OECD ECONOMIC SURVEY OF LITHUANIA 2018 Promoting inclusive growth

Transcription

1 OECD ECONOMIC SURVEY OF LITHUANIA 218 Promoting inclusive growth Vilnius, 5 July

2 Incomes are converging GDP per capita, 21 USD PPP Lithuania OECD Source: OECD Economic Outlook database. 2

3 Unemployment is declining % labour force Unemployment rate Source: OECD Labour force statistics database. 3

4 Export performance is robust Index 25= Lithuania Latvia Estonia Poland Export performance¹ Export performance is measured as actual growth in exports relative to the growth of the country s export market, which represents the potential export growth for a country assuming that its market shares remain unchanged. Source: OECD Economic Outlook database. 4

5 The budget is now in surplus 2 Government net lending, in % of GDP Source: OECD Economic Outlook database. 5

6 Denmark Finland Czech Rep. Iceland Netherlands France Luxembourg Norway Slovak Rep. Austria Ireland Slovenia Sweden Germany Belgium Switzerland Hungary New Zealand United Kingdom Poland OECD Portugal Australia Italy Korea Canada Greece Spain Chile Estonia Japan Latvia Lithuania Mexico United States Turkey Israel Poverty remains high % Relative poverty rate 215 or latest year available Note: The relative poverty rate is the ratio of the number of people whose income falls below the poverty line; taken as half the median household income of the total population. The indicator is calculated in disposable income after taxes and transfers. Source: OECD Income Distribution and Poverty database. 6

7 Well-being could be improved OECD Lithuania Lowest OECD¹ Housing 8 Safety Income and jobs Life Satisfaction Community Health Education Environment 1. Lowest OECD refer to the 17 countries with the lowest score among the OECD countries. Data are for 216 or latest available year. Source : OECD Better life index indicators database; Eurostat; Gallup database; and World Bank World Development Indicators. 7

8 New Zealand United States Canada United Kingdom Chile Australia Estonia Ireland Hungary Japan Switzerland Lithuania (post-reform) Iceland Finland Korea Israel Slovak Rep. OECD Greece Norway Denmark Turkey Spain Slovenia Poland Lithuania (pre-reform) Austria Sweden Mexico Czech Rep. Portugal Luxembourg France Germany Italy Latvia Netherlands Belgium The New Social Model improved labour market flexibility Strictness of employment protection legislation: Regular workers Scale from (least restrictions) to 6 (most restrictions), latest year Note: The indicator is calculated in disposable income after taxes and transfers. Source: OECD Income Distribution and Poverty database. 8

9 Greece Australia New Zealand United Kingdom Sweden Chile Korea Turkey Estonia Austria Ireland Germany Hungary Japan United States OECD Lithuania (pre) Spain Slovak Rep. Poland Iceland Canada Czech Rep. Norway Finland Slovenia Italy France Netherlands Denmark Belgium Switzerland Portugal Latvia Lithuania (post) Luxembourg Israel and unemployment benefits are now more generous % Net Replacement Rates for a single person in unemployment, 215 Top-ups (in the 3d month) Unemployment benefits (in the 3rd month) Unemploymnet benefits and top-ups (in the 9th month) Note: For Lithuania, the results for January and July 217 represent the situation before and after introduction of the New Social Model reform, respectively; 215 for the remaining countries. Source: OECD (218), OECD Reviews of Labour Market and Social Policies: Lithuania, OECD Publishing, Paris. 9

10 Private sector debt and house prices remain below historical peaks Index, 27=1 28 Credit growth and housing prices % of GDP 8 24 Nominal house prices Credit to private non-financial sector² (RHS) Source: European Central Bank; OECD Economic Outlook database; and OECD House price index database. 1

11 Debt is falling but could decline further % of GDP 6 55 No deficit Deficit 1% of GDP Deficit.5% of GDP Note: Projected debt reduction paths under different deficit scenarios. Source: OECD calculation. 11

