Lithuania

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    About the ILO in Lithuania

    Low impact of the pandemic on growth, but significant labour market challenges

    After regaining its independence in 1990, Lithuania embarked on a major economic transition from command to social market economy. This contributed to a catching-up towards the living standards in the European Union. The country’s EU membership in 2004 further helped to promote convergence. Lithuania’s per capita income is today at 83% of the EU average.

    Labour markets benefited from these developments before the Covid-19 pandemic. The employment rate stood at over 77%, above the EU average of 73%, while unemployment fell to 6%. The shrinking population became a major bottleneck to growth. Lithuania’s population has fallen by nearly 25 % since the early 1990s due to high emigration and adverse demographic trends. Although net migration turned positive in 2019, the outflow of skilled labour continued, limiting the potential for growth. The shortage of workers has been growing in recent years while labour costs have increased considerably. Labour immigration from non-EU countries like Ukraine and Belarus is growing. Continue reading