Lithuanian labour market trends of 2016.

Review and the short-term prospects

LITHUANIAN LABOUR EXCHANGE UNDER THE MINISTRY OF SOCIAL SECURITY AND LABOUR

Foreword

I am pleased to introduce the Review of Lithuanian labour market

trends of 2016 and insights for the short-term prospects. The study is

carried out by analysing data not only from Lithuanian Labour

Exchange database, but also from the national and international

sources of information and data from the major Internet sites of job

advertisements. Therefore, we can present a comprehensive

assessment of the situation in the labour market.

The review covers the data about the most demanded employees

and competencies, the forecast for long-term supply and demand

and factors that will shape the employment structure in the future.

Unemployment trends and structure, trends of employment of

foreigners and youth unemployment are also presented in the

Review.

The good news is that moderate positive trends in the labour market will remain in the

nearest future which is beneficial for already employed and jobseekers. Employment rate

in 2016 was the highest in the last 15 years according to the preliminary data.

The analysis of critical occupations reveals a qualitative imbalance of supply and

demand. In 2016, the greatest difficulties for employers arose in finding managers,

customer information staff, long-distance drivers, ICT specialists and engineers.

I would like to note that unemployment rate of women and youth were most decreasing

in 2016. The women unemployment rate decreased from 8.5% to 7.9% and youth

unemployment decreased from 5.3% to 4.7%.

Ligita Valalytė

Director of Lithuanian Labour Exchange under the Ministry of Social Security and Labour

Trends in the labour market

Lithuanian labour market has recovered from the economic crisis and there are positive trends

in the nearest future. Employment rate in 2016 was the highest in the last 15 years, according to

preliminary data. Unemployment rate was steadily decreasing and is likely to get lower in 2017.

Labour demand is likely to be slightly growing while the main obstacles are stagnating export

markets and low volume of investment (compared to pre-crisis level). Despite the high level of

activities, the labour supply will continue to decline mostly because of the emigration. Since

2007, labour force has shrunk by 50.2 thousand of people.

The most of new job vacancies were created in service and construction sectors. Employment

in agricultural sector was shrinking, while there was a growth in industry without creating many

vacancies as a consequence of successful technological modernization. The share of

executives and professionals was increasing in the employment structure led by the growth of

the knowledge-intensive service sectors. The growth in labour-intensive (accommodation, food

sectors, etc.) services and construction sectors, on the other hand, increased the share of

employees in service sector and unqualified employees. The growth of a minimum wage could

have also had an impact on the bigger labour force supply.

3

Lithuanian

labour market

recovered

after a deep

economic

crisis, positive

moderate

trends in the

nearest future

are expected

Service and

construction

sectors

created most

new job

vacancies in

the last years

There is no significant imbalance in the Lithuanian labour market. It occurs when

there is a high unemployment level and a big share of job vacancies in the state,

indicating that competencies of jobseekers do not comply with the demands of

employers. In Lithuania, we had a decreasing unemployment level together with

the growth of job vacancies during the recent years. The country is in a better

position on this indicator compared to an average of EU, where the level of

unemployment and job vacancies is higher.

The wages have been increasing steadily in the past years and it is likely that this trend will

continue in the nearest future. Since 2012, a rapid wage growth was seen in the service

sector where it is lower than the average. This resulted from a minimum wage growth and

shortage of jobseekers willing to perform such work. The slowest average wage growth was in

state-funded sectors like education, public administration, health security and social work

sectors. The highest average wage in Q3 of 2016 was in finance, insurance and information

and communications sectors.

There is no

significant

imbalance of

labour market

The wages

have been

increasing

steadily in the

past years

and it is likely

this trend will

continue in

the nearest

future

4

Regional differences remain. Employment in Vilnius, Kaunas, Klaipėda and surrounding areas

was consistently increasing since 2012 and only 6-7% of all working age population was seeking

for jobs in 2016. Particularly good results were achieved by small municipalities like Neringa

and Birštonas where number of employed doubled in 2012–2015. On the other hand, in the

border municipalities of southwest and northern Lithuania, the crisis effects remain. The

unemployment rate decreased slower than average in Lithuania and still remains higher than

10%. In 2016, the unemployment rate in Lazdijai, Ignalina, Akmenė municipalities was registered

higher than 15%. In addition, the number of occupied citizens in border regions is consistently

decreasing. Between 2012 and 2015 the number of occupied citizens decreased by more than

3 thousand in Alytus district and Šilutė district municipalities, which is more than 25% of the total

number of occupied citizens.

