VILNIUS - As Lithuania's economic slowdown continues, elderly pensioners are facing the grim reality of making it through the winter with increased tax rates, skyrocketing unemployment and government checks that barely equal one third the average wage.
Unlike Western counterparts such as Germany and the United States, the Lithuanian government is currently doing all it can to avoid large deficits that could negatively impact the country's credit rating and borrowing capability.
"If the government is exceeding a 3 percent GDP deficit, it will find itself in a position where interest rates would be prohibitively high. It would be hard for anybody to provide financing. That's why the government needs to consolidate their fiscal situation," said Nerijus Udrenas, a senior economist for SEB Bank.
"We are a very small market, a very small economy," he said.
The anti-crisis plan passed last month increases the value-added tax (VAT) and excise taxes and cuts back on government spending.
"The VAT punishes consumption," Udrenas said, adding that he expects food prices to rise with the taxes.
"Food production industries, especially the meat sector, they had a VAT subsidy rate before. This sector will be especially given to consolidation as demand will decrease because prices have increased substantially," he said.
Since the economic crisis has turned the ruling coalition into deficit hawks, there's no indication that the government will be in the mood to raise pensions anytime soon.
The government's pension fund, which is considered separate from the normal budget and is funded under a pay-as-you-go scheme that deducts money from employees' paychecks, ran a 1.2 billion lita (350 million euro) deficit in 2008. This is about 10 percent of the fund total of 12.3 billion litas.
According to its most recent data, the Lithuanian Ministry of Social Security and Labor reports that the average old age pension is 811 litas and is largely determined by a person's period of employment. Extra pension funds on top of this are available to veterans, victims of the Soviet gulag system and those with a deceased spouse. Numerous discounts are also available for public transportation and heating.
The average gross monthly salary in Lithuania, meanwhile, is about 2,319 litas.
"The so-called replacement rate is quite low. It's somewhere between 40 to 50 percent, where in Western Europe it's 70 percent," said Gediminas Curniaustas, a project manager for the Health Economic Center, a Lithuanian non-government organization that studies the healthcare industry. "We are a liberal country and we try to keep our budget in check."
Curniaustas said the reason Lithuania had a lower replacement rate was due to a lack of money for larger pensions.
"You should be realistic. It's not so much of a political decision as realities. If you have revenues just for 800 litas, you have only those revenues," he said.
"It's not much but our country is not very rich yet, so it's what money the nation can afford to pay for senior people. And also it's a type of encouragement maybe for younger type of pensioners to work because if you are working, [the entire] pension is still paid," he said.
The old age pension is intended to be the primary salary of elderly Lithuanians, but Povilas Sigitas, a spokesperson for the Lithuanian Pensioners' Union, said it is not enough to get by on.
Back in the USSR
After spending most of their lives under the communist system, some pensioners pine for the old days despite the totalitarian baggage that came with it. Just a few days in Vilnius can show a casual observer why. One can witness elderly Lithuanians grimly selling flowers and apples outside grocery stores and even digging through trash dumpsters.
Aldona Tamosiuniene, a 77-year-old pensioner from Panevesys, said she appreciated the dignity of living in an independent country but she missed the standard of living she had in the Soviet Union.
"I would say it's better now because we are an independent country and we don't belong to the Russians. But I should say it was much easier to live in the Soviet times," she said. "Yes, I miss it. We really used to live better in those times. We weren't counting every cent to live."
Tamosiuniene retired in 1987 and is no longer employed. Her husband has passed away and she now lives with her daughter's family. She receives a pension of 937 litas a month and considers herself relatively lucky.
"I know many old people, especially my neighbors. Most of them get only 500 litas a month and they live very hard lives," she said.
Brone Mikalauskiene is 66 and lives in Gineitu, a village in the Kedainiai region of Lithuania. She and her husband rely on their small farm to get by.
"We have an additional source of income. We have cows, pigs for food. We're growing vegetables, fruits. If we live just off money we get for pension, we would not survive," she said.
According to Lithuania's Department of Statistics a majority of pensioners live in the rural areas where they can more easily raise food.
Like Tamosiuniene, Mikalauskiene says she knows many pensioners who are doing worse than she is.
"Yes it's a really hard period for most pensioners in Lithuania, especially for those who get only 600 litas (173 euros) or even less," Mikalauskiene said.
However, Mikalauskiene said life in the Soviet Union didn't treat her any better.
"The salaries were so low. Now it is much easier to make ends meet," she said. "I prefer living in today's independent Lithuania. There were bigger difficulties and problems in the Soviet system for people than in today's Lithuania. No one could live easily by working honestly … I have never complained about fate. It means I'm happy."
