Ieva Pecukevičiūtė
Compensation Benefits Consultant
Baltic Salary Survey / SIA Fontes Management Consulting

Some things are difficult to forecast, others are nearly impossible to imagine. Little who had an idea that the happy 2020 will take a rather different turn only a month forward. No different from most countries in the world, organizations in Latvia and Lithuania are experiencing challenges dealing with rather concerning slowdown of economic activity while countries are closing their borders and restricting usual business operations. Organizations in the Baltics are forecasting that the impact of the pandemic may last up to the end of 2020 and many decisions due to uncertainty have not been reached yet. Besides shifting to the remote work and closure of business units, what are organizations doing today in the Baltics and globally as a response to the pandemic?

To assess the current impact of the pandemic on the labour market and business environment, we in Fontes/Baltic Salary Survey have conducted pulse surveys in Lithuania and Latvia, where respectively 175 and 117 organizations have answered our questionnaires. The results cover various business industries, from small to medium and big enterprises. Also, our long-term partner LLC Mercer is conducting live survey to assess global actions taken by organizations and the impact of COVID-19.

Survey results show us that overall Lithuania and Latvia have been affected similarly concerning the impact on business, compensation and benefits, recruitment and onboarding. Nevertheless, the answers differ in a few measures, such as the  level of concern, actions taken as a response to the outbreak, particularly, in providing necessary protective gear to employees, also in changes to incentive plans or main HR challenges. Even though there isn’t a major difference of COVID-19 impact on business operations based on the location across the Baltics (including Estonia), yet specific government actions, such as Lithuanian government announcing National lockdown, while Latvian government applying National recommendations, as well as differences in demographics and economic situation may have had an influence on several trends related to the reactions to COVID-19.


The overall level of concern related to the pandemic is higher in Lithuania than in Latvia. In the scale from 1 to 5, the average level of concern in Lithuania is 4.3, while in Latvia it is 3.8 for the general market. Above the average level of concern in Lithuania are companies from Transport and Logistics as well as Hospitality (4.8) industries, not far below are Retail & Wholesale (4.5) and Real Estate and Construction sectors (4.4). In Latvia, higher concern than the average is also observed in similar industry organizations, such as Hospitality (4.4), Transport and Logistics (3.9), but also in Finance industry (3.9). It is interesting that the industry showing the lowest concern in Lithuania is Pharmaceutical industry, whose level of concern almost equals the average concern in Latvia (3.9), while in Latvia Pharmaceutical industry’s concern is slightly above the average (4.0).


What concerns the impact on business operations, both countries experience a similar trend. Majority of organizations in the general market have had a decrease in the number of projects, clients and/or sales as a result of the pandemic (64% in Lithuania and 70% in Latvia). In Lithuania, the decrease in the demand has been mostly observed in Hospitality (92%), Services (79%) and Retail & Wholesale industries (79%), while in Latvia – Finance (93%), Services (82%) and Hospitality (80%) industries, some of which were also among the most concerned industries. Also, in 39% of organizations in Lithuania and Latvia clients are not following with their payments, and in 20% of organizations in Lithuania and 28% in Latvia have suppliers, who are not providing products/services.

Nevertheless, some organizations are seeing an increase in demand. 17% of organizations in Latvia have seen an increase in projects, clients and sales, mostly in Transport and Logistics (30%) and IT & Telecommunications (31%) industries, while in Lithuania this trend was observed in 14% of organizations, mostly in Pharmaceutical industry (33%).

“The biggest difference was observed in conduction of internal surveys, interviews or focus group discussions to understand the mental state of employees, in Lithuania 53% of organizations have taken on these initiatives, while in Latvia – 26%.”


More differences in both countries are observed in the frequency of actions taken as a response to COVID-19. In Latvia, majority of organizations (84%) have enhanced cleaning and sanitizing efforts across the facilities, while in Lithuania it was done by 66% of organizations. In Lithuania, slightly more often than in Latvia companies have enhanced communication with their employees, likewise sharing knowledge and best practices of “work from home” (57% in Lithuania and 48% in Latvia), and preparing FAQ of company’s approach to health and wellbeing (47% in Lithuania, 38% in Latvia). The biggest difference was observed in conduction of internal surveys, interviews or focus group discussions to understand the mental state of employees, in Lithuania 53% of organizations have taken on these initiatives, while in Latvia – 26%.

