This Selected Issues paper examines inflation dynamics over the past five years for Lithuania. A decomposition of inflation into its components provides clues to its main causes. It shows that energy price increases and convergence to European Union (EU)-wide price levels have been important factors driving inflation, but domestic demand pressures—and wage growth, in particular—have also contributed to inflation. The types of possible efficiency gains are illustrated in the context of health care and social assistance. The paper also examines migration and its long-term fiscal implications.

Abstract

This Selected Issues paper examines inflation dynamics over the past five years for Lithuania. A decomposition of inflation into its components provides clues to its main causes. It shows that energy price increases and convergence to European Union (EU)-wide price levels have been important factors driving inflation, but domestic demand pressures—and wage growth, in particular—have also contributed to inflation. The types of possible efficiency gains are illustrated in the context of health care and social assistance. The paper also examines migration and its long-term fiscal implications.

IV. Emigration From Lithuania: Determinants and Implications14

A. Introduction and Overview

68. Emigration has contributed importantly to the steady decline of Lithuania’s population. In 1996, Lithuania’s population was just over 3.6 million people; by 2005, the population was close to 3.4 million (Figure 1). The decline in population reflects some of the same forces, such as natural demographic changes, that have caused populations to stagnate or diminish throughout Europe; in Lithuania, the natural population growth rate turned negative in 1994. But, in addition, international migration has contributed to the decline. There appears to be some correlation between population growth rate and migration in Europe (Figure 2). Thus, Ireland’s population has increased along with the inflow of immigrants. In contrast, Lithuania (and some of its neighbors) have experienced falling populations along with emigration.

Figure 1.
Figure 1.

Lithuania: Total Population and Population Growth Rate, 1996-2005

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Source: Lithuania Statistics Department.
Figure 2.
Figure 2.

Selected European Countries: Population Growth and Migration, 1990-2000

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Sources: IMF; and Eurostat.

69. Following an initial emigration wave of Russian-speaking people, the current emigration is taking place despite improving economic prospects. The massive migration flows in the 1990s accounted for much of the decrease in population, dwarfing the effect of natural population growth rate (Figure 3). In the early 1990s, the Russian-speaking population returned to the Russian Federation and Ukraine. This movement continued, although at a decreasing rate, until the end of the decade. In the first few years of the new millennium, the net outflow seemed to be stabilizing. However, a surge in emigration in 2003 was followed by a further increase in 2004. Interestingly, both years correspond to stronger GDP per capita growth than in the past. Preliminary numbers for 2005 also point to large outflows despite continuing robust growth. In the past two years, migration accounted for over 40 percent of the annual decline in population.

Figure 3.
Figure 3.

Lithuania: Contribution of Migration to Population Decline, 1997-2004

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Source: Lithuania Statistics Department. Notes: Natural population growth rate calculated by subtracting number of deaths from number of births and dividing by annual average population. Migration rate is calculated as number of immigrants minus number of emigrants divided by annual average population.

70. The recent increase in emigration seems to be related to Lithuania’s accession to the European Union (EU). The signing of the acquis communautaire in December 2002 coincides with the migration outflows starting in 2003. Expectations of imminent accession, confirmed at the Athens Summit in April 2003, appear to have boosted migration even before Lithuania joined the EU in May 2004. Initially, of the EU-15 countries, only Ireland, Sweden, and the United Kingdom allowed relatively free access to the new EU members, while the others applied transitional provisions limiting access to their labor markets.15 Recently, Finland, Portugal, and Spain announced that they would lift restrictions by May 2006, and the Accession Treaty requires all such measures to be abandoned by May 2011.16 The removal of legal barriers to the free movement of persons will, undoubtedly, have an additional impact on migration.

71. This chapter estimates the potential for, and implications of, future emigration. Section B presents the findings of a survey on the incentives for leaving Lithuania. Also, drawing on econometric estimates of the determinants of emigration, the emigration potential over the next few decades is estimated. Section C considers the implications for the labor market and public finances. While the repercussions are manifold, including potential benefits from the inflow of remittances and the return of well-trained and experienced professionals, this section focuses on two specific costs of migration: those to the pension and the health care system.

