1.2. Analysis of disparities

1.2.1. Rural-urban disparities

Lithuanian rural areas are characterized by unfavourable demographic situation. Natural rural population increase in 1998 was negative (- 3.8), while urban was 0.2. Birth rate in rural areas is by 30% higher than in urban, but the percentage is annually decreasing. High death rate in rural areas, which is by 75% higher than in urban areas, makes a negative impact on natural population increase.

Ageing of rural population and its poor viability are indicated by ratio between children and retired people, which is 0.93; in urban areas this indicator is 1.28. Ratio between active and retired population shows that in rural areas for one active person there are by 36.5% more of retired people than in urban areas.

Number of divorces is rapidly increasing too. During 1991 – 1995 there were 55.5% and 32% divorces in urban and rural areas respectively and in 1998 these figures became 62.7% and 65.4%.

Regarding the quality of life, improved health, which can be measured by longer life, is one of the most important indicators of social development. In 1998 life of men, living in rural areas was by 5 years shorter than of men, living in urban areas; among women this figure was 2.4 respectively.

Investments in health and education should be the factors which would affect higher income in the future. However, majority of rural inhabitants receive only minimal income to satisfy the basic needs, therefore, the part allocated to health care, education and culture is very small. In 1998 rural population spent by 31.5% less for health care, by 78.9% less for education and by 64.6% less for leisure and cultural activities than urban population. Percentage of income allocated for food by rural inhabitants is decreasing, but it is still high (59%) and by 14.7% higher than allocation by urban inhabitants.

In 1998, rural household per capita income was 30% lower than the urban one. Additionally, rural household income grew at a slower rate. Therefore, the already existing gap between rural and urban households in terms of income keeps on widening.

Table 20 Household income per capita in rural and urban areas

Source: Lithuanian Department of Statistics, 1998

At the end of 1997, the total rural working population was estimated at 475,500, constituting about 30% of total Lithuanian employment[1]. One in six rural employees was above retirement age (about 58,000, i.e. 11% of the total rural working population). Agriculture remains a main activity among the rural population: the sector employs 58% of total rural employment. The second largest employer is public services - healthcare, education and social sectors. It constitutes 15.6% of the total rural working population.

Usually, the rural activity rate is considerably lower than the urban one. At the end of 1997, it was 57.4%, compared to 62.7% in Lithuanian urban areas. Similarly, the rural employment rate was lower than the urban. Despite this, the rural population is less unemployed than in urban areas. But the age structure of the rural unemployed is unfavourable: the large number of rural youth unemployment is common. At the end of 1997, the unemployment rate among rural youth up to 20 years of age was nearly 30%.

Table 21 Activity, employment and unemployment rates in rural areas compared to urban

Source: Lithuanian Department of Statistics – Labour Force Survey, 1997

Because of dominating agricultural activity, only part – time involvement in it and poor rural infrastructure there may be considered 20% of the employed inhabitants as part – time workers, at the same time in urban areas this figure does not reach 7%. In rural areas, as compared to the urban ones, additional occupation is sought by twice as much employed population and there are by 73% more people willing to work additionally. Unemployment among women in rural areas is by 4% less than in urban areas.

Majority of the unemployed in rural as well as in urban areas does not have professional education and only have completed secondary schools. However, high percentage of the unemployed with professional education (21.8 %) indicates that skills gained are not in demand in the labor market.

Thus, data on employment and household income reveal major weaknesses in Lithuanian rural areas: first, high dependence on one source of income - agriculture; second, high unemployment among rural youth; and third, a widening income gap between rural and urban households.

It is rather difficult to evaluate the available statistics concerning employment of rural inhabitants situation, because information sources reveal situation in 10 biggest Lithuanian cities and the rest of the country is classified as other territories.

In 1999 there have been employed 67.2 thousand of the urban unemployed and 21.1 thousand of the unemployed from other territories, among them – 5.1 thousand were employed in agricultural activities. Among the most popular professions there were: joiner – carpenter, construction worker, dress-maker, cook, driver, accountant, teacher. Rural inhabitants which seek jobs are mostly employed by private service enterprises – 40%, State service enterprises – 25%, industrial enterprises – 18%, in agriculture – 11% and construction enterprises – 6%.

Number of employed in social and service sectors shows the level of rural development. In rural areas for 1000 of rural inhabitants percentage of people working in the social and health care is 48, education – 30, services – 66, hotel and restaurant business – 72, industry – 64 lower than in urban areas.

Less developed rural social and technical infrastructure hinders development of better living and working conditions. However, level of social infrastructure development is influenced by limited social needs of rural population, which are, in turn, influenced by the level of income and the cost of services. Rural inhabitants are more involved in housekeeping activities than urban ones, which determines their leisure, self – education and public activities.

Currently the main labor market policy objective is to reduce the increasing levels of unemployment in rural areas, using labor market regulation measures:

-         to involve into public works people from those areas, where new jobs are not being created and there are no perspectives for them to be created in the nearest future;

-         to encourage mobility of labor force, especially of youth, from territories of high uneployment to territories where industrial and business developments are more rapid;

-         to focus vocational training in accordance with labor market situation, national economy perspectives, and demand for certain professions;

-         to support financially creation of new jobs and organize public works;

1.2.2. Analysis of disparities with the European Union

Key indicator for economic and social cohesion with the EU is Gross Domestic Product per capita. In relation to the EU average, the GDP per capita in Lithuania increased from 28% in 1995 to 31% in 1998.

Regarding rural development, major disparities are:

·        Lithuanian employment is strongly dependent on agricultural activities

·        The agricultural sector itself still has to foster its competitiveness in terms of quality, productivity and efficiency.

The summarising Table 22 contains main indicators illustrating disparities of Lithuania with the European Union.

Table 22. Lithuania - disparities with the European Union

Source: Lithuanian Department of Statistics, 1998

[1] Source: Lithuanian department of Statistics, Labour Force Survey, 1997

[2] 1998

[3] Labour Force Survey data