Reforms in Lithuania are reinforcing economic growth but boosting productivity is still a challenge

Lithuania President 2018

Ms Dalia GRYBAUSKAITE, President of Lithuania. Shoot location: Bruxelles – BELGIUM Shoot date: 29/06/2018 Copyright: European Union

This article is brought to you in association with OECD.

Lithuania’s economy has grown faster than most other OECD economies over the past 10 years, unemployment continues to fall and public finances have stabilised after a long period of deficits and rising debt.

In a new report, however, the OECD says productivity has remained subdued, slowing down the convergence process as income remains at around two thirds of the OECD average. Income inequality is high and an ageing and declining population is putting pressure on the pension system.

The OECD Economic Survey of Lithuania praises the wide-reaching New Social Model reforms, implemented in 2017. It says they are expected to help reinvigorate inclusive growth, strengthen the social safety net and reinforce the sustainability of public finances.

Presenting the survey in Vilnius alongside Lithuanian Prime Minister Saulius Skvernelis and Finance Minister Vilius Šapoka, OECD Secretary-General Angel Gurría said: “The New Social Model showcases how an ambitious reform agenda can be brought through the political process. It is an impressive achievement. But big challenges still remain. Among them is population ageing, which is being intensified by many young Lithuanians leaving the country. Addressing emigration is a long-term endeavour which requires improving well-being and opportunities across the population”. Read the full speech.

The release of the survey took place the day Lithuania officially became the OECD’s 36th Member with the depositing in Paris of its Instrument of Accession to the OECD Convention. Lithuanian President Dalia Grybauskaitė signed an Accession Agreement with the OECD on 30 May 2018.

The survey says Lithuania needs to boost its relatively low productivity. The rate of productivity growth has fallen in recent years and there is a considerable mismatch between the skills of workers and the needs of businesses. It recommends strengthening work-based learning and to better adapt education to required skill levels.

To improve innovation, better coordination between business and research sectors is needed. Collaborative research should be privileged when allocating funds to public institutions.

Recent pension reforms, which form part of the New Social Model, have made the system more sustainable but the OECD says further steps are needed such as a rise in minimum pensions to reduce old-age poverty. Payments into pension funds should be made compulsory.

The survey also shows that Lithuania’s overall tax burden is below the OECD average and leans strongly toward labour and consumption while income and property are taxed relatively lightly. High labour taxes, especially for the low paid, are increasing informality. The tax mix could be made more inclusive by reducing social security contributions, particularly for the low paid. The base for property taxes should be broadened, and exemptions provided for low income households.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

‘Starvation’ now a reality for displaced Syrians stranded in camp near Jordanian border

DR Congo: Restore internet services as ‘a matter of urgency’, urges UN expert

COVID-19 has disrupted cybersecurity, too – here’s how businesses can decrease their risk

MEPs cap prices of calls within EU and approve emergency alert system

EU Council: The US airlines may freely pollute the European air

iSting: a reader’s thoughts on the UN Environment Assembly 2017

Berlin and Paris pursue the financial fragmentation of Eurozone

Fisheries: Commission proposes measures to conserve stocks of deep-sea species in the North-East Atlantic

Safe drinking water, sanitation, are ‘basic human rights’: new UN Water Development report

France breaks budget promises once again and the EU’s finance offices are shaking

“We need to use the momentum globally to ensure that corporations pay their fare share of taxation”, EU Commissioner Valdis Dombrovskis outlines from the World Economic Forum 2017.

Central Africa Republic: Violence drives thousands of refugees into neighbouring DR Congo, says UN agency

The Mental Health Hero in You

How civil society can adapt to the Fourth Industrial Revolution

Mother of all mergers between Facebook Messenger, WhatsApp and Instagram: EU Data Privacy restrictions against Facebook’s imperialistic plans

UN working ‘intensively’ to stop Ebola in eastern DR Congo, following second case in major border town

UN court increases sentence of former Bosnian-Serb leader to life imprisonment

European Commission calls on national political parties to join efforts to ensure free and fair elections in Europe

The importance of exchanges for the medical students of the world

Malaria: Focus on pregnant women and children, stresses UN health agency report

EU Commission challenges Berlin by proposing breakthrough legislation on banks

Hungary’s laws on helping vulnerable foreigners are ‘blatantly xenophobic’: UN rights chief

This South Korean city once had the biggest coronavirus outbreak outside of China. Now it’s reported zero new cases

How each country’s share of global CO2 emissions changes over time

Maintaining mental health is as important as avoiding COVID-19

Worldwide terror attacks have fallen for the third year in a row

FROM THE FIELD: ‘A piece of me’ was taken

Killing of Egyptian peacekeeper in Mali ‘may constitute war crimes’ Guterres warns, urging ‘swift action’

JADE @ European Business Summit 2014: Youth Unemployment – a drive to Entrepreneurship

Why exporters need to mind the trade finance gap

North-east Nigeria displacement crisis continues amid ‘increased sophistication’ of attackers, warns UN

Sweden is fighting loneliness by housing older and younger generations together

Reform of road use charges to spur cleaner transport and ensure fairness

GSMA outlines new developments for Mobile World Congress Shanghai 2018

Multilateralism must weather ‘challenges of today and tomorrow’ Guterres tells Paris Peace Forum

‘Good enough’ global cooperation is key to our survival

We must learn and change after Haiti sexual abuse scandal -Oxfam chief

Repression, use of force risk worsening Bolivia crisis: UN human rights chief

EU to gain the most from the agreement with Iran

Reinforcing EU border security: Visa-exempt travelers will be pre-screened

Amazon fires: Health Effects, Near and Far

EU Commission: Growth first then fiscal consolidation

Five-year low inflation for Eurozone and now Mario has to finally wake up the Germans

Tech must embrace teamwork to transform the world

Global health challenges require global medical students

If you live in a big city you already smoke every day

COVID-19 tracing apps: MEPs stress the need to preserve citizens’ privacy

Do not confuse food charity with ‘right to food’, UN expert tells Italians, labelling food system exploitative

EU prolongs economic sanctions on Russia by six months

Antibiotics are contaminating the world’s rivers

A Sting Exclusive: “Europe needs decisive progress for stronger cybersecurity”, EU Commissioner Gabriel highlights from Brussels

Could Europe become the first climate-neutral continent?

Coronavirus: additional ventilators dispatched to Czechia via the EU Civil Protection Mechanism

Portugal can use its economic recovery to build up resilience

UN health experts warn ‘dramatic resurgence’ of measles continues to threaten the European region

Eurozone’s credibility rock solid

UN chief saddened at news of death of former US President George H.W. Bush

Are e-cigarettes as safe as they claim to be?

Tax Inspectors Without Borders making significant progress toward strengthening developing countries’ ability to effectively tax multinational enterprises

Environmentalists have removed nearly 40 tonnes of trash from the Pacific

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s