Investing in youth

1. Mark Pearson (Deputy Director) and Alessia Forti (Policy Analyst)
Directorate for Employment, Labour and Social Affairs
Investing in Youth
Lithuania
Vilnius, 24th February 2016

2. Published so far
Brazil (2014) Tunisia (2015) Latvia (2015) Lithuania (2016)
Forthcoming
Australia Norway Sweden Japan
Kazakhstan Peru
The Lithuanian review is #4 of an ongoing
series of ‘Investing in Youth’ reviews
2

3. 1. The demographic challenge
2. Job quantity
3. Job quality
4. Policy options and key recommendations
3
Outline of the presentation

4. 1. THE DEMOGRAPHIC
CHALLENGE
4

5. 5
1.1. The youth population is shrinking
The size of the youth population in Lithuania
17
18
19
20
21
22
23
0
100
200
300
400
500
600
700
800
900
1000
1990 1995 2000 2005 2010 2015
Percentageofyouthinworkingagepopulation
Thousands
15-19 20-24 25-29 Youth/Working age population (%)
…Declining fertility rates and ageing population
…Increasing migration outflows of youth

6. 2. JOB QUANTITY
6

7. 7
2.1. Youth were hit hard by the crisis
0
10
20
30
40
50
%
Unemployment
Lithuania EU OECD
50
55
60
65
70
75
80
%
Inactivity
10
20
30
40
50
2007 2008 2009 2010 2011 2012 2013 2014 2015
Employment

8. 8
2.2. Some youth fare worse than others
Young women are more
often inactive and less
often employed than
young men
Highly-qualified youth
fare considerably better
than low-qualified youth
Some regions are
lagging behind
0
10
20
30
40
50
60
70
80
Primary Secondary Tertiary
Youth employment
by level of education
Alytaus
Kauno
Klaipedos
Marijampoles
Panevezio
Šiauliu
Taurages
Telšiu
Utenos
Vilniaus
0
5
10
15
20
25
30
35
40
45
Youth unemployment
by region
0
10
20
30
40
50
60
70
80
90
100
Men Women
Employment Inactivity
Youth employment and inactivity
by gender
Gender
Education
Regions

9. 9
2.3. Youth not in Employment, Education or
Training (NEET)
10
11
12
13
14
15
16
17
18
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Lithuania OECD European Union
0
2
4
6
8
10
12
14
16
18
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Inactive (not in school) Unemployed
NEET rates (share of youth aged 15-29)
By international standards
In Lithuania

10. 10
2.4. Youth not in Employment, Education or
Training (NEET) (cont.)
0
5
10
15
20
Men Women
Share of unemployed Share of inactive (not in school)
0
5
10
15
20
Primary Secondary Tertiary
0
5
10
15
20
25
Alytaus
Kauno
Klaipedos
Marijampoles
Panevezio
Šiauliu
Taurages
Telšiu
Utenos
Vilniaus
Region
Education
Regions
Gender
Young women are
more often NEET
Youth with
secondary
education are
more likely to be
NEET
Some regions
are lagging
behind

11. 3. JOB QUALITY
11

12. Earnings quality: relatively low earnings (20%
earn MWs) and among the most unequal
countries in Europe
Labour market security: high unemployment
risk and weak income support
Quality of the work environment: 70% young
workers lack work autonomy and learning
opportunities
12
3.1. OECD Job Quality framework

13. 13
3.2. Skills mismatches are frequent
0
5
10
15
20
25
30
35
40
45
Men Women Full-time Part-time Permanent Temporary
All youth Gender Full- or part-time Type of contract
% Underqualified Overqualified
Percentage of employed youth who are either over- or under-qualified for
their jobs

14. 14
3.3. Informality and envelope wages are
frequent among youthHungary
Lithuania
Latvia
Estonia
CzechRepublic
Greece
Netherlands
UnitedKingdom
Slovenia
Luxembourg
OECD
Spain
Finland
Portugal
SlovakRepublic
Poland
Austria
France
Germany
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Percentage of employed youth who receives envelope wages
… Foregone tax revenues for the state budget
… Weaker income protection for youth in case of job loss
… More uncertainty for employers

