Promoting Active Ageing in Lithuania

2. Promoting employment opportunities and lifelong learning of older citizens

2.1. Rapid population ageing and the shrinking of the workforce requires prolonging working lives and rethinking lifelong learning policies

Giving people better employment opportunities at older ages will be necessary to address challenges posed by demographic change, reduce existing labour market tensions and maintain high living standards. Thanks to reforms to retirement ages, and better educated and healthier cohorts entering into older age, the employment rate of older Lithuanians has improved markedly over the past decade (Figure 2.1, Panel A). At 68%, the employment rate of older workers aged 55‑64 in 2021 stood above the EU27 average of 61%. Employment of older people also proved to be resilient in the face of the sharp economic contraction that occurred in 2020 as a result of the COVID‑19 pandemic (Zitikytė, 2022[8]).

Despite this progress, large inequalities in employment remain, by gender, skills, region, and there is substantial scope to further harness the talent of older people. Lithuania’s older citizens have one of the largest inequalities in employment by educational attainment in the EU. Those with tertiary degrees have employment rates of 81%, whereas those with the lowest degrees only reach 47% of employment rates (Figure 2.1, Panel B). The gap between these two groups is on average smaller (32 percentage points) at the EU level.

Figure 2.1. Employment outcomes for older people have improved but are still very unequal

Note: EU27 and OECD are weighted averages in Panel A and unweighted in Panel B. Low skilled refers to below upper secondary education, medium skilled to upper secondary or post-secondary non-tertiary education and high skilled to tertiary education (based on ISCED 2011).

Source: OECD dataset LFS by sex and age – indicators http://stats.oecd.org//Index.aspx?QueryId=54218 (Panel A), OECD dataset Educational attainment and labour force https://stats.oecd.org/Index.aspx?QueryId=93189 and Eurostat dataset Employment rates by sex, age and educational attainment level for the EU27 (Panel B).

Unemployment, especially long-term unemployment, presents a unique challenge for Lithuania’s older and unskilled citizens, with rates exceeding EU averages and distinct disparities based on age, education, and geography. Compared to the EU average, unemployment among older people is higher (8.2% vs 5.5% in 2021, (OECD, Forthcoming[9]). Long-term unemployment (12 months and over) among the elders is particularly concerning (Figure 2.2). Nearly half of the 55‑64 unemployed are out of work for over a year (Figure 2.2, Panel C). Older citizens are now much more likely than younger ones to be in long-term unemployment whereas this was not the case 20 years ago. Among those with lower educational attainment, the likelihood of being unemployed increases significantly with age (Figure 2.2, Panel A). Geographical inequalities are also stark: the unemployment rates are particularly higher for the older people in more rural districts (Figure 2.2, Panel B).

Lithuania is experiencing significant labour shortages that have further been exacerbated by the COVID‑19 crisis, like in many other OECD countries. This issue underscores the importance of enhancing the employment rate of older workers. As the population shrinks and job vacancy rates rise – a trend that has almost doubled since 2015 (OECD, Forthcoming[9]) – the inclusion of older workers in the labour market is increasingly critical.

Figure 2.2. Older Lithuanians struggle to find new jobs and prospects

Note: Low skill corresponds to less than upper secondary; Middle skill to upper secondary and post-secondary non-tertiary; and High skill to tertiary education. Long-term unemployment is unemployed for more than 12 months. OECD is a weighted average.

Source: Panels A and B, Lithuanian Labour Force Survey, 2020. Panel C: OECD dataset Incidence of unemployment by duration http://dotstat.oecd.org//Index.aspx?QueryId=9594.

Many older Lithuanians face multiple barriers including poor health and lack of the right skills that prevent them to keep their current jobs and finding new ones. Age discrimination and prejudice are also major obstacles that hinder their successfully employment in good quality and productive jobs. Compared to other EU countries, older workers in Lithuania have limited opportunities to take part in lifelong learning which not only hurts their chances in the labour market but also limits their participation social, public, and political life. Tackling these barriers requires a broad and integrated approach involving all key stakeholders.