B. Driving Forces and Potential of Migration

72. A recent survey investigates the principal reasons for emigration in the various segments of the Lithuanian population. The survey was carried out by the market analysis and research company Rinkos Analizės ir Tyrimц (RAIT) in August 2005. It covered 1,054 participants, representing the distribution of Lithuanian residents aged between 16 and 74 according to place of residence, income, education level, age, and gender. The respondents were asked to rank the potential reasons for migration. For each of the possible reasons, respondents were asked if they agreed, partially agreed, or did not agree.

73. The strongest reason reported for emigration was dissatisfaction with wages, followed by employment prospects. Over 90 percent of the respondents agreed that low wages were a reason for wanting to migrate, with a mere 0.6 percent disagreeing with the proposition (the others “partially agreed”). Employment prospects came in as the second most important factor for emigration, with almost three-fourths of the respondents agreeing that “unemployment” was a reason for migrating and more than half of the rest partially agreeing with this statement (Table 1).

Table 1.

Lithuania: Main Reasons for Emigration, 2005

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Source: RAIT survey.Totals do not add up to 100 percent due to rounding and no response cases.

74. several potential drivers of emigration are investigated. The goal is to distinguish whether the intensity of the goal of emigrating to secure employment varies across population groups. Thus, in the top half of Table 2, an ordered probit is used to distinguish among those who agree, partially agree, and disagree:

Table 2.

Lithuania: Ordered-Probit Regression Result

Reason for Emigration: Unemploymen

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*, **, and *** denote significance levels at 1 percent, 5 percent, and 10 percent, respectively. Standard errors are displayed in parentheses.
Pr(Agreementwiththereason=k)=α+β0age+β1education+β2employementstatus+γ1income+γ2placeofresidency+γ3maritalstatus+γ4occupation+γ5nationality+γ6gender+ɛ,

where k takes on values 1, 2, or 3, corresponding to “agree,” “partially agree,” and “disagree.”

In the presentation of the results, age is measured in years; education is the level of schooling on a scale of 1 to 5, where the highest level (5) corresponds to university or college diploma; employment status is 0 for those who are employed and 1 for those who are unemployed; income takes the value 0 if the average income per family member is less than or equal to 500 LTL per month and 1 otherwise; place of residency is a dummy with value 1 if the respondent resides in Vilnius and 0 for all other districts; and marital status is 0 for single (never married, divorced, or widowed) and 1 for those with a partner (either married or living together). Occupation is another dummy variable with value 0 for executives, specialists, and white collar employees, and 1 for others. Finally, nationality and gender are also dummy variables that become 0 for Lithuanians and males, respectively.

75. The older, the less educated, and the unemployed see emigration as a valuable means of securing employment opportunities. The coefficient suggests that older respondents were more likely to agree with the proposition that the risk of unemployment in Lithuania was an important consideration in the decision to emigrate. This may reflect the difficulty faced by older workers in finding jobs due to shifts in labor demand toward younger workers better equipped with state-tof-the-art skills. There is some indication that the relationship with age may be nonlinear, with incentives to migrate rising before they eventually begin to fall again; however, these findings are not robust. As may be expected, the more educated/skilled view unemployment as less of a problem. Not surprisingly, the unemployed express more agreement with unemployment being the main reason for emigration. Since being educated and employed is correlated with a person’s income and occupation, the introduction of these additional categories does not add to the distinctions between those seeking or not seeking to migrate. Being non-Lithuanian and being female also appear to be effective in determining the extent people feel about unemployment as a reason to emigrate. Nationality and gender are actually the most significant factors shaping the response to unemployment.17 The results reported in Table 2 remain robust to different constructions of the independent variables, such as defining cohorts based on age and clustering according to income intervals.