5

Regional

differences

remain

Bottleneck jobs and what skills are we lacking the most

Lithuanian Public Employment Service - Lithuanian Labour Exchange (LLE) data indicates,

that there are many bottleneck job vacancies exceeding the amount of jobseekers by a few

times. During the period of eleven months of 2016, the demand for long-distance drivers was

10 times bigger than the supply. The main reasons for the lack of staff are emigration,

discrepancy between labour market needs and vocational training and retraining,

unsatisfactory working conditions and job wage.

The analysis of critical occupations reveals a qualitative imbalance of supply and demand

showing the occupations where employers face the biggest challenges to find suitable

candidate. This is determined by the lack of suitable candidates, and applicants not meeting

the required skills/experiences. European Commission agency CEDEFOP has carried out a

study of priority mismatch occupations1 and identified occupations where now and in the

near future, employers will meet the greatest difficulties in recruiting staff.

Critical occupations Employee shortage cause

Programmers, ICT professionals,

finance and math specialists:

Software and application

developers and analysts (ISCO 251);

Database specialists and systems

administrators (ISCO 252);

Information and communications

technology service managers (ISCO

133); Financial and mathematical

associate professionals (ISCO 331).

The rapidly growing demand led to Lithuania's success in

attracting foreign direct investments to the financial and ICT

service centres and to creation of start-ups. Higher

education institutions have accepted a larger number of

students in particular study programmes during recent

years, but there is a 4 year gap before they graduate.

Engineers: Engineering professionals

(ISCO 214); Electrotechnology

engineers (ISCO 215).

A demand for engineers is determined by ongoing industrial

modernization and development. Although the number of

students in higher education institutions has increased,

engineering programs are struggling to attract the most

talented graduates who seek careers in engineering.

Therefore, business has certain difficulties in recruiting

motivated graduates who not only have good technical,

but also the general (foreign languages, management skills)

competences.

1 http://euskillspanorama.cedefop.europa.eu/en/analytical_highligths/lithuania-mismatch-priority-occupations

6

LLE data

indicates

that there

are many

bottleneck

vacancies

a few times

exceeding

the amount

of

jobseekers

The analysis

of critical

occupations

reveals a

qualitative

imbalance

of supply

and

demand

Source: European Commission Agency CEDEFOP 2016 m. study data.2

The analysis of job advertisements in the seven biggest Lithuanian Internet sites3 for jobseekers

also reveals similar trends. In the second half of 2016, the greatest difficulties arose in finding

managers, customer information staff, drivers, ICT specialists and engineers - more than 40 % of

these occupations job ads have been published for more than 30 days.

The issue of job vacancies is usually the lack of experience and skills of candidates. The most

demanded occupations require higher (tertiary) education, knowledge of the English language

and 2 years of experience. Requirements in job ads for ICT specialists usually are the knowledge

and skills in Java, PHP programming languages. In many ads, applicants have to know foreign

languages – English (83%), Russian (43%), less frequently German (7.8%) and Polish (4.1%).

What employees are employers looking for?

Occupations Education required Foreign languages Experience

Company, institutional and

organization managers Higher (80 %) English (90 %)

5 years (32 %);

1 year (26 %)

Manufacturing, mining, construction

and distribution managers Higher (76 %) English (79 %)

2 years (29 %);

3 years (26%)

Sales, marketing and development

managers Higher (93%) English (94%)

5 years (35%);

2 years (35%)

Sources: Vacancy Analytics data (1 May – 31 November, 2016).

2 http://skillspanorama.cedefop.europa.eu/en/analytical_highligths/lithuania-mismatch-priority-occupations 3 Internet sites: alio.lt, cvbankas.lt, cv.lt, cvmarket.lt, cvonline.lt, LLE database and manodarbas.lt.