2.2. Retaining and attracting older workers

Effectively retaining skills and talents of older individuals has a number of advantages for both employers and workers. For employers, low job turnover of older workers can be beneficial in particular, if they have accumulated firm-specific human capital and improve the know-how transfer to the younger generation of workers. Retaining older workers can also reduce costs for older workers because when they lose their job, finding a new one is uncertain, lengthy, and difficult, as evidenced by their high unemployment rates. Unfortunately, the retention rate for older workers is the 17th lowest of OECD countries and the lowest among the neighbouring countries (Figure 2.3, Panel A). Retaining and attracting older workers will require a combined action on four fronts that make it difficult for older Lithuanians to access and hold on to good quality jobs.

First, prejudices against older workers are highly prevalent among Lithuanian employers. Older Lithuanians report feeling unrecognised at their workplace more than their EU counterparts (OECD, Forthcoming[9]). Reports of age discrimination are among the highest in Europe. Evidence suggests that age discrimination not only hurts employees, but also firms as it reduces their pool of potential workers and thereby results in lower productivity and efficiency. The country currently does too little to raise awareness about the potential of older workers and to eradicate negative perceptions and stereotypes. Many countries have successfully implemented awareness campaigns to eliminate age discrimination. An interesting example is the case of the Netherlands where two public awareness campaigns were launched featuring an ex-soccer player to reduce the negative stereotypes among employers and encourage them to hire older workers. Anti‑age discrimination laws are powerful if victims themselves are aware of their rights. In this regard, Belgium disseminated information via banners and posters on the illegal nature of discrimination based on age and encouraged victims of discrimination to report their experience.

Second, there is a scarcity of flexible‑time arrangements for older workers. Starting in their 50s, people often face increased responsibilities for caring for older family members. Older workers often need flexible time arrangements to combine care responsibilities with work, or to improve their work-life balance to prevent and reconcile with health issues. Two obstacles to flexible time arrangements exist in Lithuania. First, employers are usually reluctant to provide flexibility. Second, reducing the number of hours often causes a reduction in further pension benefits which are already relatively low. Tackling these two obstacles through policies should be considered. Additionally, phased-retirement schemes are limited in Lithuania (i.e. transitioning to retirement via reductions in working time), whereas they would allow older workers to reduce their working time to gradually retire.

Third, mandatory retirement ages in the public sector are still low. They force into retirement workers that could continue to work, imposing an end to a working relationship that is potentially beneficial for both the employer and the employee. These rules can possibly also cause discrimination as senior workers could be seen as less capable due to their age. Acknowledging these shortcomings, the government raised the ceiling of those age limits in a 2016 reform. Some age ceilings remain relatively low compared to the general retirement age, as evidenced by the mandatory retirement at 55 years of age for officers at the primary level in the internal service.

Figure 2.3. Many older Lithuanians struggle to hold onto their jobs

Note: The retention rate is defined as all employees currently aged 60‑64 with job tenure of five years or more as a percentage of all employees aged 55‑59 5‑years previously. The hiring rate is defined as employees aged 55‑64 with job tenure of less than one year as a percentage of total employees. EU27 and OECD are unweighted averages. In Panel A, the OECD excludes Columbia and Israel (both years) as well as Chile, Costa Rica, New Zealand and Türkiye in 2010. In Panel B, OECD excludes Israel (both years) and New Zealand in 2010.

Source: OECD Older Worker Scoreboard 2021, https://www.oecd.org/employment/ageingandemploymentpolicies.htm.