12 Chile Israel Ireland New Zealand Mexico Switzerland Korea Australia United Kingdom Netherlands Canada Iceland Luxembourg United States Portugal OECD Norway Japan Spain France Greece Slovak Rep. Estonia Denmark Turkey Slovenia Finland Poland Belgium Italy Lithuania Czech Rep. Austria Sweden Latvia Germany Hungary High social security contributions reduce employability of the low-skilled % of total labour cost 6 5 Decomposition of the tax wedge, 216 Single without children 5% of the average wage Income tax Social security contribution Source: OECD taxing wages database. 12

13 Luxembourg Switzerland Mexico Austria Czech Rep. Turkey Estonia Slovak Rep. Germany Norway Lithuania Slovenia Ireland Hungary Chile Sweden Finland Korea Portugal Latvia Netherlands OECD Spain Poland Italy Belgium Denmark Iceland Australia Japan New Zealand Israel Greece United States France Canada United Kingdom Property taxes are low % of GDP 3.5 Property tax revenues 216 or latest year available Source: OECD Revenue statistics database; and Ministry of Finance of Lithuania. 13

14 Key recommendations for more inclusive growth Set a debt target and establish a credible path to reach it Reduce social security contributions, especially for low-income workers Increase property taxation, while exempting low-income households Assess spending efficiency by carrying out spending reviews Actively use macro-prudential measures once financial imbalances emerge 14

15 Productivity and inclusiveness: a twin challenge 15

16 Mexico Chile Latvia Hungary Estonia Lithuania Portugal Poland Greece Czach Rep. Slovenia New Zealand Israel Slovak Rep. Turkey Korea Japan OECD Spain United Kingdom Iceland Germany Italy Finalnd Canada Austria Australia Netherland Denmark France Sweden Switzerland Belgium United States Norway Luxembourg Ireland Labour productivity is low 16 Labour productivity, USD PPP per worker, Source: OECD Economic Outlook database. 16

17 Men Women Low-skilled¹ Medium-skilled¹ High-skilled¹ The labour market is not very inclusive % 3 Group-specific unemployment rates (UNR), Lithuania OECD Gender Age Educational attainment² Long-term UNR² 1. Calculated on the labour force aged Data refer to 216. Source: OECD Gender employment database 17

18 Informality is high % of population aged People carrying out undeclared paid activities Poland European Union Lithuania Estonia Latvia Source: Eurobarometer. 18

19 Luxembourg Lithuania Turkey New Zealand Hungary Ireland Australia Austria Canada France United Kingdom Belgium Iceland Mexico Netherlands Norway Slovenia OECD Chile Denmark Greece Latvia Spain Sweden Switzerland Israel Czech Rep. Slovak Rep. Italy Estonia Japan Korea Poland Finland Portugal Germany United States Insolvency procedures are cumbersome Scale from (worst) to 16 (best) Strength of insolvency framework index (-16), The strength of insolvency framework index is a composite indicator of the quality of the insolvency framework based on the time, cost and outcome of insolvency proceedings involving domestic legal entities. Source: World Bank Doing business 218 database. 19

20 Italy Latvia Lithuania Portugal Greece Poland Spain Ireland Luxembourg Czech Rep. France Hungary Slovakia EU28 Germany Netherlands Estonia Sweden Denmark United Slovenia Belgium Austria Finland Firms and research institutions could collaborate more % of innovating firms 25 Firms collaborating on innovation with higher education or research institutions Source: Eurostat. 2

21 Korea Japan Hungary Lithuania Chile Greece New Iceland Spain Estonia Mexico Sweden Latvia United Israel France Denmark Portugal Germany OECD Turkey Norway Poland Italy Australia Belgium Luxembourg Switzerland Slovenia Netherlands Slovak Rep. Austria Finland Czech Rep. Vocational education and training should be strengthened % 8 Share of vocational students on upper secondary students, Source: OECD education at a Glance

