having a university in every town. What is more important, the small size of Lithuania means that almost any student could commute to at least a single university by living nearly anywhere in the country (save for, perhaps, northeast Lithuania and extreme south).


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