“The Lithuanian economy is growing successfully. In terms of gross domestic product growth, we have been among the leaders of the European Union (EU) for a decade. However, the paradox is that the unemployment rate in the country remains around 6-7 percent, exceeding the EU average and almost twice as high as in other fast-growing countries, such as Poland or the Czech Republic. How is it possible that an expanding economy still does not “take”tens of thousands of people into the labor market?”
This is one of the biggest riddles of the Lithuanian labor market, which economists often refer to as structural unemployment. Although GDP is growing, this growth does not always directly correlate with the creation of new jobs for those people who are currently unemployed.
Here are the main reasons why the Lithuanian economy does not “take” all the free hands:
Skills mismatch: This is a critical problem. Most of the growth is generated in high-value-added sectors (IT, biotechnology, engineering) that require specific skills. Meanwhile, a significant proportion of registered unemployed (about two-thirds of young unemployed at certain periods) do not have the necessary qualifications.
Regional exclusion: Jobs are created in large cities (Vilnius, Kaunas), while the highest unemployment remains in remote regions, such as Ignalina (12.4%) or Kelmė district (11.4%). Low population mobility and a lack of housing in growing centers prevent people from moving to where there is work.
Social support traps and the shadow: Economists mention the problem of “moral hazard”, when for some individuals social benefits or work in the shadow become more financially attractive than the minimum wage in the official sector.
Comparison with neighbors: Although unemployment in Lithuania fluctuates around 6.6–7.1%, in Poland and the Czech Republic it historically remains one of the lowest in the EU (around 2.6–3.1%). In these countries, the industrial structure is more even, and the manufacturing sector is able to absorb more of the medium-skilled workforce than Lithuania's service- and high-tech-oriented growth.
Long-term unemployment: A significant share of the unemployed have lost their work skills or have other obstacles (health problems, addictions, debt burden) that prevent them from returning to the market even when demand is high.
Why can all Poles work, while we can't?
This question often arises when comparing the Lithuanian and Polish labor markets.
Here are some reasons:
Market size and economies of scale: Poland has over 37 million inhabitants. A large domestic market makes it easier for businesses to survive, create more jobs and maintain lower prices, which stimulates consumption and production Eurostat.
Industrial structure: Poland has maintained a strong industrial sector and manufacturing base. Lithuania is more focused on services and high added value (IT, biotechnology), where specific qualifications are required, so it may be more difficult for unskilled workers to find work.
Labor mobility: In Poland, regional policy is more balanced. In Lithuania, there is a large gap between Vilnius/Kaunas and the regions, where the lack of jobs is a real problem according to the Lithuanian Employment Service.
Tax environment: In Poland, various benefits are applied to small businesses and young workers (e.g., "zero" GPM for persons under 26 years of age), which encourages early entry into the labor market.
Landsbergis is guilty. He ruined Lithuania. Let's put him in prison for life together with other criminal figures of that time.
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