76. Low salary levels as a cause of emigration, meanwhile, seem to be widespread across segments of the population. No single variable turns out to be statistically significant: in other words, no particular group feels more strongly than another about low salary levels. The mean and median responses are extremely close across groups, pointing to a consensus about dissatisfaction with salaries as the foremost cause of emigration. Examination of wage levels relative to other European countries reveals that this perception is well-founded (Figure 4). Lithuanian wages are about one-third of the EU-25 average.

Figure 4.
Figure 4.

Selected European Countries: Average Monthly Wages in PPP by Education Level, 2002

(In euros)

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Source: Eurostat.Note: NMS-10 refers to the ten new member states of the EU.

77. What is the potential migration from Lithuania? Given that the two leading causes of emigration are the low level of salaries and the fear of unemployment, forecasts can be obtained based on the projections of GDP per capita and the unemployment rate. Several studies have analyzed the relationship between migration flows and economic and social factors in order to come up with estimates of future migration flows. These studies also generally identify the income and unemployment gap between the origin and host countries as the main economic factors; in addition, the stock of migrants, as proxy for social network effects, and physical and cultural proximity of the two countries are revealed to be important in the determination of bilateral migration flows. For example, Kielyte (2002) uses the following logarithmic specification:

Mt=a0+a1log(1yo/yd)t1+a2log(Ud/Uo)t1+a3log(MS)t1+a4log(D)+ut,

where the migration rate, Mt, calculated as the number of migrants divided by population, depends on 1 -yo/yd , the income gap between the origin and destination countries; Ud/Uo, the unemployment differential; MS, the stock of migrants from the origin country living in the destination country; and D, the distance between the capitals of the origin countries and the destination countries. She uses data on the migration flows from the Baltic countries to the EU during the 1990-2000 period. Table 3 summarizes her results. To obtain estimates of Lithuania’s migration potential, the coefficients reported in Table 3 are applied to projections of income convergence from Eurostat and the World Economic Outlook (WEO) database. Eurostat projections are for the years 2005-07. The WEO database provides projections until 2010. For the years after the projection period, a simple trend is assumed, as implied by the available forecasts. The underlying assumptions assert that the income gap would be somewhere between 48.8 percent and 50.7 percent in 2005, but convergence would be achieved pretty quickly (by 2028, according to the WEO database, and by 2032, according to Eurostat). The stock of migrants is assumed to be 100,000 at the start of the forecasting period18 and is recalculated each year, taking into account the forecast flow from the previous year. The distance D is the average distance from Vilnius to the capitals of the EU-15 countries. In these calculations, the unemployment gap assumptions do not play a major quantitative role.

Table 3.

Lithuania: Quantifying the Determinants of Migration

article image
Source: Kielyte (2002).

78. The emigration incentives, stemming from the discrepancy in earnings, would peter out in 23 to 27 years as the income gap disappears. About 10,000 people, corresponding to 0.33 percent of the population, are forecast to migrate from Lithuania during 2006. This is somewhat smaller than the actual number (15,571) that migrated in 2005. Figure 5 shows the evolution of the migration rate, assuming that, once income convergence has been achieved, there will be no migration.

Figure 5.
Figure 5.

Lithuania: Projected Income Gap and Emigration, 2006-32

(In percent)

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Source: IMF staff calculations.Notes: Migration rate is expressed as a percent of population. Income gap is the ratio of Lithuanian GDP per capita to the EU-15 average in percent.

79. These projections are sensitive on several counts. First, the projection error relative to the annual average observed rate from 2001 to 2005 turns out to be quite high, most probably reflecting the inaccuracy inherent in the data and the estimation procedure. This may suggest a general upward bias in the estimates. Note, though, that the 2005 migration numbers were quite close to the forecasts here. Nevertheless, since the initial projection has a significant bearing on the overall migration potential, it is important to assess this sensitivity. One source of an upward bias may be that the coefficients were obtained through regressions on data covering the period 1990-2000, which witnessed unusually large outflows of the Russian-speaking population. Although Kielyte (2002) reports that only bilateral flows between the Baltic countries and EU-15 were considered, a high degree of uncertainty governs the quality of the data.19

