Non-inclusive growth increases the emigration challenge in Lithuania

Remarkable economic growth over the past two decades has permitted Lithuania to narrow the national-income gap relative to comparable OECD countries, but the country faces substantical challenges. The demographic situation is very difficult, with Lithuania’s population having declined by more than 1% annually since the early 2000s – mostly a result of large and persistent emigration, driven primarily by low wages and poor working conditions. Income inequality and poverty are very high, as households at the bottom of the distribution have benefited very little from the recent recovery. This highlights the importance of well-functioning labour market institutions that support the continuing economic transformation while providing employment opportunities to all groups and raising job quality. It also creates a pressing need for stronger social policies that effectively reduce high inequalities and boost the living standards of vulnerable groups.