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Artūras Račas: Lithuania is shrinking and not because of emigration

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When Robertas Dargis, the new president of the Lithuanian Industrialists Confederation, presented his suggestions to political parties last week, among the problems he focused on were emigration and the resulting shortage of labour; ageing population; and failure to collect revenues to the Social Insurance Fund.

If I remember correctly, Mr Dargis predicts that, within the next twenty years, the population of Lithuania can shrink to 2.7 million, i.e., by more than one fifth compared to 1990. And we are talking about a period of 40 years which, you must agree, is not that long in the lifespan of a state.

In other words – this is hardly news to anyone – we are a shrinking country. We are ageing and slowly dying out.

Yet I must confess that the projected population numbers were not what shocked me most in the Industrialist Confederations' suggestions to parties – after all, I might not live to see if the prognoses are correct.

I was considerably more shocked by Mr Dargis' pronouncement that the Lithuanian Industrialists Confederation was against progressive income taxes that I've always been a supporter of. Not the fact itself, since it is hardly news and, in any case, there are no genuine champions of progressive taxation in Lithuania – all the pre-election talk from candidates never amounts to anything.

Shocking were the numbers that Mr Dargis quoted to support his case against progressive taxation.

There is no middle class to speak of – or at least it is shrinking faster than the overall population.

The figures are (based on 28 February 2012 data from the Social Insurance Fund, Sodra): 1.8 percent of Lithuania's working population earn over 5,000 litas (1,500 euros) per month; 1.3 percent earn over 6,000; 0.9 percent make above 7,000 litas (2,000 euros); and 0.2 percent get 10,000 litas (3,000 euros). And these are pre-tax figures, so to get an idea of Lithuanians' disposable income, one must slash about one fifth off the sums above.

Why is it shocking? Because the figures indicate that Lithuania is evolving towards a third-world country. There is no middle class to speak of – or at least it is shrinking faster than the overall population.

Merely 5 percent of the population earn over 5,000 litas. Sure, we could also include those who make between 4,000 and 5,000 (3.6 percent) and earners of at least 3,000 litas (8.4 percent), before taxes. But to be honest, I doubt if anyone living in Vilnius could feel comfortably middle-class with a disposable income of 2,400 litas (700 euros) – i.e., able to afford a home, a car, education for children, and a summer vacation abroad.

Lithuania is, pardon the expression, going plebeian – we have a real growth of the underclass and, with it, the ignorant class. The latter, as Mr Dargis rightly observes, has never been the one to build states. I may add that it has only destroyed.

One could probably find comfort in the fact that there are significantly more Lithuanians who earn over 4,000 or 5,000 litas than the official statistic indicates. A recent poll reveals that 47 percent of the population have little scruples about accepting undeclared pay. But can these 47 percent be truly considered part of the class that builds and supports the state – the “aristocracy,” in Mr Dargis lingo?

Hardly. And that is why the question of rebuilding Lithuania's middle class – and thus consolidating its intelligentsia – should be a priority on our national agenda.

Otherwise, the state will disappear even before we die out or emigrate.

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