Lithuania - Poverty and wealth

The legacy of Soviet control in Lithuania is one of poverty and deep disparities in income. Many Lithuanians have not adjusted well to the market economy. These

GDP per Capita (US$)
Country 1975 1980 1985 1990 1998
Lithuania N/A N/A N/A 3,191 2,197
United States 19,364 21,529 23,200 25,363 29,683
Russia 2,555 3,654 3,463 3,668 2,138
Latvia 2,382 2,797 3,210 3,703 2,328
SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.

Distribution of Income or Consumption by Percentage Share: Lithuania
Lowest 10% 3.1
Lowest 20% 7.8
Second 20% 12.6
Third 20% 16.8
Fourth 20% 22.4
Highest 20% 40.3
Highest 10% 25.6
Survey year: 1996
Note: This information refers to expenditure shares by percentiles of the population and is ranked by per capita expenditure.
SOURCE: 2000 World Development Indicators [CD-ROM].

phenomena left most people of Lithuania quite poor at the beginning of the independence in 1990. True, nomenklatura lived well under the Soviets in the narrow material sense and the social security sense. But even nomenklatura were separated from the world and for that and other reasons were unable to make their lives richer in many respects.

In 1993, the wealthiest 10 percent of the population controlled 28 percent of the country's wealth, while the poorest 10 percent only controlled about 3 percent of the nation's wealth. Increases in Lithuania's unemployment rate have added to the nation's poverty. In 1996, unemployment was 6.2 percent, but by 2000, the rate had increased to 15 percent.

Those in Lithuania who earn or survive on US$28 per week or less are considered to be below the poverty line. In 1999, the poverty rate in Lithuania was 16 percent, but that wealth varies considerably. For instance, the rural poverty rate is 28 percent because of lower pay rates and higher unemployment rates among agricultural workers. Overall, some 55.1 percent of those living in poverty were aged 15 or younger.

The transition period is bringing its own opportunities and problems. An undisputed achievement of the transition period is the equilibrium on the consumer goods markets and the resultant wide choice of imported and domestic consumer goods available to those who can afford them. And the possession of some goods (e.g. cars, phones) increased tremendously compared to the Soviet period. As usual in a market economy, some people (younger, better educated) are able to live financially very well. Newly rich Lithuanians are not numerous but they are able to live lifestyles comparable to those of the average middle class members in the West or even better. However, some of Western ills (e.g. drugs) are making their way to Lithuania as well. Part of new wealth came from shadowy international dealings organized by the KGB (the notorious Soviet political police) and other

Household Consumption in PPP Terms
Country All Food Clothing and footwear Fuel and power a Health care b Education b Transport & Communications Other
Lithuania 33 5 13 4 27 9 8
United States 13 9 9 4 6 8 51
Russia 28 11 16 7 15 8 16
Latvia 30 5 16 6 23 11 10
Data represent percentage of consumption in PPP terms.
a Excludes energy used for transport.
b Includes government and private expenditures.
SOURCE: World Bank. World Development Indicators 2000.

post-Soviet mafia. Other people (older, less educated or educated but more influenced by the communist system) suffer from higher levels of unemployment and the shortages of the social safety net. While they are able to subsist on usually rather small plots of land, most people living in rural areas are poor, old, and plagued by social ills (e.g. alcoholism) inherited from the Soviet period. They present one of the gravest problems. The Lithuanian government is trying to help people who find themselves below the poverty line, but the budgetary resources are very limited. The state provides unemployment insurance and both old age and disability pensions. It also provides limited assistance for housing. In addition, the efficiency of social assistance is low by international standards. It will take years of economic growth before the majority of the Lithuanian people are able to feel appreciable and broader-based improvements in their living standards.

Also read article about Lithuania from Wikipedia

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Apr 13, 2012 @ 2:14 pm
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