VILNIUS - There may be talk of recession but industry still made huge profits in 2007 at the expense of the public according to union leaders and consumer groups.
The Department of Statistics released data about corporate profits and staff compensation for 2007. According to the report, Lithuanian businesses increased their pre-tax profit by 17 percent last year, while after-tax wages in the country have grown by only 17 percent. Profits are unevenly split between various sectors. Retail and service firms doubled their profits in 2007, at the same time in construction, transportation, and manufacturing corporate profit growth was only 30 percent.
Arturas Cherniauskas, Chair-man of the Lithuanian Trade Unions Confederation, claimed that the greed of big businesses is causing rampaging inflation in the country.
"All prices have grown yet manufacturing costs in reality did not follow suit. For example, price hike in bread production was explained by growing energy costs. But if you look closely you'll notice that energy costs account for only about 10 percent in the overall cost structure in the baking industry," says Mr. Cherniauskas.
The Union's boss claims that according to EU standards, average wages in Lithuania must be at least 500 Litas (144) per month higher than today and a certain share of dividends should be contributed to a special workers' incentive plan. However, only a handful of Lithuanian enterpises actually have profit sharing plans, according to Cherniauskas.
The Director General of the Lithuanian Employers' Confeder-ation Danukas Arlauskas argues, that corporate profits and wages cannot really be compared because many entrepreneurs started from a very low profit base while paying out large sums of money as compensation to their employees. Arlauskas believes that additional health insurance or vacations at employer's expense would be a better way to create an additional incentive to the workers in Lithuania, and these contributions would effectively reduce corporate profits thus minimizing the income tax burden for private businesses.
In the fourth quarter of 2007 average wages before taxes in Lithuania were 2,052 litas (594 euros). This is 17.5 percent growth of average after-tax wages in the country compared to 2006. Of course, there is a significant compensation disparity between sectors. In the financial services industry in Lithuania average pre-tax salary in 2007 was 3,800 's 3,900 litas (1,100 euros) a month while in retail the average salary was only 430 litas.