Lithuanians Vote as Economic Disquiet Steers Close-Run Election

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  • Premier’s job is on the line amid wage, emigration gripes
  • Makeup of next cabinet is unclear; tight fiscal policy to stay

Lithuanians are voting Sunday in a parliamentary election that’s been shaped by disquiet over pay and opportunities in the tiny Baltic nation that seven years ago became a trailblazer for European Union austerity amid an unprecedented slump.

Voting began at 7 a.m. in the capital, Vilnius, and will run until 8 p.m., with initial results due about an hour later. There will be no exit polls. While Prime Minister Algirdas Butkevicius’s Social Democrats narrowly lead polls, their support has shrunk on persistent emigration, sluggish salary growth and a procurement scandal that’s worsened already frosty ties with President Dalia Grybauskaite. His coalition allies have also lost ground, while his two closest challengers could forge an alliance to usurp him.

Dalia Grybauskaite during a pre-vote for parliamentary elections in Vilnius on Oct. 5.

Photographer: Petras Malukas/AFP via Getty Images

Lithuania, a euro-area and NATO member that borders Russia and Poland, won plaudits for its response to one of the continent’s worst recessions after the 2008 crisis. But the recovery hasn’t stemmed an exodus of workers or triggered the kind of wage growth seen elsewhere in the region. Campaigning, rocked by graft scandals at parties including the Social Democrats, has focused on pledges of future prosperity, though tight fiscal is set to stay.

Voting is being steered by “pressing social and economic issues in the aftermath of the 2008 economic crisis and the country’s euro accession,” Tsveta Petrova, a senior analyst at Eurasia Group, said by e-mail.

The Social Democrats will get 15.6 percent of the national vote, the Peasants & Green Union 14 percent and the conservative Homeland Union-Christian Democrats 13.7 percent, an Oct. 4 poll by Spinter tyrimai showed. Butkevicius’s coalition partners -- the Labor Party and Order & Justice -- are near the 5 percent entry barrier, according to the survey, which had a 3.1 percentage-point margin of error.

Parties can also win representation in single-mandate constituencies, which account for 71 of parliament’s 141 seats and where the Social Democrats have traditionally outperformed. A second round of voting in individual constituencies will be held Oct. 23.

Butkevicius, 57, wants more increases in the minimum wage to help lift average monthly salaries to 1,100 euros ($1,230) by 2020 from 772 euros now. He’ll also skew taxation from labor to property. Homeland Union, popular among urban voters, pledges to boost average pay to 1,250 euros. Having secured investment from the likes of Barclays Plc when last in power, it promises 147,000 new jobs, a higher cutoff for untaxed earnings and the return of 80,000 emigrants to the nation of 3 million.

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“You don’t need to pack your suitcases and leave,” Homeland Union head Gabrielius Landsbergis said Thursday evening during a televised debate. “You have to come back because there will be jobs.”

The balance of power will probably lie with the Peasants & Greens, who advocate less red tape and a more technocratic government. While they haven’t specified a preferred coalition partner, they may be a better fit for Homeland Union, according to Ramunas Vilpisauskas, director of the Institute for International Relations and Political Science at Vilnius University.

Whatever the result, a budget stance that’s reined the deficit back within EU limits is unlikely to change with the big parties shunning major additional expenditure beyond meeting NATO-mandated defense outlays by 2020 in the wake of Russia’s Crimea annexation. Economic growth, while curbed by EU sanctions against Russia that Grybauskaite strongly backs, is set to top 3 percent in 2017 and 2018. Government bond yields are near all-time lows.

Fitch Ratings said last month in a report that it’s “not expecting a new government to diverge from the current economic, fiscal and social-policy agenda, regardless of the outcome of upcoming parliamentary elections.”