Globally, making sure that employees are provided with the needed equipment to ensure their safety as well as constant informational updates were the top priorities – at the given moment (27.04.2020), 93% of organizations globally have placed hand sanitizers in the workplace, 84% provided regular communications and updates to employees and 82% have postponed all non-essential travel to countries affected by COVID-19. Other than that, providing masks in the workplace and arranging body temperatures check were introduced by around one third of organizations globally.


The previously discussed increased effort to ensure communication flow with employees in Lithuania corresponds to the highest current concern in the human resources in Lithuania, which is internal communication. 45% organizations have indicated internal communication as the biggest challenge, followed by recruitment and hiring (42%), leadership as well as compensation and benefit revision (36%), while in Latvia, the biggest challenge is remote working (63%), followed by internal communication (51%), compensation and benefit revision (34%) and provision of remote working options (32%). However, the current HR challenges impose opportunities to finally adapt tools to improve and ensure remote communication, provide grounds for remote working culture (as well as trust and empowerment culture) possible also in the future and encourage to review the organization of work, i.e. identify the roles that could be automated in the future or reorganized to a more complex ones to fully use the workforce potential.

“Both in Latvia and Lithuania every second organization has decided not to apply any changes to employee benefit packages as a response to COVID-19 outbreak, which is also the global practice.”


Organizations in Lithuania were quicker to make changes to 2020 incentive compensation plans than in Latvia. In Lithuania, 39% of organizations have lowered the incentive threshold or target goals, while in Latvia only 9% have taken the same action. Also, in Lithuania 27% of organizations have postponed the setting of performance goals, while in Latvia it was done so by 17% of organizations. Overall, changes to incentive plans were not yet determined for 57% of organizations in Latvia and 14% in Lithuania, while also globally 58% of organizations are yet monitoring the situation while 31% plan no changes to the incentive plans.

What concerns the employee benefits, both in Latvia and Lithuania every second organization has decided not to apply any changes to employee benefit packages as a response to COVID-19 outbreak, which is also the global practice. Also, organizations in both countries have on majority not yet reached the decision for changes in the executive remuneration, which once again corresponds to the global data.

Regarding compensation, organizations in both countries have in most cases left the standard hourly-rate or monthly-based compensation for employees, who can work from home or with additional precautions, from the workplace, otherwise, employees have been put on a downtime. In addition, only a small portion of organizations are paying out additional allowance or increased compensation for essential employees whose work must be continued from the workplace (5% in Lithuania, 10% in Latvia).

Globally, three different influences of COVID-19 on salary budget have been observed; 1) 39% no changes, salary budget to be implemented as previously planned, 2) 35% no decision is yet made, salary budgets are to be finalized, and 3) 26% decreased the salary budget. Therefore, salary freezes, or decreases will not affect all employees, some may still expect to receive the planned raise.


Most organizations in Latvia and Lithuania expect the effect of COVID-19 related factors to influence their businesses till the end of 2020 (51% in Lithuania and 43% in Latvia). In case the situation is going to prolong, 32% of organizations in Lithuania, compared to 23% in Latvia, are planning to use government support mechanisms or are planning to take on cost-cutting that excludes the personnel costs (29% in Lithuania, 26% in Latvia). However, if the situation worsens, organizations in Latvia (28%) and Lithuania (23%) plan to start cutting off personnel costs too (benefits, incentive pay, etc.). However, majority of organizations (67% in Latvia and 60% in Lithuania) have not yet decided on the actions to be taken.

Summing up, the brighter days are yet to come as the global crisis at the given moment is resulting in more uncertainties regarding employee compensation, recruitment and future of the business than a clear, data-driven action plan how to deal with the effects of the pandemic. Nevertheless, many actions regarding safety of employees in the workplace, increased communication efforts have been already done to soften the effect of changed circumstances to the ‘’business as usual’’ situation. We are planning to repeat the survey, so stay tuned on the newest data on the COVID-19 impact on businesses and labour market!


In response to the rapidly changing events in our daily lives, we are announcing the second phase of the COVID-19 survey and are inviting organizations in the Baltics to complete a survey that will take about 15 minutes of your time by 10:00 a.m. on May 13.

We will share the results of the actions taken by companies in response to the global situation and how it affects the local market with all those surveyed on 15 May.

For companies in Latvia, fill in here.
For companies in Lithuania, fill in here.

Thank you for being together!