Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Lithuania 2016 OECD Economic Assessment more productive and inclusive Vilnius 15 March

6,286 views

Published on

Lithuania 2016 OECD Economic Assessment more productive and inclusive Vilnius 15 March

Published in: Economy & Finance

Lithuania 2016 OECD Economic Assessment more productive and inclusive Vilnius 15 March

  1. 1. http://www.oecd.org/eco/surveys/economic-survey-lithuania.htm OECD OECD Economics 2016 OECD ECONOMIC ASSESSMENT OF LITHUANIA More Productive and Inclusive Vilnius, 15 March 2016
  2. 2. 2 The fiscal position is robust 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 - 12 - 10 - 8 - 6 - 4 - 2 0 2 4 Government deficit, % of GDP 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0 5 10 15 20 25 30 35 40 45 Government debt, % of GDP
  3. 3. 3 Tax revenue potential is not fully exploited Gap between VAT collection and potential VAT revenue,% GDP, 2013 0 5 10 15 20 25 30 35 40 FIN NLD SWE LUX SVN FRA PRT DNK GBR BEL IRL DEU AUT ESP EST CZE HUN POL LVA ITA GRC SVK LTU 0 5 10 15 20 25 30 35 40  Further improve tax collection and continue fighting tax evasion
  4. 4. 4 The workforce is set to fall - 60 - 40 - 20 0 20 40 60 Projections for population aged 15-64 years, % change, 2014-2050
  5. 5. 5 The financial sector is recovering Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12 Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 Q2 15 0 5 10 15 20 25 30 Non-performing loans % of total gross loans
  6. 6. 6 Productivity growth has resumed but has slowed -70 -60 -50 -40 -30 -20 -10 0 -70 -60 -50 -40 -30 -20 -10 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Russian financial crisis Global financial crisis Labour productivity gap (%) to OECD
  7. 7. 7 Well-being is low and income inequality is high Well being indicators 0 2 4 6 8 10 Income and wealth Jobs and earnings Housing Health status Education and skills Social connections Environmental quality Personal security Subjective well-being Lithuania OECD 0 10 20 30 40 ISL NOR SVN CZE SWE FIN BEL SVK NLD AUT DNK HUN CHE LUX FRA DEU IRL POL EU28 GBR ITA GRC PRT ESP LTU LVA EST Income inequality Gini coefficient
  8. 8. 8 First challenge: boosting productivity
  9. 9. 9 Some regulations need to be more market friendly PMR Indicator of public ownership, Scale 0 (least) to 6 (most public ownership), 2013  Improve the governance of state-owned enterprises 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
  10. 10. 10 Lithuanian skills are inadequate 0 5 10 15 20 25 30 35 40 0 5 10 15 20 25 30 35 40 EST HUN SVN POL SVK CZE LVA LTU % of firms citing an inadequately educated workforce as a major or very severe obstacle to operations, 2013  Further increase the role of workplace training and cooperation with employers in the education system  Further reduce regulatory barriers to the employment of non-EU workers
  11. 11. 11 Participation in lifelong learning is insufficient  Increase access to lifelong learning, especially for low-skilled 0 5 10 15 20 25 30 35 0 5 10 15 20 25 30 35 GRC SVK HUN POL LTU TUR LVA IRL BEL DEU ITA CZE PRT ESP EST SVN LUX AUT GBR NLD FRA NOR FIN ISL SWE DNK CHE Participation rate in education and training, (last 4 weeks), 25-64 years old, %, 2014
  12. 12. 12 Participation in early childhood education is low 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 Participation rate of 4-years old in education, %, 2013  Attract strong talent to the teaching profession by raising pay and investing in teacher development
  13. 13. 13 Business sector innovation is low EU Summary Innovation Index 30 40 50 60 70 80 90 100 30 40 50 60 70 80 90 100 2007 2008 2009 2010 2011 2012 2013 2014 Lithuania Czech Republic Estonia Latvia Slovak Republic  Improve firm’s awareness of the existence of R&D tax incentives
  14. 14. 14 Second challenge: making growth more inclusive
  15. 15. 15 Unemployment is still high, especially for low skilled
  16. 16. 16 Labour taxes are high  Reduce employer social security contribution on low-skilled workers 0 5 10 15 20 25 30 35 40 45 50 55 0 5 10 15 20 25 30 35 40 45 50 55 Taxes as % of labour cost, 2014 single person at 67% of average earnings, no child
  17. 17. 17  Strengthen active labour market policies, in particular training, and the capacities of public employment services to get people back to work Labour market programmes are small 0 5 10 15 20 25 30 35 40 0 5 10 15 20 25 30 35 40 GBR SVK EST LTU LVA GRC ESP CZE PRT SVN ITA POL IRL DEU BEL NLD FRA HUN LUX NOR AUT FIN SWE DNK Public expenditure on active labour market policy measures per unemployed Percentage of GDP per capita, 2013 or last available year