Finally, age‑management practices are seldom used by Lithuanian employers, despite evidence of their success for improving human resource use. Firms who do not have age‑diverse workforces miss on these complementarities and do not reach their productivity potential. Age‑management practices include i) establishing training and development programmes for workers of all ages; ii) establishing age‑diverse teams to ensure know-how transmission and complementarity of workers; and finally, iii) flexible work arrangement and inclusive HR practices to accommodate work life with health and family obligations. A successful example of flexible work arrangements is Norway’s inclusive workplace agreements (IWA). This age management strategy is designed through a tri-partite collective agreement done at the sectoral level between employees, employers, and the government. The objectives of this IWA include reductions in sick leave, increased employment of people with reduced functional ability and delaying retirement. Consultancy services in age‑management are provided to or arranged for SMEs in various European countries since the early 2000s.

2.3. Improving job quality and health at work

Ensuring older persons are healthy is a crucial factor for longer and productive working careers. Evidence suggests that there is a strong link between working conditions, health and productivity. Unfortunately, the prevalence of poor health and low job quality among older workers is very high in Lithuania. Compared to the rest of EU countries, Lithuania ranks high in the incidence of older persons reporting health problems, and in the share of older workers reporting that work negatively affects their health. Nearly half of the workers aged 50 and older complain about work having a negative effect on health, whereas this percentage is only one in four on average in the EU (Figure 2.4). This gap is much smaller in younger cohorts.

Figure 2.4. A greater number of Lithuanians report health problems

Source: European Working Conditions Survey – Data visualisation, https://www.eurofound.europa.eu/data/european-working-conditions-survey.

Older workers also report to have high levels of job strain, compared to the young and compared to the EU average (OECD, Forthcoming[9]). Night and shift work are more prevalent in older workers than in the younger ones, whereas the opposite is observed on average in the EU. Older workers often do jobs requiring simple tasks, which suggests they may not be making full use of the experience and competencies acquired over the years.

Overall, lack of labour inspectors, coupled with little awareness of good health practices at work, paints a picture of a working environment not welcoming for older workers. Inspections in Lithuania are more often focused on finding undeclared workers, and less on improving or controlling health and safety standards. Evidence suggests that non-compliance with health and safety can be high, especially among Small and Medium Enterprises (SMEs). Improving the health and safety environment at work can be an effective way to prevent health issues and sickness for older workers.

A joint approach by different key stakeholders is required to improve preventive health measures at the workplace. Such an approach can be facilitated through a national dialogue of stakeholders, to create a national level strategy. One practical recommendation is to set up mobile health services to examine workers’ health and raise awareness on the benefits of investing in physical and mental health. The provision of mobile health services will provide additional means to identify and address health risks at work at work allow and fill in existing gaps information gaps for employers and workers in remote areas. At the same time, labour inspectors should be given additional training and resources to help, inform and raise awareness about good health practices at work. This initiative will help create a culture of health and safety in the workplace, with the aim of promoting a more positive working environment for all workers.

2.4. Promoting lifelong learning

Access to training is highly unequal and few older people participate in learning activities in Lithuania. The overall participation rate in training is considerably lower than the OECD average (27% vs 39%). The gap in training participation between younger and older people is one of the largest in the EU, as less than 18% of older adults participate in training (whether formal or non-formal job-related training). Training is unequally used. It is more frequent for the highly educated, younger, high income, and those working in large firms (Figure 2.5).

Figure 2.5. Access to training is low and targeted to the young and already skilled

Note: Participation in formal and non-formal training refers to the 12‑month period before the interview.

Source: Survey of Adult Skills (PIAAC), https://www.oecd.org/skills/piaac/.

There are significant barriers to training older people and to engage them in learning. The motivation for training is lower among older persons, who report more difficulties identifying their skills needs and perceive training to be less useful. Best practices from other countries show that career guidance can prove to be a valuable tool to motivate workers engage further in training. Unfortunately, career guidance services for older workers in Lithuania are under-developed and where available, few older people use career guidance and counselling. SMEs have little to no financial help to reskill their workforce, thus making it difficult to invest in training older workers, let alone identifying their training needs. To enhance the effectiveness and adoption of career guidance, Belgium and France established a practice of a thorough skills assessment organised by the PES. This assessment consists of an in-depth skills profiling of the individual and is available to all persons employed or unemployed.

