Times tough for Lithuania's jobless

VILNIUS - Unemployment in Lithuania has broken the 10% threshold for
the first time since the country gained independence in 1991,
according to statistics last week from Lithuania's state labor
office. This is an increase of more than 3 percent from the beginning
of last year when it was only 6.9 percent. About 177,400 people are
now officially registered on the unemployment rolls. Much of the
blame is attributed to a drop in GDP over the course of the previous
year.

Hardest hit are medium-sized cities such as Siauliai and Panavezys
(15.1 percent and 14.2 percent) while the major cities of Vilnius,
Kaunas and Klaipeda hold steady at 6.9 percent, 7.1 percent and 7.5
percent respectively.

Although none have yet been announced, large scale government lay
offs are expected to add to the problem in 2000. Planned cuts in
wages for government employees in this year's budget are between 12
and 15 percent, depending on the department; for the Ministry of the
Interior this may translate into the loss of 3,000 officials or 10
percent of its total number of employees according to Lithuanian
daily Lietuvos Rytas .

According to Guoda Steponaviciene, policy analyst at The Lithuanian
Free Market Institute, a privately run think-tank, a major reason for
sluggishness in the job market is because of continuing aftershocks
from the Russian economic crisis.

"Many individuals in smaller communities relied on the trade of used
cars with Russia for their income. The steep decline in this sector
has seen many of them registering for unemployment benefits and
heating allowances. This also is typical for this time of year,"she
said.

Steponaviciene points out that the official figures are not
reflective of the actual situation.

"According to our surveys based on expert consensus as well as the
surveys of the department of statistics, the number was 11 percent-13
percent as far back as 1998. The LFMI's survey participants predict
12 percent unemployment well into 2000."

The problem for small towns is that often there are only one or two
employers, usually in the manufacturing sector. Continued
privatization of these plants leads to modernization and downsizing.
Under-qualified employees are left out in the cold. Her institute
believes that over-regulation of the labor force prevents some of
these people from re-joining the work force. A high minimum wage and
restrictions on hiring part-time employees can be blamed, as well as
an excess of government regulation, for those wishing to strike out
on their own as entrepreneurs.

The higher 11 percent-13 percent figure for overall unemployment is
likely to be a more realistic one. Rasa Badeanskiene, statistician at
the state labour office said that her organization reports only the
number of people directly applying for unemployment benefits and
short-term work. Those seeking work through private channels are not
reported. The real number will come out in a forthcoming government
statistics department survey of the labor force. In Badeanskiene's
view, the 3 percent increase also stems from insufficient government
funding for short duration and make-work projects, hitting especially
hardest last fall following the aftershocks from the Russian crisis .

If the government had had the money available to fund these, the rise
would not have been as dramatic. Badeanskiene's group reports that
the demographic category worst affected holds those less than 25
years of age for whom the rate is 17.5 percent.

Rasa Avizius, head of recruiting for Aon Consulting in Vilnius,
said there are enough good jobs for people in Vilnius, but
statistics for other cities do not indicate the same strength in the
job market. One culprit for the high unemployment rate is age
discrimination.

"Just open the paper and look at the job ads. It's blatant. Most
companies want people in their early 20s and 30s,"Avizius said.

People over 38 coming from the manufacturing sector are in a
particularly difficult situation as most new positions are in service
and marketing. Also, the upcoming merger between the Hermes and
Vilnius banks may lead to a glut of workers in banking. Top
management, marketing and IT project management positions are the
hardest jobs to fill in her experience, said Avizius.

Mark Horton, IMF representative in Vilnius, sees Lithuania's current
overall economic situation as being at a low point.

"Lithuania is absorbing the worst effects of the Russian crisis
today, but as things are now slowly picking up in Russia, this will
mean positive gains for Lithuania as 2000 progresses."

Lithuanian companies, especially those backed or owned by foreign
firms, that are involved in light industry, textiles and furniture,
have seen very positive results in Central European and EU export
markets. This should translate into job growth in these sectors,
Horton said.