  18. 18. 18 Temporary income support to the unemployed is too low  Increase the coverage and generosity of the unemployment insurance benefit system Net income replacement rate for unemployment insurance, (first year of unemployment), 2013, % of previous income 0 20 40 60 80 100 0 20 40 60 80 100
  19. 19. 19 Minimum income benefits are low  Increase the level of minimum income for social assistance recipients Net minimum income value in % of median household income, 2013 0 10 20 30 40 50 60 70 80 0 10 20 30 40 50 60 70 80
  20. 20. 20 Financial incentives to take a job fall the larger the family  Strengthen the in-work benefits scheme to make work pay, in particular for second earners of families GRC TUR USA HUN CHL SVK ISR ESP PRT FRA CAN AUS OECD GBR NZL DEU EST BEL SVN LUX LTU JPN KOR NLD FIN IRL ISL DNK CZE POL SWE AUT NOR LVA CHE 0 10 20 30 40 50 60 70 80 90 100 110 120 Effective tax rate on additional earnings when taking a job for social assistance recipients Two children, one-earner at 50% of average earnings
  21. 21. 21 Life expectancy is low for men  Further promote healthy lifestyles and primary care services, especially in rural areas 40 45 50 55 60 65 70 75 80 85 Life expectancy at birth for males
  22. 22. 22 Summary
  23. 23. 23 Main messages • Lithuania has made remarkable progress in the last decades: o Fostering productivity convergence o Weathering the Great Recession • Current challenges: o Further boosting productivity o Making growth more inclusive
  24. 24. Main Findings o Fiscal policy needs to be adjusted to meet medium to long term fiscal challenges related to population ageing and future potential macroeconomic shocks. o The tax mix does not facilitate enough inclusive growth. o Low energy efficiency increases vulnerability to world energy price shocks and jeopardises climate change objectives. o Businesses have difficulty finding suitably skilled labour. o Test scores for secondary school students are low. o Regulations are generally business friendly, but innovation intensity of Lithuanian firms is low and access to finance is a constraint for some high productivity firms. o High wage inequality, low employability for the low skilled and low job satisfaction reduces the well-being of workers and contributes to high emigration. o Weak support to the unemployed increases vulnerability to poverty and contributes to skill mismatch. o The social assistance benefits programme is not effective enough at reducing poverty. o Life expectancy is relatively low and the health care system could make a better contribution to health status. 24 ProductivityInclusionMacro
  25. 25. Recommendations for fiscal and financial policies to support the economy  Continue fighting tax evasion also beyond the VAT gap and improve spending efficiencies (especially in education and health care areas), to allow medium term fiscal consolidation and finance public spending needs.  Further shift the tax burden away from labour, especially from employer social security contributions, and raise recurrent taxes on personal immovable property.  Increase taxes on activities that damage the environment. 25
  26. 26. Recommendations to boost productivity 26  Further increase the role of workplace training and cooperation with employers in the education system, especially in the context of vocational education and training programmes.  Attract higher performing graduates to the teaching profession by paying higher wages and investing in teacher development.  Promote participation in pre-primary education.  Promote new forms of business financing and ensure that innovation policies support young innovative firms. Reform bankruptcy procedures. More in Chapter 1 of the Economic Assessment
  27. 27. Recommendations to make growth more inclusive  Improve labour market inclusiveness by lowering employer social security contributions on low-skilled workers, providing them in-work benefits while maintaining their entitlements and increasing access to lifelong learning.  Implement the plans in the “New Social Model” to reform labour regulations and temporary income support for the unemployed.  Strengthen active labour market programmes and the capacities of public employment services to implement programmes to get people back to work.  Increase the income support to social assistance recipients while strengthening work incentives.  Further promote healthy lifestyles and primary care services especially in rural areas More in Chapter 2 of the Economic Assessment 27
  28. 28. More Information… www.oecd.org/eco/surveys/economic-survey-lithuania.htm OECD OECD Economics Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 28

×