This age gap in training matters, as the skills of older workers lag those of younger ones, who are on par with OECD standards. Compared to the 25‑34 year‑olds and to their European older peers, older people in Lithuania score relatively low in basic and digital skills. Given the large share of jobs that are at risk of automation in Lithuania, increasing the take‑up of training seems particularly relevant as a tool to keep older workers employable and make them possible to work longer. It is necessary to create an environment where older people can reskill and upskill throughout their lives.

Non-formal adult education and training is insufficiently recognised in the country, despite the importance of third age universities. Recognising learning outcomes can be encouraged by certifying non-formal education and training and recognising non-formal and informal learning in national qualification frameworks. This recognition of prior learning (RPL) can also mean adults are able to reengage with formal learning by limiting the amount of time required to complete a qualification, which helps to overcome time‑related barriers to participation in training for individuals.

2.5. Bringing older people back to work

Bringing older people back into work will be an important challenge that Lithuania needs to tackle in the near term, especially for the lower skilled and inactive i.e. those not employed and not looking for work. Compared to their European peers and to the youth, older Lithuanians have longer unemployment spells and are more likely to be discouraged from searching for work. Older people (aged 50 and over) account for about 40% of the total unemployed population, a level that has been rising in the last 10 years. Unemployment is particularly acute among low-skilled older citizens, for whom it reaches levels above 30% for both genders. Older unemployed individuals are also much more likely to be unhappy about their situation. Older unemployed are 12 percentage points more likely to be sad or depressed compared to their employed peers.

The discouragement and low motivation of older citizens from seeking work can be addressed through a mix of policies involving ALMP, better usage of public employment services (PES) as well as targeted and time‑limited employment subsidies. One particularly successful measure that has been implemented in the Netherlands is the called Inspiration days, which are large events resembling jobs fairs and organised by municipalities, local PES and employers. During these events, older and less skilled job seekers participate in activities designed to restore confidence and increase their awareness of their own skills and provide opportunities for job-matching with employers.

Although in Lithuania PES are highly used to search for work, low funding limits their capacity to offer individualised counselling for older workers and those with health limitations. Spending on ALMPs in Lithuania in 2020 as a percentage of GDP was 0.36%, a quarter less than the OECD average of 0.48% (Figure 2.6). Spending on active labour market measures per unemployed person as a percentage of GDP in 2019 is well below the EU average. Moreover, supporting older workers with multiple problems requires an integrated approach. Training of PES staff is crucial for improved intermediation services.

Figure 2.6. ALMP Expenditures are low compared to other OECD countries

PES: public employment service. GDP: gross domestic product.

Note: OECD average is an unweighted and excludes Colombia, Costa Rica and Iceland. Employment incentives are net of employment maintenance incentives, to remove as much as possible measures that are specific to COVID‑19. These exceptional measures are estimated for 2021‑22.

Source: EC-OECD Labour Market Policies Database, https://stats.oecd.org/Index.aspx?DataSetCode=LMPEXP; OECD LFS by Sex and Age – Indicators Database, http://stats.oecd.org//Index.aspx?QueryId=54218; Economic Outlook No 112 – November 2022 https://stats.oecd.org/index.aspx?DataSetCode=EO; and the OECD Questionnaire on Policy Responses to the COVID‑19 Crisis (responses from Lithuania).

Support for entrepreneurship is also under-developed. The share of self-employed older people (aged 55‑64) in Lithuania is relatively low and decreasing from 13.9% in 2010 to 5.5% in 2020. The EU and OECD averages for the same period also show a decrease in the share of older people who are self-employed, but the share is almost three to four times higher (17.6% and 21.8% respectively). PES in other OECD countries provide a wide range of tools to support self-employed citizens, or entrepreneurship at older ages. This is partly because self-employment may represent a possibility for the older unemployed to get a job.

