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1. Labour market situation in the country

2. Main concepts

Labour market situation in the country

In 2023, the unemployment rate in the country stood at 6,8 per cent, which is by 0.3 percentage points lower than in 2021; in 2021 - 7.1 per cent, which is by 1.4 percentage points lower than in 2020; in 2020 - 8.5 per cent, which is by 2.2 percentage points higher than in 2019 (source - State Data Agency of Lithuania statistics).

The biggest difference between the male and female unemployment rate was recorded in the 15–19 age group (4.4 percentage points). In this age group, the unemployment rate was 24 per cent for male and 19.6 per cent for female. In 2022, against 2021, the unemployment rate of young population (aged 15–24) in the country decreased by 2.5 percentage points and made up 11.8 per cent. Unemployment rate of young men was 13.1 per cent, that of young women – 10.4 per cent. In 2022, the majority of the unemployed (82.3 thousand or 92.2 per cent) had previously worked. As the main reason for losing job, 30.3 per cent of the unemployed indicated personal or family reason, 18.3 per cent – dismissed or made redundant, 17.5 per cent – upon the expiry of a fixed-term employment contract. 22.3 per cent of the unemployed indicated that they had elementary occupations, 21.6 per cent – were craft and related trades workers, 16.8 per cent – service and sales workers.

Until 1990 Lithuania’s industries and agriculture were part of the planned economy of the Soviet Union. Unemployment did not exist. Each person who acquired educational qualification was guaranteed to get a job. After the re-establishment of the independence in 1990 the situation in the labour market changed: the processes of the labour market, such as economic restructuring, the growth of the private sector and the development of market relations, have had a direct influence on employment and, consequently, on the education needs and opportunities of inhabitants (Kogan, Gebel, & Noelke, 2008).

The period, from 1990-94, was marked by economic decline, as in all post-communist countries. From 1990 until 1992, the key task of the Lithuanian government was to implement statehood by passing new laws and establishing new institutions. A permanent national currency, the Litas (LTL), was introduced in 1993. The period from 1995-98 was characterised by economic stability and rapid growth. The period from 1999-2000, was characterised by economic recession due to the Russian crisis that hit Lithuania particularly hard due to its strong ties with the Russian economy. The economy returned to a positive growth path in 2000. The fifth period from 2000 onwards was dominated by the EU accession process that ended in Lithuania’s EU membership in 2004. 

Since 2004 when Lithuania became the member of the EU Lithuania’s economic potential (GDP per capita) has been one of the lowest in the European Union and was characterised by high dynamic fluctuations. Economic development has been affected by low living standards (in 2011 the poverty and social exclusion rate in Lithuania was above 30%) and low average and minimum wages. This results in the reduced attractiveness of the Lithuanian labour market and in turn encouraged emigration (the emigration rate in Lithuania has been one of the highest in the EU since 2000) and risk of poverty trap (the Gini coefficient was close to 33% in 2011). As a result of high emigration and negative natural population growth, the total number of Lithuanian residents fell from 3.5 million in 2001 to 3 million by the beginning of 2012  (Gruzevskis & Blaziene, 2013). The youth unemployment rate in Lithuania (15-24 years old) was 19.3% in 2014, down from 35.7% in 2010.

The general labour market trends in Lithuania have been over the years similar to the other Baltic countries – Estonia and Latvia. During the years preceding the COVID-19 outbreak, the employment rate grew slightly faster in Lithuania than in the other Baltic countries. Lithuania’s employment rate surpassed the same figure in Latvia in 2016, but has not yet caught up with the Estonian level (72.4% versus 74.0% among 15-64 year-olds in 2021). The labour force participation rate has also grown significantly faster in Lithuania than in the other Baltics, reaching 78.2% in 2021 among 15-64 year-olds, being still below the level of Estonia (79.1%), but above the level of Latvia (75.8%) and the OECD (72.4%) (OECD 2022).

Main concepts

Adopted Eurostat concepts are used in the country's policy.

The main concepts:

• Work assistant – an employee of an enterprise, institution, organization or other organizational structure who assists an employee with a disability in performing work functions.
• Transparently employed person – a natural person working under an employment contract or engaged in independent activities who meets the requirements set out in the Law on State Social Insurance of the Republic of Lithuania and has a valid transparently employed person identification code formed in accordance with the procedure established by that law (if it is mandatory to have it), and if such a person cannot have this code formed, – documents substantiating the data encrypted in the transparently employed person identification code (if it is mandatory to have them).
• Employment – ​​a remunerated or unpaid lawful independent, partially independent or dependent activity of a natural person, by which a person earns a living, as well as an activity that a person engages in with the aim of acquiring work or professional skills, or other continuous activity that a person carries out in cases and in accordance with the procedure established by law.
• Form of employment – ​​a method of activity of a person, by performing which a person is considered employed.
• Employment support policy – ​​a set of labour market services, employment support measures, other economic and social measures applied in order to increase the employment of job seekers, reduce unemployment, mitigate its negative consequences.6. Employment support system – a set of legal, economic, social and organisational measures applied to support the employment of job seekers.
• Business incubator – a public institution, the owner of which or one of the shareholders is the state and/or municipality and the purpose of which is to reduce the risk of the activities of enterprises starting a business by providing public services to business and to help them establish themselves in the market, as well as to promote the development of the activities of small and medium-sized business entities. A business incubator gathers enterprises starting a business in premises owned by it or managed and used on another legal basis.
• Entrepreneurship – a person’s competence to implement ideas that create added economic or social value and a person’s economic, social and creative activity in the field of business.
• Employed person:
  A person is considered employed if he or she is engaged in at least one of the following forms of employment:
  1) works under an employment contract or on the basis of legal relations equivalent to employment;
  2) is a self-employed person;
  3) is engaged in unpaid employment.
• Social business – an economic activity that pursues socially beneficial goals, social and/or environmental impact and is carried out by social business entities classified as social economy.
• Startup – a very small or small enterprise with high and innovation-based business development potential, registered in the Register of Legal Entities for no longer than 5 years.

• Economic activity – a regular activity of a person developed at his or her own risk, which includes the purchase or sale of goods, the production of goods, the performance of work or the provision of services to other persons and the purpose of which is to generate income.

  (sources: Law on the Development of Small and Medium-sized Businesses of the Republic of Lithuania actual from 1 June 2024 here; Law on Employment of the Republic of Lithuania actual from 1 January 2025 here).

• Social partnership or social dialogue (used synonymously in Lithuania) is a way for social partners to cooperate, consult, coordinate mutual interests in the social, economic and political fields, and regulate labor and related relations through negotiations.
• Social partners are, on the one hand, representatives of employees - trade unions, their organizations or works councils, employees' representatives (at the employer level) - and, on the other hand, the employer, their organizations, in certain cases the Government or its authorized institution, or the municipal council. The Government or the municipal council participates in the tripartite social dialogue.

         (Source here)