80. A simple realignment of migration projections eliminates the projection error by normalizing the projected rates according to the annual average realized rate from 2001 to 2005. Figure 6 shows the results of this adjustment. The discrepancy between the unadjusted and adjusted migration numbers amounts to around 1.2 percentage points of the working-age population. According to the unadjusted estimates, as many as 227,000 Lithuanians, making up a hefty 9.7 percent of the working-age population in 2005, can be expected to leave the country between 2006 and 2032, based on Eurostat convergence projections. The adjustment brings this number down to 197,200, or 8.4 percent of the working-age population in 2005. With WEO projections, the corresponding figures are 192,700 (8.2 percent of the working-age population) and 166,300 (7.1 percent of the working-age population).20

Figure 6.
Figure 6.

Lithuania: Adjusted Projection for Emigration, 2006-2032

(In percent)

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Source: IMF staff calculations.Notes: Migration rate is expressed as a percent of population. Income gap is the ratio of Lithuanian GDP per capita to the EU-15 average in percent.

81. Another source of elusiveness regarding migration numbers is the sensitivity to underlying macroeconomic forecasts. The impact of a shock to the GDP growth or unemployment rate might be substantial. To assess how sensitive migration flows can be to the assumptions regarding the convergence process, the total number of migrants is recalculated under several simple scenarios. Table 4 presents the results of this exercise. Sensitivity to GDP growth assumptions appear to be stronger than sensitivity to unemployment. This result is not surprising, given that the discrepancy between unemployment rates is small, so, numerically, differences in per capita income are the main driving force of emigration.

Table 4.

Lithuania: Scenarios

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Notes: Scenario A. A 1 percentage point increase in the unemployment rate in 2005-07. Scenario B. A 1 percentage point decrease in GDP per capita growth rate in 2005-07 (trend growth is assumed from 2008 onward for both Eurostat and WEO). Scenario C. A 3 percentage point decrease in GDP per capita growth rate in the last year of projections (2007 for Eurostat, and 2010 for WEO).

Lithuania is assumed to catch up with the EU-25 average GDP per capita by 2032 in Eurostat projections and by 2028 in WEO projections.

The rate of income convergence is roughly in line with the European Commission’s Economic Policy Committee-Working Group on Aging Population (EPC-AWG) projections, which forecast net migration to continue until sometime between 2020 and 2030.

82. Because of the great uncertainty surrounding migration projections, these projections should be treated with caution. The main issues affecting the accuracy of predictions include (i) quality of available data; (ii) assumption of invariance in the relation of migration factors and migration decisions across countries and through time; (iii) assumption of stability in political and institutional conditions; (iv) indifference between temporary and permanent migration; and (v) econometric problems. Table 5 summarizes the predictions from several studies on the potential magnitude of east-to-west migration in Europe. The numbers are quoted for the next ten years, in order to preserve comparability without imposing further assumptions on the studies with shorter time coverage. Forecasts display wide differences, driven by the variation in methodology and assumptions. Note that the Eurostat estimate is less than half of our estimate. The key reason is that Eurostat reports net migration; hence, migration into Lithuania from third countries is incorporated in the Eurostat forecast.21

Table 5.

Lithuania: Comparison to Previous Studies

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Note: CEE-10 refers to the group of ten Central and Eastern European countries (Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia).

This period is chosen to make estimates from various studies comparable.

83. The migration potential estimate for Lithuania obtained from this analysis is consistent with the estimates of migration potential from all CEE-10 countries. Juxtaposed to the migration projections from other studies, the numbers obtained here suggest that about 10 percent of intra-European east-to-west migration would originate from Lithuania. This would imply a higher migration rate for Lithuanians than the average of this subgroup, because the Lithuanian population is only 5 percent of the CEE-10 population. The relatively large share of Lithuanians in intra-European migration is corroborated by the available evidence. According to Irish, Swedish, and U.K. accounts, Polish workers make up one half to two-thirds of new immigrants, followed by Lithuanians and Latvians. For instance, Irish authorities report that 11,410 social insurance numbers were issued for Lithuanians from May 2004 to December 2004, making up more than one-fifth of the total number of 53,582.22 Similarly, U.K. government statistics show that about 13 percent of job seekers who have come to the country since the enlargement are from Lithuania.23 The latest International Labor Organization (ILO) data also show higher proportion of Lithuanians emigrating (Table 6).

