Austerity, labour market segmentation and emigration: the case of Lithuania

The so-called ‘Baltic model’ of austerity sometimes receives uncritical praise from advocates of tightened austerity. This model has achieved an almost uncontested vogue among international finance officials and European Union policy makers who portray it as a ‘socially costless’ template for other crisis economies. The article examines the impact of austerity on Baltic Lithuania, a peripheral newer EU member state, and suggests that the harsh austerity measures adopted by its government in order to restore fiscal balance have been far from socially costless. Austerity has accelerated fragmentation of the labour market into a differentially advantaged primary (largely public) sector, and an increasingly informalised secondary (low-skill manufacturing and services) sector, stimulating extraordinarily high levels of emigration as the population, especially younger persons, depart from the country. We describe this here as the formation of a new austeriat.