Country Brief - Lithuania

LITHUANIA PORTRAITS OF LABOR MARKET EXCLUSION

“Portraits of Labor Market Exclusion” sheds new light on the life situations and labor market experiences of individuals and households in the years of the financial, economic, and employment crisis between 2007 and 2011. In this joint project of the European Commission and the World Bank, profiles of the unemployed and inactive populations were developed via a clustering analysis of data from the European Income and Living Conditions Survey. The analysis takes a comprehensive view of policy making, focusing on both the labor market attachment of a country’s out-of-work population, their participation in social protection programs, as well as their poverty profile.

Figure 1: Classes of Out-of-Work Population in Lithuania, 2011 2% 3% 5% Middle-aged poor rural long-term unemployed

7%

Rural disabled adults with benefits 28% Married rural women with old age pension

9%

Young educated rural unemployed Middle-aged educated unemployed family men 11% Single poor rural unemployed women 19%

Stay-at-home poor rural women

18% Disabled and low-educated urban young men High priority Medium priority

Source: World Bank staff analysis

The analysis for Lithuania identified a total of 609,000 out-of-work individuals (unemployed and inactive) between ages 16 and 64 for the year 2011 (total population: 3.03 million). Of the seven profiles identified in Lithuania, five are assessed to have a “high” or “medium” priority for action given their activation need, potential, and barriers (Figure 1). The middle-aged poor rural long-term unemployed, young educated rural unemployed, middle-aged educated unemployed family men, and single poor rural unemployed women are considered to have highest priority for activation. Their high priority stems from their relatively large cohort sizes, high or medium activation needs due to high poverty risk, and activation potential due to labor market proximity, given their work history and/or education level. Stay-at-home poor rural women follow close behind, but are classified as slightly lower priority owing to their non-declared unemployment and the significant share that have at least one working adult in the household. Rural disabled adults with benefits, married rural women with old-age pensions, and disabled and low-educated urban young men are not prioritized for activation measures or policies due to lower need and potential (many report strongly limited capacity to work).

Figure 2 maps the clusters according to the labor market and social barriers that might limit their labor market activation. The young educated rural unemployed are relatively still quite close to the labor market given to their education, among other factors, and are therefore graphed in the lower left quadrant of the figure. Activation measures for these individuals should focus on market-based types of interventions, such as providing information on job openings and assisting in job search, application, and job-matching intermediation—services that could be provided through public employment services

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LITHUANIA

PORTRAITS OF LABOR MARKET EXCLUSION |

(PESs) or private employment agencies. Nevertheless, given the potential scarring effects of labor market detachment at an early age, special consideration should be taken to this group of youths. Job-start programs that offer placement through subsidized internships, accompanied by professional and life-skills training, could be a promising line of action, especially for the 33 percent without work experience. Mobility support within the country and the EU (including foreign language training) should also be considered, particularly given that 44 percent has tertiary education, and for those that live in sparsely populated areas.

The unemployed included in the two middle-aged profiles will probably need more ‘intensified activation’, owing to the higher exposure to poverty and the longer period of detachment from the labor market. Among the measures to be considered are those that help with job market re-entry, training, and mobility. Taking into account the years of work experience and potential industry and trade knowledge of these individuals, reconnecting them to their previous field of employment, building on their acquired skills, and upgrading missing functional or technical skills may strengthen their case with new employers. Moreover, in order to combat any behavioral and attitudinal detachment from the labor market that may result after long periods of unemployment in the middle-aged poor rural long-term unemployed, programs that subject individuals to a (time-limited) public works requirement, combined with training, job search, and skills support could also be implemented. Finally, mobility measures should also be taken into account, particularly for the middle-aged poor rural longterm unemployed that mainly live in rural areas.

Lastly, both prioritized profiles that consist of women are shown in the upper right quadrant given the relatively higher social barriers and distance from the labor market. Although the characteristics, challenges, and priority of these two profiles differ, potential activation measures for these women are similar in nature, ideally with options that enable them to sort into the measure that would correspond best to their needs. In general, most women would benefit from greater access to social and public services near their home (such as childcare) as well as

Figure 2: Activation Types of Prioritized Clusters in Lithuania High

Labor market barriers (education, skills, experience)

|

Hard-to-serve (skills, special support)

Intensified Activation (TVET, Skills) Middle-aged educated unemployed family men Middle-aged poor rural long-term unemployed

Single poor rural unemployed women Stay-at-home poor rural women

Young educated rural unemployed

Special Support (care for dependents, transport, social, health)

Market Ready (job info, matching, search assistance)

High Social barriers (childcare, gender, poverty, disability)

Source: World Bank staff analysis and assessment

from job-search assistance and professional training. Those with previous work experience could build on it to gain labor market entry. Moreover, improving flexibility in work schedules— including part-time and home-based work—in order to facilitate combining work with other responsibilities would make it easier for them to hold jobs.

Given the high proportion of out-of-work individuals living in rural areas, Lithuania would greatly benefit from mobility policies (both internal and international) that help improve access to more dynamic labor markets. General social protection and labor policy priorities should address the labor market barriers and disincentives that the out-of-work population faces. Improving access to services such as child and elder care, broader labor market reforms that consider more flexible work schedules, and education reforms that ensure quality and relevance in expanding the tertiary education system could be items in the policy agenda. Moreover, broader economic reforms that strengthen job creation and entrepreneurship are crucial in fostering labor market attachment. In this sense, all efforts need to be embedded into activities for economic growth and job demand creation.

Note: Base data for this analysis was harmonized EU SILC (Survey of Income and Living Conditions), released by Eurostat in 2013 with a time-lag of 2 years, referring to the year 2011.

Financed by the European Commission www.ec.europa.eu/social

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http://www.worldbank.org/en/country/ centraleuropeandthebaltics

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