Real Wages of Lithuanian Construction Workers from 1913 to 1939 (Measured in Subsistence and Welfare Ratios) in a Cross-National Comparison

Abstract

This article provides two comparisons: (1) a cross-time comparison of real wages of skilled and unskilled workers in Kaunas before the First World War and during the interwar period; and (2) a cross-national quantitative comparison of the wages of unskilled workers in Kaunas and the capital cities of most European countries during the same period. For the second comparison, we use the findings of researchers who applied Robert C. Allen’s methodology of real wage estimation. In this methodology, the wages of unskilled construction workers (known in interwar Lithuania as zimagoras) are used as proxies for the wages of unskilled urban workers, and those of construction site carpenters provide a sample for skilled workers’ wages. Real wages are measured in subsistence and welfare ratios, indicating the distances separating the purchasing power of wages from the subsistence level of a single worker (subsistence ratio = 1 meaning absolute poverty) or his family (welfare ratio = 1 meaning absolute poverty). Subsistence or absolute poverty levels are defined by regionally adjusted (to variations in survival needs) minimum consumption baskets. The main findings are: (1) although during the first decade of independence (in the 1920s) the real wages of unskilled construction workers in Kaunas were lower than in 1913, by 1938 they had markedly surpassed the pre-First World War level; (2) in no year with available data did the real wages of unskilled construction workers in Kaunas fall below the absolute poverty level; (3) the real wages of skilled construction workers in Kaunas had markedly surpassed the pre-First World War level even before the Great Depression in the early 1930s, and remained above this level even in the worst years of the depression; (4) the real wages of skilled and unskilled construction workers in Kaunas in 1913 were no lower than in metropolitan centres of the Russian Empire; (5) in the period 1927 to 1929, the wages of unskilled construction workers in Kaunas were lower than in Moscow, but largely surpassed Russian wages in the 1930s, when Stalin’s policy of industrialisation forced them below the subsistence level; (6) the real wages of unskilled construction workers in Kaunas in the 1930s surpassed those in Riga and Tallinn. While this finding is surprising, it concurs with earlier (2007) findings by Gediminas Vaskela, who compared the mean wages of workers and employees in the Baltic countries in the period 1938 to 1940.