OECD Secretary General calls for boosting productivity in Lithuania

Lithuania needs to boost its productivity in order to stay on a clear path towards advanced economy which brings benefits for all citizens, Angel Gurria, OECD Secretary-General said in Vilnius on Tuesday.

Together with Lithuania's prime minister Algirdas Butkevicius, he presented the first-ever OECD Economic Assessment of Lithuania.

"Productivity, productivity, productivity - this is what you need to boost because growth of labour productivity has been weak in Lithuania, therefore, you should catch up with leaders," Gurria was quoted as saying by local media.

"The good news is that you are in a good company," he added and promised that Lithuania will be "soon accepted" into the "house of the best practices", OECD.

The OECD report finds that labour productivity in Lithuania grew by 5 percent on average in a period from 1995 to 2014, one third below the OECD average.

OECD Secretary-General admitted that Lithuania has made remarkable economic and social progress over the past 25 years and showed robust resilience to external shocks. Deft management of the post-crisis economy delivered strong growth, declining unemployment and improving public finances, Gurria said.

"Despite these considerable achievements, further reforms will be needed to bring about a more productive and more inclusive economy for the benefit of all Lithuanians," he noted.

Gurria pointed out the need for more flexible labour market in Lithuania and called for more inclusive society, notably for low-skilled workers and the unemployed.

"You should work more with low-skilled people, given that every third company in your country points to the lack of such workers," he said.

Lithuania's OECD accession process was launched in April 2015. In July 2015, the OECD adopted a roadmap for Lithuania's accession. The process aims to contribute to implementation of reforms that will help Lithuania to continue modernizing its economy while improving living standards.

OECD Assessment identifies a few challenges that must still be overcome to bring about further convergence of living standards for all citizens with other advanced economies.

Among the priority reforms for Lithuania to implement, OECD mentioned improving the education system, enhancing the governance of state-owned enterprises, promoting of innovation, also reducing informal economy which would improve tax collection.

The report welcomes the "New Social Model" reform package by Lithuanian government which includes all main reforms of labour market and social system. However, it is not clear if the Seimas, Lithuanian parliament, will start to discuss the package during this spring session.

According to the OECD report, reforms for bringing about a stronger economy go hand-in-hand with efforts to reduce poverty, which currently affects one in five Lithuanians.

The OECD also called Lithuanian government to promote healthy lifestyles and pay more attention to primary health care system.

There is no set timeline or end date for the accession process, and progress made ultimately depends on Lithuania's response to recommendations made by the OECD.

Among the three Baltic States, Estonia is already a member of the organization, while Latvia is also in accession process. Endit