Table 6.

Selected Countries: Emigration-to-Population Ratio, 2001

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Source: ILO.

84. In sum, despite the uncertainties in projecting the numbers of migrants, these numbers are large enough to warrant an assessment of the possible impact on the economy. Even the most conservative analysts foresee a considerable number of people leaving Lithuania until 2030. Our analysis suggests 7 to almost 10 percent of the current working-age population leaving Lithuania in the next few decades. The next section discusses the policy implications of potential migration movements for labor markets and public finances.

C. Policy Implications and Conclusions

85. While potential benefits of migration should not be ignored, the pressures on the labor market and the social security system deserve immediate attention. Policy choices are critical for achieving a flexible labor market and fiscal sustainability. Emigration reduces the economically-active population, and, hence, the base that supports public finances. To the extent that emigrants are drawn from the working-age population, migration will tend to exacerbate the impact of aging.24 To assess the full potential impact on labor markets and the social security system, in the rest of this section, it is assumed that all emigrants are economically active and that emigration will not be offset by increased labor force participation. The section starts with a brief discussion of labor markets and then explores the magnitude of the burden that could be imposed upon the pension and health insurance funds.

86. The recent tightening of labor markets might partly be a consequence of the decline in the economically-active population. The migration of some of the unemployed has apparently contributed to the declining unemployment rate, which had fallen sharply to 7.1 percent by the fourth quarter of 2005. The sharp decrease in the unemployment rate has coincided with the increase in the number of emigrants; meanwhile, the labor force has declined despite the increase in the working-age population (Figure 7). Wage pressure has been evident in the aggregate, and particularly in select sectors, such as construction, wholesale and retail trade (where nominal wages increased almost 12 percent), and health care (with about 20 percent increase in salaries). The rise in reported vacancies, especially for specialists in construction, retail and transportation services, pharmacists, and doctors, has been further evidence of the labor crunch.25,26

Figure 7.
Figure 7.

Lithuania: Emigration and Labor Market, 1998-2004

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Source: Lithuania Statistics Department.

87. Measures to retain older workers in the labor market would help to mitigate the decrease in the labor force. These measures could include raising standard retirement ages, eliminating early retirement schemes, making old-age pension schemes actuarially neutral so that pensions fully reflect the time spent at work, enhancing the role of part-time work, and expanding education and training opportunities to foster skill development in mid-career. A comparison of the average exit age, legal retirement age, and extent of continuing training of the workforce in Lithuania with other European countries reveals that there might be room for such policies to be effective. Lithuanian workers opt out of the labor force earlier than their European counterparts and do less to maintain or improve their skills (Figure 8).27

Figure 8.
Figure 8.

Selected European Countries: Age and Training in Labor Markets, 2004

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Source: Eurostat.

88. Since emigrants are mostly young and drawn from the pool of potential contributors to the social security system, migration will cause a deterioration in the pensioner-to-contributor ratio. Due to demographic factors, dependency ratio is expected to worsen from 46.7 percent in 2005 to 56.8 percent in 2030, which would be reflected as an increase in the pensioner-to-contributor ratio from 73.9 percent to 101.7 percent, assuming no changes to the current retirement ages of 60 for women and 62.5 for men. When emigration is accounted for, the pensioner-to-contributor ratio may rise to 125.3 percent. If current policies were left unchanged, revenues net of expenditures in the first pillar would amount to 0.6 percent of GDP in 2010 in such an emigration scenario, down from 0.9 percent of GDP if migration effects were excluded. By 2030, the pension fund budget would score a deficit equal to 2.7 percent of GDP, of which 1.3 percentage points would be attributable to emigration. In other words, the deficit would be 1.4 percent of GDP if there were no migration (Figure 9).28

Figure 9.
Figure 9.

