Jobs market heating up: we near the breaking point

Gradually declining throughout years of economic uplift, unemployment levels should remain stable or rise slightly this year, specialists predict. The long term unemployment and employment of older individuals will remain difficult situations, but a part of unfilled jobs will still be possible to fill with immigrants. However, if we do not take to resolving how to retain residents in Lithuania or to regain emigrated nationals, serious problems await us, Monika Kasnikovskytė wrote in tv3.lt

In 2020-2021, unemployment levels should reach 5.9% in Lithuania, the Organisation for Economic Co-operation and Development predicts.

Ambiguous situation

Meanwhile, the SEB bank’s forecast for this year is a little more reserved – 6.2%. The bank’s chief economist Tadas Povilauskas muses that we will not see any dramatic changes in the jobs market this year, but the situation is rather ambiguous.

“On one hand, we see that the decrease in unemployment, which continued throughout the post-crisis period, has halted for several years now and this halt began from the second quarter of last year. We see that unemployment is no longer decreasing; the number of unemployed is no longer declining. On the other hand, we see that the number of those working, hired staff is increasing,” T. Povilauskas told tv3.lt.

According to the economist, stagnant unemployment levels in Lithuania are linked to those in long term unemployment, who struggle to return to the jobs market. What is curious is that the growth of those in long term unemployment has been observed at the end of last year not only in the regions but also in Vilnius and Kaunas.

“These are people, who, due to lacking qualifications for the jobs market or simply unwillingness to return to the jobs market, or other reasons, exit the jobs market and no longer seek or cannot find work. People, especially older individuals, do not find it easy to remain in the jobs market, find work, especially if they lose theirs,” T. Povilauskas noted.

Long term situation

He is echoed by the Labour Market Research Institute head, professor Boguslavas Gruževskis, who predicts a slight rise in unemployment next year.

“The long term unemployment situation could particularly worsen. These are less appealing people, thus they will integrate with even more difficulty in the jobs market. On the other hand, I believe that every month we will have around 12-15 thousand new job vacancies. In 2019 we had approximately 15-18 thousand; thus, the trend is downward, but there will be opportunities for employment.

According to him, the situation on the jobs market will form based on two main economic development vectors: general economic development (how the country’s economy develops) and demographic processes.

“The end of 2019 showed that the jobs market is not as inclusive as it was in, for example, 2018. The assumption can be made that this is an overall expression of economic changes. Both the Lithuanian economy and that of all of Europe and the world, taken in general is somewhat slowing. Respectively, Lithuania’s economic development will not be as generous as in 2019. As such, overall economic growth will be lower, less appealing for the jobs market,” the professor predicted.

Nearing the breaking point

When talking about the influence of demographics on the country’s jobs market, B. Gruževskis notes that soon Lithuania will face a difficult situation because retired residents will exceed working-age youths in number.

“We are moving toward the 2022-2023 point, where based on demographic changes, people, who reach retirement age will exceed in number those, who reach the age of 22. This is a critical breaking point, where there is factually no possibility to develop employment or even efficiency through extensive measures, simply employing people,” the professor said.

Nevertheless, according to B. Gruževskis, this is not a massive problem, when Lithuania is finally observing migrational growth.

“In many a family and institution, champagne was uncorked because, for the first time in 30 years of independence, we have significant migrational growth. We don’t have annual numbers, but it can be said that around 8 thousand more arrived than departed,” he commented.

What about our emigrants?

While Lithuania is currently having no difficulty in attracting staff from abroad, B. Gruževskis points out that we should also begin considering the care for gradually returning emigrated citizens.

“There is need for much investment in education, particularly when parents return with children so that they would have a favourable environment in schools so that parents wouldn’t be incentivised to leave the country for their children. If they returned, this means they have plans, it is important not to scare them away, to not disappoint people, then we can encourage returning even more,” B. Gruževskis stated.

He predicts that this year too, migration trends will remain favourable for Lithuania.

“I believe that we can prepare champagne once again because the growth should continue. Of course, the most negative here is the very high number of departures, 38 thousand is far too much. We must think about how to reduce emigration moods. Firstly, we must protect Lithuania, the jobs market from departure and afterwards it will be easier to regulate the immigration and re-emigration flow,” the professor said.

We must be kind hosts

The jobs market will also be influenced this year by work migrants arriving in large numbers from Ukraine and Belarus. In January-November 2019, the Employment Service issued 8.4 thousand permits for foreigners to work in Lithuania – this is 1.7 times more than the same period the year before. More than half the foreigners arrive from Ukraine.

“The number of employees from third countries rose rapidly, but this only influence certain sectors. Of course, competition, if we are to talk about the construction sector, certain industrial companies, where staff from particularly Ukraine is on the rise, is increasing in certain jobs. Thus, Lithuanians find it increasingly difficult to find work in these areas,” T. Povilauskas spoke.

Typically, it is cooks, builders, carpenters, international passenger travel drivers, caterers, car engineers and service managers, who come to Lithuania.

“On the other hand, these employees are still needed in Lithuania; we see that companies seemingly are not planning any marked changes toward reducing the number of employees. Thus we should say that companies want to continue growing, expanding, but this requires staff,” T. Povilauskas added.

Worrying sectors

Meanwhile, B. Gruževskis notes that important sectors, where the staff are ageing rapidly, cannot be filled out with work migrants.

“Formally, in certain sectors such as for example, teaching, nursing, state service – these are high average age structures and problems could arise here. As you cannot include immigrants as easily into the public sector because you need high competence, good skill in the state language, there could be problems in this. Of course, in 2020, this problem could increase,” B. Gruževskis spoke.

However, according to him, this year Lithuania will remain appealing to employees from third countries due to our wages, thus “it is crucial that we be good hosts, receive them well, so that there are less abuse and ever fewer disappointed emigrants.”

In November 2019, Lithuania posted unemployment levels of 6.3%. Compared to the start of the year, 6.5% in January, it can be said that the level of unemployment decreased in the country, but throughout the year it fluctuated between 5.9% and 6.5% according to Statistics Lithuania.