15. Only one in twelve employed youth work under temporary
contract in Lithuania..
compared to around one in three across OECD and
European countries.
15
3.4. Youth rarely work under temporary
contracts

16. Only one in seven employed youth work part-time in
Lithuania..
compared to around one in five across OECD and
European countries.
16
3.5. Youth rarely work part-time

17. 4. POLICY OPTIONS AND
KEY RECOMMENDATIONS
17

18. 4. Policy Options and Key Recommendations
Reduce non-wages costs to employers to stimulate youth
(formal) hiring
Introduce a differentiated minimum wage structure to
reflect lower productivity of young workers
Relax employment protection legislation, but strengthen
enforcement and compliance
Provide more adequate income support (subject to strict
mutual obligations)
Expand ALMPs which are cost-effective

19. 19
4.1. Reduce non-wage costs to employers
to stimulate youth (formal) hiringCzechRepublic
Estonia
France
Italy
Sweden
SlovakRepublic
Lithuania
Spain
Austria
Hungary
Belgium
Greece
Portugal
Finland
Germany
Turkey
Poland
OECD
Slovenia
Japan
Mexico
Norway
Luxembourg
Canada
US
Ireland
Koreas
Netherlands
UK
Iceland
Switzerland
Australia
Israel
0
5
10
15
20
25
30
%
Employers’ social security contributions
(for low-wage earners)
Percentage of labour costs

20. 20
4.2. Introduce a differentiated minimum wage structure
to reflect lower productivity of young workers
0
10
20
30
40
50
60
70
80
90
100
Turkey
Chile
France
Slovenia
NewZealand
Israel
Portugal
Australia
Hungary
Lithuania
Belgium
Poland
Latvia
Ireland
Germany(estimate)
Netherlands
UK
SlovakRepublic
Greece
Canada
Luxembourg
Spain
Korea
Japan
Estonia
UnitedStates
Mexico
CzechRepublic
%
MW/Median MW/Average
Minimum wages as percentage of median and average wages

21. 21
4.3. Relax employment protection legislation,
but strengthen enforcement and compliance
Lithuania
OECD
0
1
2
3
4
5
6
Temporary
Lithuania
OECD
0
0.5
1
1.5
2
2.5
3
Scale 0-6
///
Regular
Strictness of Employment Protection Legislation

22. 22
4.4. Provide more adequate income support
(subject to strict mutual obligations)
* Data refers to people previously earning 67% of average wages
18months
10months
6months
10months
55%ofprevious
earnings
64%ofprevious
earnings
0
10
20
30
40
50
60
70
0
2
4
6
8
10
12
14
16
18
20
LTU OECD LTU OECD LTU OECD
Minimum contribution period Maximum duration Net replacement rate (right-scale)
% of previous earningsMonths
Unemployment benefits

23. 23
4.5. Expand ALMPs which are cost
effective
Four out of five Lithuanian unemployed youth register with PES
OECD
Lithuania
0
5
10
15
20
25
%
OECD
Lithuania
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
%
Youth participation to ALMPs
Percentage of youth labour force
Spending on ALMPs
Percentage of GDP
But participation to and spending on ALMPs remains low

24. 24
Contacts: alessandro.goglio@oecd.org, alessia.forti@oecd.org, anton.nivorozhkin@oecd.org
Access the Lithuanian review online: Investing in Youth – Lithuania
More recent work on the youth policies: www.oecd.org/employment/action-plan-youth.htm
OECD Directorate for Employment, Labour and Social Affairs: www.oecd.org/els
In It Together: Why less Inequality benefits All: www.oecd.org/social/inequality-and-poverty.htm
Society at a Glance 2014: www.oecd.org/social/societyataglance.htm
Pensions at a Glance 2015: www.oecd.org/pensions/pensionsataglance.htm
Thank you
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