Lithuania: Social Insurance Pension System Budget Balance, 2005-30

(In percent of GDP)

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Source: IMF staff calculations.

89. Measures to increase the economically active population would help alleviate the pressure on the pension fund. Implementation of a three-pillar pension system has been recently completed. Although the introduction of voluntary contributions to be managed by private pension funds is an important step, further changes are necessary to guarantee a system that can face the challenges imposed by aging and emigration of the active population. Gradually increasing the retirement age to 65 for both men and women by 2020 could bring the deficit down to 0.9 percent of GDP in 2030 (as opposed to 2.7 percent of GDP), even if the highest estimate of emigration were realized. It is critical to remember that these figures depend on (i) the proportion of emigrants that are of working age; (ii) the extent to which the emigrants choose to contribute to the national pension system, as opposed to claiming welfare benefits in the host country; (iii) the share of permanent relative to temporary migration; (iv) the changes in the labor force participation rate; and (v) the specification of the retirement system. These factors will determine the severity of the final impact on the pension system budget balance.

90. The Health Insurance Fund faces an additional challenge stemming from migration, due to the possibility of “brain drain.” According to a study done by the Kaunas University of Medicine, migration is seriously depleting health care human resources—and this tendency will continue. The study reports that 26.8 percent of physicians and 60.7 percent of medical residents interviewed have expressed their intention to migrate, while 3.8 percent and 2.5 percent, respectively, have made a definite decision to do so. Since 1995, the number of physicians per 100,000 population has fallen from 408 to 391.29 These factors could push up health care costs per capita, while the aging of the population is likely to induce a second spike to the total health care bill. Measures to avoid potential shortages, while maintaining fiscal soundness, will be needed. The Kaunas University of Medicine study recommends an increase of salaries, until they have tripled, or even, quintupled in size, by 2015. This implies a growth in nominal wages of between 14 and 17 percent a year. While such a policy might be necessary, it is likely to induce a deficit of about 1 percent of GDP in the Health Insurance Fund budget by 2010 (Figure 10). The Lithuanian government has approved a plan to increase the salaries of health staff by 20 percent a year in the coming few years. Such an increase would create even greater pressure on the health fund resources.

Figure 10.
Figure 10.

Lithuania: Health Insurance Fund Budget Balance, 2004-10

(In percent of GDP)

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Source: IMF staff calculations.

91. In conclusion, while migration poses an important economic and social challenge, it also presents opportunities. Recognizing the pressures on the labor market and on public finances, through the pension and health care systems, requires structural reforms in labor markets, the social security system, and the health care system to face the emerging challenges.30 At the same time, migration creates a unique opportunity. The skills that migrant workers gain through networking, their experiences in the destination countries, and remittances they send are important for needed human and financial capital. Such spillovers could turn the brain drain to a “brain circulation” and contribute to productivity gains. Policies encouraging the continuous interaction of the emigrants with the Lithuanian economy would help utilize these spillovers in the long run. Figure 11 suggests remittances are growing and could be an important potential of financial capital.

Figure 11.
Figure 11.

Lithuania: Emigration and Remittances, 1998-2005

Citation: IMF Staff Country Reports 2006, 163; 10.5089/9781451824131.002.A004

Sources: Bank of Lithuania; and Lithuania Statistics Department.

References

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14

Prepared by Deniz Igan.

15

These restrictions apply to the so-called A-8 countries, the eight new member states from Central and Eastern Europe. Citizens of Cyprus and Malta are exempt from any restrictions.

16

The meeting of the European Council in Tampere in October 1999 marked the beginning of efforts to develop a common EU migration policy. A change in the traditional European attitude toward migration was deemed necessary, reflecting the labor and skill shortages already visible in a number of sectors and regions, as well as the rapid aging of the population. The recent positive Irish and U.K. experiences with respect to immigration from the new member states, along with the empirical evidence of small or no ill effects of immigration on host-country native employment and wages, have stimulated calls for voluntarily abandoning transitional measures sooner rather than later. The European Commission’s “Report on the Functioning of the Transitional Arrangements” (February 8, 2006) urged the EU-15 to carefully consider whether restrictions are necessary, in the light of the modest and stable labor flows and their help in easing skills bottlenecks. Following this call, Finland, Portugal, and Spain chose not to extend the restrictions, which are to expire in May 2006, and France announced its intention to gradually lift the restrictions.