Wage subsidies for low-wage earners in Lithuania have recently shown to have positive effects on employment and job retention. A wage subsidy programme was recently evaluated in Lithuania. Jobseekers could apply to this programme, which would subsidise up to 50% of the wages paid by the firm for the jobseeker, for up to six months, conditional on firms committing to keeping the worker for a full year. Three years after the start of the subsidised employment, participants were still 11 percentage points more likely to be employed than non-participants, which shows that the initial subsidy was successful in placing a low-skilled individual in a durable job. Wage subsidies for employing older workers could be effective in overcoming discriminatory practices in recruitment and compensate employers from a temporarily lower productivity of a newly hired older worker. Overall, caution should be taken if implementing wage subsidies to minimise dead weight loss and crowding out, i.e. firms taking the subsidy for their existing older workers without an effect on total employment of older workers.

Box 2.1. Key policy recommendations to promote the employment of older citizens

Key policy recommendations to increase training by workers in their mid- to late careers

• Promote career and vocational guidance, especially for mid-career and older workers.to help them understand the benefits of training as well improve the uptake of learning measures.

• Strengthen the focus on training to basic skills as well as digital skills to promote participation in employment, social and public and political life.

• Consider increasing the subsidies for vocational training and upskilling of workers. Different methods can be used to achieve this objective, such as vouchers to workers, individual learning accounts, subsidies for firm that train workers.

• Broaden the access to career guidance and training for employees in SMEs, as these often need help identifying the needs in terms of skills and training of their workers.

• Setting up mechanisms for validating and recognising skills, including non-formal adult education and training. This measure could facilitate the re‑engagement with formal learning as well.

Key policy recommendations to improve job retention and attract older workers

• Raise awareness for employers about the benefits of working time flexibility for older employees.

• Foster a flexible retirement system: facilitate the choice of phased retirement, i.e. switching from full-time to part-time work at older ages, by smoothing income from work and pensions for different choices of working time.

• Ensure that employment separations are based on competency and fitness rather than on age and eliminate mandatory retirement for all civil servants. This can remove obstacles for older individuals aged 65 and over to re‑enter the workforce.

• Raise awareness about the benefits of employing older workers and address age stereotypes for instance through national campaigns and management training.

• Scale‑up counselling of SMEs on appropriate life cycle human resource management approaches to better manage age diverse workforces.

Key policy recommendations to increase the employment rates of older unemployed and inactive

• Increase the resources of PES to allow for intensive and regular one‑on-one job coaching and mentoring sessions with older workers most in need of counselling. Consider providing digital counselling for older workers and inactive in remote areas with limited access to public transport.

• Strengthen training for PES staff to effectively work with older unemployed with multiple employment barriers.

• Support entrepreneurship of older workers, including self-employment and business start-ups.

• Support upskilling and reskilling of low-skilled older workers and support training measures for older workers to adapt to technological change at the workplace (including through digitalisation).

• Consider expanding the wage subsidy programme to unskilled older workers. Time‑limited financial incentives such as wage subsidies for firms, when they are properly targeted to low-wage older workers, seem to successfully increase employment in Lithuania. To be most effective, the wage subsidies should be well-targeted to older low-skilled workers or people with limiting health conditions. Prepare evaluations of the programme before its implementation, to ensure its effectiveness.

• Organise job fairs and group-counselling session to promote self-esteem, working on expectations, based on the example of the Dutch Inspiration Days. Counselling needs to include an assessment of competencies and aspirations based on work experience.

Key policy recommendations to improve job quality and health-related aspects of jobs for older cohorts

• Expand the mandate of public health bureaus to raise awareness on the benefits of improving health and working conditions at the workplace.

• Make use of local-level mobile health services to examine workers’ health in SMEs, as well as those in remote and rural areas.

• Set-up a national occupational health service advisory line accessible to employers of all ages (e.g. as in the United Kingdom).

• Set up a national level strategy involving key stakeholders to better foster a national dialogue on the link between working conditions, health prevention and productivity. This dialogue could offer room for identifying and showcasing good examples and collective agreements concluded at sector and company level.

• Provide preventative counselling to workers and early in the sickness spell to promote timely return to work.