22 Italy Turkey Greece Chile Hungary United States Spain Portugal Slovak Rep. Israel Latvia Lithuania (no HC) Canada Korea Estonia OECD New Zealand Belgium Sweden France Norway Czech Republic Poland Switzerland Australia Lithuania (HC) Slovenia Netherlands Luxembourg Austria Finland Germany Iceland Ireland United Kingdom Denmark Japan Social support is relatively weak % 7 6 Net income from minimum-income benefits as a % of the median equivalised household income, couple with two children, 215¹ Net income from minimum-income benefits Poverty line for Lithuania, with Heating Compensation ("Lithuania (HC)") and without ("Lithuania (no HC)"). Source: OECD (218), OECD Reviews of Labour Market and Social Policies: Lithuania, OECD Publishing, Paris. 22

23 Australia Estonia Latvia Canada Israel New Slovak Slovenia Greece Lithuania Germany Czech Rep. Poland Norway OECD Italy Spain Portugal Switzerland Ireland Belgium Netherlan Austria Luxembo France Hungary Finland Sweden Denmark More should be done to get people back to work % of GDP Public expenditure in activation programmes¹ 215 or latest year available 1. Active labour market programmes (categories 2-7) include: cover training, employment incentives, supported employment and rehabilitation, direct job creation and start-up incentives. Source: OECD Labour database. 23

24 Key recommendations for raising productivity and inclusiveness Address skills mismatch by continuing the reform of the education system at all levels Strengthen work-based learning, including apprenticeships Continue the reform of innovation policy and strengthen collaboration between firms and research institutions Simplify bankruptcy procedures and facilitate restructuring Increase investment in active labour market programmes upon close monitoring of results Further increase the level of social assistance while maintaining strong work incentives 24

25 Ageing together 25

26 The population is ageing % population 65+ on population Old age dependency ratio, projections, Lithuania EU OECD Source: United Nations, Department of Economic and Social Affairs, Population Division (215). World Population Prospects. 26

27 Slovak Rep. Hungary Czech Rep. France Denmark Luxembourg Netherlands Finland Greece Poland Spain Austria EU Italy Belgium Ireland Sweden United Kingdom Germany Slovenia Portugal Romania Bulgaria Croatia Lithuania Latvia Estonia The pension system is not targeted at the poor % of population Old age population at risk of poverty, 216 Source: Eurostat. 27

28 Latvia Estonia Lithuania Slovak Rep. Austria Slovenia Finland Hungary Portugal Denmark Switzerland Poland Luxembourg France Czech Rep. Netherlands United Kingdom EU28 Belgium Greece Germany Spain Ireland Italy Iceland Norway Sweden Life expectancy of men is low Healthy life years at birth for men, Source: Eurostat Health statistics database. 28

29 Health care is too hospital-centric Percentage points Health expenditure by function, difference to OECD average Hospital care Outpatient care Long term care Medical goods Collective services Source: OECD Health Statistics database. 29

30 SVK POL GRC TUR LTU HUN IRL BEL LVA ITA DEU CZE ESP PRT EU28 SVN GBR AUT EST LUX FRA NLD NOR ISL FIN DNK SWE CHE Participation in life-long learning is low % 35 Participation rate in lifelong education or training, year-olds, Note: Data refer to the share of 25 to 64 year-olds who participated in education or training in the 4 weeks prior to the survey. Source: Eurostat (217), Education and training statistics database. 3

31 Net migration contributes to skill shortages Thousands of persons 9 Emigration 8 Immigration including return migrants Emigration and immigration, absolute numbers Source: Statistics Lithuania. 31

32 Key recommendations for an ageing society Continue moving pensions from the pay-as-you go (first) pillar to the funded (second) pillar Fund the wage-independent basic pension through the general budget rather than social contributions Continue reorganising the hospital sector and improve outpatient and long-term care Provide financial incentives for life-long learning to firms and employees, especially older Reach out better to emigrants and ease restrictions for high-skilled immigrants Extend and improve support for childcare, to help parents reconcile work and family 32

33 For more information 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 33