Managers: Sales, marketing & development

managers (ISCO 122); Managing directors and chief

executives (ISCO 112); Manufacturing, mining,

construction, and distribution managers (ISCO 132);

Retail and wholesale trade managers (ISCO 142).

Even though the labour market offers a lot of

vacancies for management and similar

programme graduates, business still lacks

professional experienced managers. This gap

cannot be filled by a large number of

management graduates, nor by experienced,

but earlier graduated or self-educated workers.

Greatest

difficulties

arose in finding

managers,

customer

information

staff, drivers,

ICT specialists

and engineers

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Note: The percentage indicates what part of the job ads had specific requirements, compared to all ads, where the requirements were

announced (e.g., the number of ads with foreign language requirement, where English language was indicated)

Retail and wholesale trade

managers Higher (54 %) English (80 %) 2 years (70 %)

Engineering professionals Higher (77 %) English (91 %) 1 year (40 %);

2 years (31 %)

Electrical technology engineers Higher (58 %) English (100 %) 1 year (35 %);

2 years (29 %)

Software and application

developers and analysts Higher (89 %) English (90 %)

5 years (40 %);

2 years (36 %)

Database and network

professionals Higher (77 %) English (86 %) 1 year (50 %)

Information technology and

comm. services managers Higher (100 %) English (100 %) -

Junior finance and math

specialists Higher (65 %) English (100 %) 2 years (56%)

Client information specialists Higher (47 %) English (64 %) 1 year (43 %);

2 years (40 %)

Heavy truck and bus drivers Gen. w. prof. q. (34 %);

Primary (24 %)

Russian (58 %)

English (55 %) 1 year (57 %)

Programmes

usually

required in job

ads for

programme

software

developers

and analysts

are Java, PHP

and .NET

Forecast for long-term demand and supply There are three factors that will shape the employment structure in Lithuania in a long-term

perspective.

Technological change. Automation, ICT systems implementation etc. trends will lead to: a) a

further decline in demand for lower-skilled workers; b) increase in demand for higher-skilled

workers able to create, manage and service complex technology needs; c) most valued

employees will be the ones who have the technical knowledge and skills as well as good

general competences – researcher, developer, communication, emotional intelligence, and so

on, all of which in the future will not be delivered by machines yet. The technological

modernization of industry will determine the growth without creating job vacancies: although

the industrial added value in Lithuania is likely to continue to grow, it does not lead to increased

demand for employees. Technological modernization will affect service sectors dominated by

routine work – logistics and transport, trade etc., by automation of routine jobs (e.g. driving the

vehicles). Hence, the need for such employees will decrease, whilst increasing the demand for

professionals able to create and manage complex systems.

Demographic change. Ageing Lithuanian and West Europe population will increase the

demand for health care, palliative care and social work specialists. It is likely that Lithuania will

face the lack of such workers not because of small number of vocational training, but because

of wage differences between Lithuania and West European countries leading to emigration.

International trade flows and location of Lithuanian economy in the international value-added

chains. Lithuania's economy is small and open, and participation in the international exchange

of goods and services has a significant impact on the economic structure and demands for

employees. Under the optimistic scenario, the global trade volume will not decrease in the

future and Lithuanian companies will continue to successfully foster an increasingly high added

value in the global supply chains, e.g. it will produce more and higher value-added products

and will be acting not only in manufacturing but also in creating and developing new products

and brands; high-value added service centres will be established in Lithuania. This would lead to

the demand for employees with higher competencies and the increase of wages and it would

foster re-emigration and immigration. On the other hand, there are more and more signs that

show that the volume of the international trade can decrease in the future and its directions can

change. This illustrates the increasing part of West Europe voters opposed to the free trade,

Brexit and emerging disintegration tendencies in the EU. However, if the disintegration

tendencies will occur, it will have a significantly negative impact on Lithuania's economic

growth prospects, unemployment and wages, and will affect the change of economic

structure.

