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Investing in youth Lithuania

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Investing in youth Lithuania

  1. 1. Mark Pearson (Deputy Director) and Alessia Forti (Policy Analyst) Directorate for Employment, Labour and Social Affairs Investing in Youth Lithuania Vilnius, 24th February 2016
  2. 2. Published so far Brazil (2014) Tunisia (2015) Latvia (2015) Lithuania (2016) Forthcoming Australia Norway Sweden Japan Kazakhstan Peru The Lithuanian review is #4 of an ongoing series of ‘Investing in Youth’ reviews 2
  3. 3. 1. The demographic challenge 2. Job quantity 3. Job quality 4. Policy options and key recommendations 3 Outline of the presentation
  4. 4. 1. THE DEMOGRAPHIC CHALLENGE 4
  5. 5. 5 1.1. The youth population is shrinking The size of the youth population in Lithuania 17 18 19 20 21 22 23 0 100 200 300 400 500 600 700 800 900 1000 1990 1995 2000 2005 2010 2015 Percentageofyouthinworkingagepopulation Thousands 15-19 20-24 25-29 Youth/Working age population (%) …Declining fertility rates and ageing population …Increasing migration outflows of youth
  6. 6. 2. JOB QUANTITY 6
  7. 7. 7 2.1. Youth were hit hard by the crisis 0 10 20 30 40 50 % Unemployment Lithuania EU OECD 50 55 60 65 70 75 80 % Inactivity 10 20 30 40 50 2007 2008 2009 2010 2011 2012 2013 2014 2015 Employment
  8. 8. 8 2.2. Some youth fare worse than others Young women are more often inactive and less often employed than young men Highly-qualified youth fare considerably better than low-qualified youth Some regions are lagging behind 0 10 20 30 40 50 60 70 80 Primary Secondary Tertiary Youth employment by level of education Alytaus Kauno Klaipedos Marijampoles Panevezio Šiauliu Taurages Telšiu Utenos Vilniaus 0 5 10 15 20 25 30 35 40 45 Youth unemployment by region 0 10 20 30 40 50 60 70 80 90 100 Men Women Employment Inactivity Youth employment and inactivity by gender Gender Education Regions
  9. 9. 9 2.3. Youth not in Employment, Education or Training (NEET) 10 11 12 13 14 15 16 17 18 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Lithuania OECD European Union 0 2 4 6 8 10 12 14 16 18 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Inactive (not in school) Unemployed NEET rates (share of youth aged 15-29) By international standards In Lithuania
  10. 10. 10 2.4. Youth not in Employment, Education or Training (NEET) (cont.) 0 5 10 15 20 Men Women Share of unemployed Share of inactive (not in school) 0 5 10 15 20 Primary Secondary Tertiary 0 5 10 15 20 25 Alytaus Kauno Klaipedos Marijampoles Panevezio Šiauliu Taurages Telšiu Utenos Vilniaus Region Education Regions Gender Young women are more often NEET Youth with secondary education are more likely to be NEET Some regions are lagging behind
  11. 11. 3. JOB QUALITY 11
  12. 12. Earnings quality: relatively low earnings (20% earn MWs) and among the most unequal countries in Europe Labour market security: high unemployment risk and weak income support Quality of the work environment: 70% young workers lack work autonomy and learning opportunities 12 3.1. OECD Job Quality framework
  13. 13. 13 3.2. Skills mismatches are frequent 0 5 10 15 20 25 30 35 40 45 Men Women Full-time Part-time Permanent Temporary All youth Gender Full- or part-time Type of contract % Underqualified Overqualified Percentage of employed youth who are either over- or under-qualified for their jobs
  14. 14. 14 3.3. Informality and envelope wages are frequent among youthHungary Lithuania Latvia Estonia CzechRepublic Greece Netherlands UnitedKingdom Slovenia Luxembourg OECD Spain Finland Portugal SlovakRepublic Poland Austria France Germany 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Percentage of employed youth who receives envelope wages … Foregone tax revenues for the state budget … Weaker income protection for youth in case of job loss … More uncertainty for employers
  15. 15. Only one in twelve employed youth work under temporary contract in Lithuania.. compared to around one in three across OECD and European countries. 15 3.4. Youth rarely work under temporary contracts
  16. 16. Only one in seven employed youth work part-time in Lithuania.. compared to around one in five across OECD and European countries. 16 3.5. Youth rarely work part-time
  17. 17. 4. POLICY OPTIONS AND KEY RECOMMENDATIONS 17
  18. 18. 4. Policy Options and Key Recommendations Reduce non-wages costs to employers to stimulate youth (formal) hiring Introduce a differentiated minimum wage structure to reflect lower productivity of young workers Relax employment protection legislation, but strengthen enforcement and compliance Provide more adequate income support (subject to strict mutual obligations) Expand ALMPs which are cost-effective
  19. 19. 19 4.1. Reduce non-wage costs to employers to stimulate youth (formal) hiringCzechRepublic Estonia France Italy Sweden SlovakRepublic Lithuania Spain Austria Hungary Belgium Greece Portugal Finland Germany Turkey Poland OECD Slovenia Japan Mexico Norway Luxembourg Canada US Ireland Koreas Netherlands UK Iceland Switzerland Australia Israel 0 5 10 15 20 25 30 % Employers’ social security contributions (for low-wage earners) Percentage of labour costs
  20. 20. 20 4.2. Introduce a differentiated minimum wage structure to reflect lower productivity of young workers 0 10 20 30 40 50 60 70 80 90 100 Turkey Chile France Slovenia NewZealand Israel Portugal Australia Hungary Lithuania Belgium Poland Latvia Ireland Germany(estimate) Netherlands UK SlovakRepublic Greece Canada Luxembourg Spain Korea Japan Estonia UnitedStates Mexico CzechRepublic % MW/Median MW/Average Minimum wages as percentage of median and average wages
  21. 21. 21 4.3. Relax employment protection legislation, but strengthen enforcement and compliance Lithuania OECD 0 1 2 3 4 5 6 Temporary Lithuania OECD 0 0.5 1 1.5 2 2.5 3 Scale 0-6 /// Regular Strictness of Employment Protection Legislation
  22. 22. 22 4.4. Provide more adequate income support (subject to strict mutual obligations) * Data refers to people previously earning 67% of average wages 18months 10months 6months 10months 55%ofprevious earnings 64%ofprevious earnings 0 10 20 30 40 50 60 70 0 2 4 6 8 10 12 14 16 18 20 LTU OECD LTU OECD LTU OECD Minimum contribution period Maximum duration Net replacement rate (right-scale) % of previous earningsMonths Unemployment benefits
  23. 23. 23 4.5. Expand ALMPs which are cost effective Four out of five Lithuanian unemployed youth register with PES OECD Lithuania 0 5 10 15 20 25 % OECD Lithuania 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 % Youth participation to ALMPs Percentage of youth labour force Spending on ALMPs Percentage of GDP But participation to and spending on ALMPs remains low
  24. 24. 24 Contacts: alessandro.goglio@oecd.org, alessia.forti@oecd.org, anton.nivorozhkin@oecd.org Access the Lithuanian review online: Investing in Youth – Lithuania More recent work on the youth policies: www.oecd.org/employment/action-plan-youth.htm OECD Directorate for Employment, Labour and Social Affairs: www.oecd.org/els In It Together: Why less Inequality benefits All: www.oecd.org/social/inequality-and-poverty.htm Society at a Glance 2014: www.oecd.org/social/societyataglance.htm Pensions at a Glance 2015: www.oecd.org/pensions/pensionsataglance.htm Thank you Follow us on Twitter: @OECD_Social

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