Lithuania has experienced positive economic changes in recent years, but income inequality and social exclusion remain a problem, according to the European Commission.
The EU’s executive body published on Wednesday a report analysing Lithuania’s key socioeconomic challenges. Read more: Could European minimum wage ease Lithuania’s income disparity?
“Nothing new on the Lithuanian front,” Arnoldas Pranckevičius, the head of the European Commission Representation in Lithuania, told reporters.
“Although the health of the Lithuanian economy looks rather good at first glance, […] poverty, inequality, social exclusion, and the education and health systems’ problems did not abate,” he said.
According to Pranckevičius, Lithuania has made “progress” in some areas, such as broadening the tax base, and combating poverty and inequality, but the underlying problems remain acute even though steps are being taken to reduce social exclusion.
The rate of poverty, income disparity and taxation remain the three main focus areas in Lithuania, according to Pranckevičius.
As much as 28.3 percent of the population is at risk of poverty or social exclusion, well above the EU average of 21.9 percent.
Meanwhile, the income of the richest 20 percent of the population is 7.1 times higher than the income of the poorest 20 percent, compared to 5.17 times for the EU as a whole.
In Lithuania, social transfers reduced the at-risk-of-poverty rate in Lithuania by 22.9 percent, versus 33.2 percent in the EU.
According to the European Commission, Lithuania’s education reform is taking place slowly, held back by a lack of coordination and a long-term strategy to improve the efficiency of the education network. Read more: How much poverty is there really in Lithuania?
Although Lithuania took steps to improve access to healthcare, the overall health of the Lithuanian population remains among the worst in the EU and the country has the one of the highest treatable and preventable mortality rate in the bloc.
“A mere 44 percent of the Lithuanian population judge their health as ‘good’ or ‘very’ good’, compared to the EU average of 70 percent,” said Pranckevičius.
“As you well know, the treatable mortality rate was more than twice as high as the EU average, based on the latest data,” he added.
Public spending on healthcare in Lithuania remains low at 5.7 percent of GDP, compared to 7 percent in the EU as a whole, Pranckevičius noted.
This year’s report by the European Commission gives considerable attention to environmental sustainability.
“Environmental sustainability in Lithuania is low overall, the main contributing factors being low resource efficiency, high pollution levels from fossil fuel consumption in transport, and little progress on the circular economy,” it said.
“This situation is exacerbated by a low landfill tax, weak controls on waste management companies and polluting producers, and little progress on green procurement and green taxation.”
“Further rapid income growth requires a successful transition to a knowledge-based economy capable of delivering higher productivity and avoiding the middle-income trap, which is hardly possible without deep structural reforms,” said Pranckevičius.
The report published on Wednesday assess member states’ progress in implementing country-specific recommendations, the tailored policy guidance that the Commission provides each year.
A new set of country-specific recommendations will be released in May.