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Demography, income inequality among Lithuania's major challenges: European Commission

Xinhua, February 23, 2017 Adjust font size:

Lithuania is facing major macroeconomic challenges due to negative demographic trends and increasing incomes inequality, European Commission's (EC) representative office in Vilnius said on Wednesday after presenting the new EC report on Lithuania's economy.

"Inequality of incomes in Lithuania is one of the highest in the EU; the poverty rates are high and even higher among the disabled, pensioners, and the unemployed," Marius Vascega, EC representative office's economist, responsible for economy monitoring, was quoted as saying in a press conference on Wednesday by local media.

The EC in its latest report notes that inequality of incomes in Lithuania has been increasing since 2012. According to the EC, it results from high employment gaps between low-skilled and high-skilled workers, strong wage dispersion, the limited progressivity of the tax system and weak social safety nets.

Decreasing number of working age residents is another issue which has not been addressed properly in Lithuania so far, the EC said in the report.

According to the EC, demographic challenges weigh on potential growth. Lithuania's population has been declining since the early 1990s at an accelerating pace. For the past 10 years, it declined on average by 1.3 percent annually due to high net emigration and negative natural growth.

Meanwhile, Arnoldas Pranckevicius, the head of EC office in Vilnius, noted that the latest EC report corresponds with the current Lithuania's government programme, especially in terms of demographic and social issues.

"We can observe that diagnosis made by the EC and priorities of our government coincide in many cases, therefore, we can expect some common attitude towards reaching the goals," Pranckevicius was quoted as saying by local website vz.lt.

Lithuania's GDP expanded by 2.2 percent in 2016, the slowdown compared with the previous years was mostly due to weaker investments during the start of the new EU's financing period. Enditem