EU Countries with Flat tax system Lithuania24% Latvia25% Estonia22% Slovakia19% Bulgaria(from 1 January)10% Romania16%

POPULATION AND SIZE POLAND Population: 38.5 million (2008) Area: 312,685 sq. km BELARUS Population: mill. (June 2008) Area: 207,600 sq km RUSSIA Population: mill. (2007) Area: 17,075,200 sq km LATVIA Population: 2,271 mill. Area: 64,589 sq km ESTONIA Population: 1,341 mill. Area: 45,226 sq km LITHUANIA Population: 3,366 mill. Area: 65,200 sq km KALININGRAD OBLAST Population: 947,000 Area: 15,100 sq km

INFLIATION 12.6% (Jan 2008) 11.3%* 17.9%* 12%* 2.5% (2007) 8.4% (2007 est) 9.3% (8/2007) *LT, LV, EE – May 2008

UNEMPLOYMENT RATE 4.2%* 6.5% 4.9% 5.9% (Jan. 2007) 12.8% (2007 est.) 1.7% (2007) 6.2% *LT, LV, EE – Q1 2008

Average gross monthly earnings 788 EUR* 645 EUR 623 EUR 268 EUR 770 EUR (9/2007) 375 EUR 348 EUR *Q (LT, LV, EE) (2007) in Euros

GDP GROWTH 7.1% 10.3% 8.8% 11.2%* *2006 Q EE 0.1%; LV 3.3%; LT 7% 6.5% (est.) 8.1% 8 %

GDP per Capita (2007 est.)* $21,100 $17,400 $17,700 $14,700 $16,300 $10,900 *CIA- The World Factbook

Labour productivity per person employed (EU 25)

Real GDP Growth Rate (2006)

Expenditure on social protection as a percentage of GDP (2004)

Lithuania – Human Development Index Lithuania ranks at 43 in the United Nations Development Programme (UNDP) Human Development Index. Estonia ranks at 44 and Latvia ranks at 45. HDI - living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and enrolment at the primary, secondary and tertiary level) and having a decent standard of living (measured by purchasing power parity, PPP, income). At ranking 43 out of 177 countries – Lithuania is listed as - a ‘High Human Development Country’.

Total expenditure on social protection

Active Labour Market Policy % GDP (averages 1997 – 2004)

Index of Fatal Accidents at Work (per 100,000 employees) source: Eurostat

Fatal accidents at work Index of the number of fatal accidents at work per 100 thousand persons in employment (1998=100)

Serious accidents at work 2005 Index 1998=100

Deaths due to suicide (SDR per 100,000) males

At risk of poverty after social transfers 2005

Tax rate on low wage earners: unemployment trap

Tax rate on low wage earners: couple with 2 children

Food and non-alcoholic beverages (% of household income expenditure) 2005

Inequality of income distribution (income quintile share ratio) 2005

Relation between income inequality and life expectancy Source: HEALTH STATUS AND LIVING CONDITIONS IN AN ENLARGED EUROPE Report prepared by European Observatory on the Social Situation LOT 4: Health Status and Living Conditions Network for the DG Employment, Social Affairs, and Equal Opportunities, European Commission Final Report December 2005 p.64

Recent demographic developments in Europe Strasbourg: Council of Europe Publishing 2005

Male life expectancy at birth 2005

Net trade union density in EU25, 1995–2004 (%) Source: European Foundation, Industrial Relations in EU Member States p.6.

Collective bargaining coverage in EU25, 2002 (%) Source: European Foundation, Industrial Relations in EU Member States p.14.

Trade unionisation in the Baltic States Latvia –15% of workforce (EIRO report. 2005) Lithuania – 10% of the workforce (EIRO report, 2005) Estonia –9% of the workforce (LFS, 2006)

Density rate of employer organisations in EU25 (%) Source: European Foundation, Industrial Relations in EU Member States p.12.

Average number of working days not worked due to strike action per 1,000 employees, EU25, 2000–2004 Source: European Foundation, Industrial Relations in EU Member States p.23.

Did your employer provide cash-in-hand payments for overtime or other work in the last twelve months?

Migration – a crisis of human resources

Scale of labour outflow since EU accession in 2004 Lithuania (3.3%) and Latvia (2.4%) registered outflow of working age population. In Slovakia, Poland and Estonia, the scale of outflow was somewhat smaller – about 1% LABOR MIGRATION FROM THE NEW EU MEMBER STATES: World Bank, EU8,Quarterly Economic Report, PART II: Special Topic, September 2006,World Bank Report p.22

Proportion of people who think that they are likely to move to another EU Member State in the next five years (percentages)

Quality of life % satisfied by country source: EQL Survey

Standard of living % satisfied by country source: EQL Survey

‘Non-circular’ migration

Proposals of World Bank Governments would be well-advised to manage labor migration more proactively. Further measures are needed to stimulate labor force participation and employment, including reducing high labor taxes and in some cases social benefits. EU8 countries should also consider phasing in— in tandem with capacity development for screening needed labor—a more liberal regime for importing labor from countries further east.

The ‘Hard Landing’ scenario…