The gap between Vilnius and other regions of Lithuania is increasing not only due to differences in residents’ wages, but also due to the housing situation in the country’s smaller cities, says interim Finance Minister Kristupas Vaitiekūnas. According to him, recently, companies offering well-paid jobs have been actively opening in the regions, but the limited housing supply is hindering the attraction of employees.
“We see such a gap with residential housing in the regions, especially if businesses come there, which means good jobs are created and they are fairly well-paid. But the supply of housing is quite limited – these are old buildings.” apartment buildings or old houses. This somewhat discourages those incoming workers,” said K. Vaitiekūnas in the program of the project “Financial Health”.
According to the interim Minister of Finance, municipal housing being built in municipalities would help solve this problem.
“Currently, through the national development bank ILTE, we are developing a tool that would help regions to start creating not only social, but specifically municipal House“, which would have modern, comfortable conditions for engineers, better-paid workers, doctors, and teachers arriving there,” said K. Vaitiekūnas.
He noted that municipal housing would be created in modern apartment buildings, managed and developed by municipalities. Their development, according to K. Vaitiekūnas, could be financed through ILTE, providing municipalities with the opportunity to borrow on more favorable terms.
“The municipality would not have to invest the entire amount at once; it could be done through a private-public partnership, with payback over a very long period of time,” he said.
K. Vaitiekūnas said that such a measure would be the third stage of regional development – after infrastructure and business attraction. According to him, the results of the first two stages are already visible in the regions.
Municipal budgets have increased not by percentage, but by times
According to the interviewee, municipal budgets have been growing rapidly over the past few years, so they have more funds for investments in infrastructure and public services.
“The current budget structure means that municipal budgets are growing very quickly, because they depend on the personal income tax collected, and income in Lithuania has been growing very rapidly for the past 5-7 years. Municipal budgets have not grown in percentages, but in times,” said the interim Minister of Finance.
According to him, regional investments are largely financed by the European Recovery and Resilience Plan (RRF), which is ending the multiannual EU budget period.
“Now, quite a lot of money is actually coming to the regions. (…) There are really very good examples where regions are investing intensively in infrastructure. You can see modern swimming pools, beautifully landscaped squares, renovated schools, and that is good, such infrastructure can attract people to live there,” said K. Vaitiekūnas.
In May, the government approved an additional allocation of 152 million euros of European Union (EU) funds for regional drinking water infrastructure, civil preparedness, and social housing development.
According to K. Vaitiekūnas, municipalities were given the opportunity to determine their own priority investment areas.
The most difficult task is to attract residents to the regions
According to K. Vaitiekūnas, regional development is taking place in the context of demographic decline, therefore the main challenge is attracting not only business, but also residents.
“Attracting business (to the regions – ELTA) is being attempted in various ways. There are free economic zones (LEZ), where tax breaks are created, regional mayors are very active, understand the importance of business well, do not drag everyone into bureaucratic matters (ELTA), try to help. (…) But in parallel, people need to be attracted, this is probably the most difficult task,” he said.
According to the interim Minister of Finance, in order for the population in the regions to increase, municipalities must strive to bring back Lithuanians who have left to live abroad.
“There are Lithuanians who have gone abroad and are now considering returning. We need to work with them very intensively so that they always know what is happening here, how they can return here, how to settle here, and what opportunities life in Lithuania opens up,” the interviewee said.
However, according to K. Vaitiekūnas, the differences between Lithuania’s major cities and regions will continue to exist in the future.
“I don’t think that any kind of unification is possible at all. I think that the differences will remain, but we need to make sure that the quality of life (…) is not significantly worse,” he said.
ELTA reminds that in the first quarter of this year, the wage gap between Vilnius and other regions of the country increased by 16 euros and reached 459 euros “on paper”.
It grew the most in Tauragė counties during the quarter, while it decreased in Panevėžys and Kaunas counties, according to data published by the State Data Agency in early June.
Joint content project of the ELTA news agency and the Ministry of Finance “Financial Health”.
Karolina Navakauskaitė (ELTA)