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Three factors

shaping the

employment

structure in

Lithuania in the

long-term

perspective:

technological

change,

demographic

change and

international

trade change

Source: European Commission agency CEDEFOP forecast

Labour market segments

Unemployment trends and structure

In 2016, the rate of registered unemployment decreased by 0.5%. Most decreases were in

women and youth groups. Women unemployment decreased from 8.5% to 7.9% and the

youth unemployed from 5.3% to 4.7%.

LLE supported employment for 312.8 thousand of jobseekers in 2016: we helped to employ

172 thousand of people, 85.4 thousand started working with business license. 55.4 thousand of

jobseekers participated in the Active Labour Market Policies measures, every third took

vocational and educational training and gained occupations and competencies more

demanded in the labour market.

The time required to employ a jobseeker depends on a region. Jobseekers are faster

employed in cities and surrounding areas and the slowest employability is in municipalities in

the northeast and southwest of Lithuania. The long-term unemployment was also increasing in

those districts since 2012. It indicates that the border municipalities are still suffering from the

last economic crisis, situation here remains poor and with a shallow labour market, further

economic and social development prospects are undermined in these municipalities.

Map of municipalities showing average

unemployment duration in 2015

Long-term unemployment changes (%) in

municipalities in 2012-2015

Source: LLE data.

A typical unemployed person is usually a man aged 45-54 with secondary education and is

living in the border areas. The type of long-term unemployed person is similar with an

exception of gender – women more often become long-term unemployed than men. This

illustrates that unemployment is geographically concentrated and can be characterized to

specific social groups. This denies the popular myth that higher educational institutions

educate clients for LLE. On the contrary – people with higher education have least chances

to become unemployed compared with those having other levels of education. In 2016,

local offices have offered 600.4 thousand job offers for the jobseekers. 36.1 thousand

jobseekers have rejected the proposals because of unsatisfactory wages and work

conditions and 11.7 thousand did not show up to employer or return to labour exchange

office.

Jobseekers are

faster

employed in

cities and

surrounding

areas, the

slowest

employability is

in

municipalities

in the northeast

and southwest

of Lithuania

10

Typical

unemployed is

usually a man

aged 45-54

with secondary

education

living in the

border areas

Unemployed rate by age Long-term unemployed rate by age

Unemployed rate by level of education Long-term unemployed rate by level of education

Source: LLE data, 2015.

Trends of employment of foreigners

The number of work permits issued to non EU citizens has been constantly increasing since the

end of economic crisis and in Q3 2016 reached 14.5 thousand. The majority permits (90%) were

issued to drivers of international freight vehicles. This resulted from labour market demand for

such employees – between January and November of 2016, the number of vacancies was 12

times bigger than jobseekers willing to perform this job. The other popular occupations that

lacked employees in the labour market and third countries citizens have been employed were

welders (349 work permits issued) and assemblers of metal hull for ships (305 work permits

issued). High-skilled occupations were not among top 10 that received work permits. The

majority of all employed were citizens of Ukraine (58%) and Belarus (32%).

16-24

25-34

35-44

45-54

55+

The number of

work permits

issued to non

EU citizens has

been

constantly

increasing and

in Q3 2016

reached 14.5

thousand

11

Unemployment of graduates

Graduates4 account for 3.8% of all registered unemployed in LLE in the first half of 2016. The

majority of graduates register in July, right after gaining the qualification. The number of

graduates registered in local offices dropped almost three times over the last five years.

Given the fact that the majority of those who register continue later with their education or

find work quite quickly, it can be concluded that unemployment of graduates is not a

systemic problem in Lithuania.

Graduates registered in LLE July 2012 – 2016.

Source: LLE data

4Graduate person in this context is a person who graduated a higher school, university or received vocational training and

qualification in the last 12 months or less.

7210

7385

5118

4027

2631

2000

3000

4000

5000

6000

7000

2012 2013 2014 2015 2016

The number of

graduates

registered in

local offices

dropped

almost three

times over the

last five years

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LITHUANIAN LABOUR EXCHANGE UNDER THE MINISTRY OF SOCIAL SECURITY AND LABOUR