Lithuania has made remarkable economic and social progress, but further policy reforms will be necessary to ensure a more productive and inclusive economy, according to the first-ever OECD Economic Assessment of Lithuania.
José Ángel Gurría
© DELFI / Mindaugas Ažušilis

"Productivity in Lithuania is only a fragment of the productivity in average OECD countries. So, what is going to be the key to keeping growth in the medium and long-term is productivity," said OECD secretary general Angel Gurría presenting the assessment on Tuesday.

Reducing poverty and ensuring more equal distribution of wealth is another pressing issues for Lithuania, according to the OECD report.

The main reform priorities should be to improve the education system, by increasing the role of workplace training and attracting talented people to the teaching profession, to enhance the governance of state-owned enterprises, to further develop infrastructure and to further promote innovation, notably by ensuring that the overall policy framework supports the growth of young innovative firms.

"Perhaps Lithuania does not need 43 different companies to deal with forests. Perhaps there are too many, perhaps there is room for consolidation," Gurría said at a news conference in Vilnius on Tuesday.

"This has to do with state-owned enterprises in general. We are not preaching privatization. We are saying the important thing about state-owned enterprises is the operation. That means efficiency, transparency, integrity, paying taxes, paying dividends, paying the market rate of interest. (It is important) who are on the board of directors," he said.

The OECD Economic Assessment of Lithuania feeds into the country’s ongoing OECD accession process, which was launched in April 2015. It aims to contribute to the design and implementation of reforms that will help Lithuania to continue modernising its economy while improving living standards for all.

According to the Assessment, reforms for bringing about a stronger economy go hand-in-hand with efforts to reduce poverty, which affects one in five Lithuanians. They would also make Lithuania a more inclusive society, notably for low-skilled workers and the unemployed.

A wider access to lifelong learning for the low-skilled and the planned movement toward a “flexicurity” model, with streamlined labour market regulations combined with greater income support in case of job loss, should expand opportunities and share prosperity more widely. Building up the capacity of public employment services, to get people back to work, and strengthening the minimum income support to the poor, are both equally critical.

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