17

This could be a reflection of less favorable employment statistics for these groups. For instance, the unemployment rate among women was 11.8 percent in 2004, compared to 11 percent among men. The rate decreased for both in 2005 but still stayed slightly higher for women at 8.3 percent, over the year, compared to 8.2 percent for men.

18

Estimates for the Lithuanian population living abroad range from 195,000 to 250,000. The Lithuanian community in Ireland, Spain, and the United Kingdom alone is estimated to total some 70,000 people.

19

There is no easy way to assess whether the recent increase in outflows signals a renewal of migration incentives in light of the gradual opening-up of the European labor markets before the 2011 deadline for removal of all legal barriers to free movement of persons. If these recent trends continue, it could be argued that the estimated coefficients are downward biased because they are based on data prior to increased mobility with the EU and the future flows could be higher as legal, as well as cultural and linguistic, impediments disappear.

20

The Ministry of Social Security and Labor projects that net migration could reach 219,959 by 2030.

21

Eurostat estimates are based on “extrapolation of the trends observed over the period 1994 to 2002, or shorter, depending on data availability.” In addition, “minimum values [are] assumed for 2012 and 2013 and “target values for 2050 are bridged using an approximation of a logistic curve,” details of which were not available at the time of this writing (European Commission 2005, p. 32).

22

Issuance for Polish workers was the highest (25,222 social insurance numbers), but Poland has a population ten times greater than Lithuania.

23

Once again, Polish immigrants rank first, constituting almost 60 percent of the newcomers, and Slovakia follows Lithuania with 10.5 percent.

24

Irish records show that almost 70 percent of immigrants are between the ages of 20 and 34, whereas U.K. statistics suggest that more than 80 percent of their immigrants are aged 18 to 34.

25

Associated Press quoted a spokesman for Lithuania’s second-largest supermarket chain saying that about 10 percent of its workforce had left in 2005 (Jacobs, 2005). Real estate reviews mention similar problems in the construction industry.

26

In response, the Lithuanian parliament unanimously adopted a resolution urging the government to set up a long-term strategy to decelerate youth emigration and create incentives for those already abroad to come back. The Lithuanian Foreign Ministry hosted a roundtable discussion on emigration on March 8, 2006, aiming to obtain a better assessment of the situation and to share insights with countries such as Ireland, Spain, and the United Kingdom, which have past experience with mass emigration.

27

Aptly, the Lithuanian government has recently taken steps to implement a program aiming to encourage on-the-job training.

28

These figures are based on staff calculations and information about the pension system obtained from the authorities.

29

Starkiene and others (2005) report that 36 family physicians left Lithuania in 2005 and calculate the annual migration rate among family physicians to be equal to 2.2 percent.

30

For a discussion of possible measures for the health care system, see Chapter III.

Republic of Lithuania: Selected Issues
Author: International Monetary Fund
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    Lithuania: Total Population and Population Growth Rate, 1996-2005

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    Selected European Countries: Population Growth and Migration, 1990-2000

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    Lithuania: Contribution of Migration to Population Decline, 1997-2004

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    Selected European Countries: Average Monthly Wages in PPP by Education Level, 2002

    (In euros)

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    Lithuania: Projected Income Gap and Emigration, 2006-32

    (In percent)

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    Lithuania: Adjusted Projection for Emigration, 2006-2032

    (In percent)

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    Lithuania: Emigration and Labor Market, 1998-2004

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    Selected European Countries: Age and Training in Labor Markets, 2004

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    Lithuania: Social Insurance Pension System Budget Balance, 2005-30

    (In percent of GDP)

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    Lithuania: Health Insurance Fund Budget Balance, 2004-10

    (In percent of GDP)

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    Lithuania: Emigration and Remittances, 1998-2005