Figure Baltic Advisory ICT sector survey in Lithuania
8/13/2024
A recent survey by "Figure Baltic Advisory" in Lithuania highlights a noticeable slowdown in salary growth within the information and communication technology (ICT) sector. Despite the ongoing specialist shortage, the average salary increase was 4.2% lower than the previous year, suggesting a potential cooling in the IT sector.
Povilas Blusius, a remuneration consultant at "Figure Baltic Advisory," notes that while wages in this sector continue to grow steadily, the pace has decelerated compared to recent years.
"We are witnessing signs of a slowdown and self-correction. This year, wages increased for 91% of sector employees, compared to 93% last year. Additionally, the average wage growth rate has slowed to 8,6% this year, down from 12,8% last year," says P. Blusius.
The survey, conducted in June 2024, analyzed compensation data from 18 000 ICT sector workers.
Other Indicators of Market Cooling
The practice of offering higher salaries to new hires compared to long-term employees has been prevalent for the past five years due to intense competition and high demand for specialists. However, this trend appears to be diminishing.
"Despite the ongoing talent shortages, our data shows that the trend of paying newcomers the same or more than experienced employees is waning. We also see that salary ranges in job advertisements are increasingly aligning with actual market wages, unlike a few years ago when advertised salaries were often 20-30 percent higher," notes the chief consultant at "Figure Baltic Advisory."
Emphasis on Talent Retention
Blusius highlights that companies are employing various strategies to retain their existing talent due to the persistent shortage of employees. This includes regular salary reviews, highly flexible working conditions, and a comprehensive benefits package.
"The IT sector is known for offering remote and flexible work arrangements. Nearly all organizations in our study provide these benefits. Over 80% offer additional paid vacation days, organize various events, provide food and drinks at the workplace, and cover parking costs," adds the specialist.
Fastest Growing Salaries
According to the June survey, junior project managers, junior programmers, data analysts, information security managers, and human resources managers experienced the fastest salary increases.
"Rapid percentage growth in compensation is common among junior professionals due to their lower starting salaries. When senior professionals or management roles top the list, it typically indicates higher market demand or a shortage of workers," explains the specialist.
As of June 1, 2024, the median base salary in the IT sector was EUR 4 252 before taxes, with the annual salary, including performance bonuses, reaching EUR 52 318.
Changes Expected Next Year
It is estimated that the average annual salary growth rates in the IT sector over the past decade, excluding 2020 and 2021, have been between 8 and 13 percent, with some specific positions averaging 20, 30, or even 40 percent annual salary growth.
According to the authors of the study, such rapid growth, primarily driven by the competition caused by the lack of specialists, is neither sustainable for businesses nor beneficial for consumers. As companies' costs increase, so do the prices of IT services.
"An average of 5-6% growth is not only more sustainable in the long-term perspective but also closer to the growth rate of the general country's market," explains P. Blusius.
99% of the companies participating in the study plan to increase the basic monthly salary of employees in the next 12 months, and 77% plan to increase the number of employees. It is predicted that during this period, remuneration in the sector will grow by an average of 6,7%.