OECD Economic Surveys: Lithuania 2018

Annex. Progress in structural reforms

This table reviews recent actions taken on recommendations from the previous Surveys. Recommendations that are new to the present Survey are listed in the relevant chapters.

 

KEY RECOMMENDATIONS	ACTIONS TAKEN
FISCAL AND FINANCIAL POLICIES TO SUPPORT THE ECONOMY
Continue fighting tax evasion also beyond the VAT gap and improve spending efficiencies (especially in education and health care areas), to allow medium term fiscal consolidation and finance public spending needs.	“Smart tax administration” has been introduced, and the VAT tax gap reduced from 31% to 26%.
Further shift the tax burden away from labour, especially from employer social security contributions, and raise recurrent taxes on personal immovable property.	Property is now assessed close at market value, and the threshold value for property tax exemption was reduced. Property tax rates were reduced.
Increase taxes on activities that damage the environment	A landfill tax was introduced in 2016 but the rate is low
BOOSTING PRODUCTIVITY
Further increase the role of workplace training and cooperation with employers in the education system, especially in the context of vocational education and training programmes.	The new Labour Code, in effect from July 2017, introduces apprenticeship contracts. These can either entail a training contract with a VET institution; or, include no such a contract. In the latter case the employer has to create the training programme for the whole period of apprenticeship contract. Sectoral professional committees are being renewed in order to ensure better cooperation with employers in the education system and life-long learning; this is facilitated by the revision of professional standards.
Attract higher performing graduates to the teaching profession by paying higher wages and investing in teacher development. Promote participation in pre-primary education.	Attractiveness of the teaching profession is being addressed by reforming teachers’ remuneration and workload calculation system, raising the salary level, and restructuring teachers’ training institutions The number of childcare facilities has been increased, now reaching OECD averages.
Promote new forms of business financing and ensure that innovation policies support young innovative firms. Reform bankruptcy procedures.	A law on crowd-funding was adopted in November 2016. The government established three new venture capital instruments in 2017, with six more funds to be established by 2019. Three new financial instruments for SMEs are to be launched in 2018: short-term export credit guarantees to SMEs exporting their goods to non-EU and non-OECD countries; portfolio guarantees for factoring transactions to provide short-term financing for SMEs; and, crowd-funding loans, which would allow to finance SMEs through crowd-funding platforms. A measure specifically targeted at promotion of commercialization R&D results has been worked out and the first call for proposals announced in June 2017.
PROMOTING INCLUSIVE GROWTH
Improve inclusiveness by providing in-work benefits for low-paid jobs and increasing access to lifelong learning. Lower employer social security contribution on low-skilled workers while maintaining their entitlements.	Recent reforms allow those who find employment to temporarily keep half of their benefits after taking up work in the form of in-work benefits.
Implement the plans in the “New Social Model” to reform labour regulations and temporary income support for the unemployed. Strengthen active labour market programmes and the capacities of public employment services to implement programmes to get people back to work.	Almost all laws of the New Social Model were already in force or went into force on 1 July 2017. The coverage and generosity of unemployment benefits have increased by easing eligibility conditions and rising payment rates. The management of Public Employment Services has been centralised. In addition, a new Law on Employment in July 2017 expands the range of ALMPs and reallocates spending among programmes.
Increase the income support to social assistance recipients while strengthening work incentives	The new Law on Employment provides more opportunities to employ the recipients of cash social assistance through programmes for increasing employment. The work incentives for social benefit recipients were strengthened by permitting those who find employment to keep part of the work income that is not included in a family income establishing person’s (family) right to assistance. The government has initiated the evaluation of ALMP measures, social support and social service compatibility when integrating unemployed into labour market. Its aim is to evaluate ALMP measures, social assistance and social services impact of social assistance recipients and its impact on their motivation to work.
Further promote healthy lifestyles and primary care services especially in rural areas through general practitioners, greater role for nurses and the recently established network of public health bureaus. Increase health sector efficiency and effectiveness of health policy by continuing to merge hospitals and widening the scope for the newly established e-health infrastructure while fully respecting privacy concerns.	The number of staff who provides social services and nursing, including long term care, has doubled within a few years. The number of nursing homes also increased. Merging and restructuring of hospitals is continuing.