The European Commission has recognized Lithuania's so-called social model package, including its new Labour Code, as a structural reform and granted the country the requested flexibility in meeting its public deficit target.
Worker
© Sputnik / Scanpix

The EU's executive body allowed Lithuania to use the flexibility clause in the Stability and Growth Pact, noting that the country's planned major structural reforms of the pension system and labor relations may have a positive impact on the long-term sustainability of public finances and employment.

Lithuania was thus given the green light for an additional deviation of 0.4 percent of GDP in 2017 from the medium-term budgetary objective of a deficit of up to 1 percent of GDP. The country was previously granted a 1 percent deviation due to the pension reform underway since the start of this year.

Lithuania's 2017 Stability Program provides for a general government deficit of up to 0.4 percent due to the major labor market and pension system reforms.

"Increasing tax compliance, which would help collect budget revenue and improve the fairness of the tax system and the efficiency of the economy, remains an important task in the tax system," Arnoldas Pranckevičius, head of the European Commission Representation in Lithuania, told reporters on Monday.

In its country-specific recommendations released on Monday, the European Commission also recommends that Lithuania "address skills shortages through effective active labor market policy measures and adult learning and improve educational outcomes by rewarding quality in teaching and in higher education".

The Commission's recommendations are to be endorsed by EU leaders n June.

Lithuanian President Dalia Grybauskaitė asked the EU's executive body to allow Lithuania to use the flexibility clause and have a higher public finance deficit, saying that it was necessary for the country to carry out structural reforms in the labor market, education, social protection and healthcare.

Executives of two dairies slapped with fines for market abuses

The board of the Bank of Lithuania has imposed a fine of 200,000 euros on Linas Strelis, a member of...

Telecoms operators watching situation regarding Huawei

Following Google 's announcement that it has severed relations with Huawei , seen by Washington as a...

Swedbank's pension funds invest EUR 200 mln into sustainable business

Pension funds managed by the Swedbank financial group are investing 200 million euros, or a sixth...

Belarus complains: Lithuania's blocking Minsk-EU agreement

Belarusian representatives complained in Brussels last week that Lithuania is blocking the...

New trends in startup world: unicorns' aspiration is not key anymore

The question when the first unicorn with over 1 billion of US dollars in value will appear in the...