Lithuanian labor costs are rising due to wage growth, risking competitiveness without productivity gains. Labor shortages and migration are key issues.
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The average employee’s hourly cost in Lithuania is 16.3 euros, with salaries constituting the largest portion of employer expenses, a figure among the lowest in Europe. While wage increases have driven up labor costs, experts warn that this trend, if not matched by productivity gains, threatens international competitiveness. Unsupported wage growth risks discouraging investment and causing capital to move to regions with better returns. Currently, Lithuania’s real hourly productivity lags significantly behind wage growth. Wage increases in Lithuania have been influenced by the demand for skilled workers and public sector pay hikes, with the minimum monthly wage increasing by 10% in 2024. Experts stress that increasing wages alone is insufficient; productivity must also improve, necessitating investments in technological advancement and innovation. Labor shortages, demographic challenges, and migration issues are also driving up labor costs. Furthermore, there is a shortage of specialists in high-value sectors like finance and IT, which puts pressure on employers to raise salaries. In contrast, Bulgaria has one of the lowest average hourly labor costs in the EU.
