European Commission
Europe 2020

Country-specific Recommendations

The Country-specific Recommendations are documents prepared by the European Commission for each country, analysing its economic situation and providing recommendations on measures it should adopt over the coming 12 months. They are tailored to the particular issues the Member State is facing and cover a broad range of topics: the state of public finances, reforms of pension systems, measures to create jobs and to fight unemployment, education and innovation challenges, etc. The final adoption of Country-specific Recommendations prepared by the Commission is done at the highest level by national leaders in the European Council.

Proposed recommendations for Lithuania 2012

After a strong rebound in 2011, Lithuania's economic activity is expected to increase by 2.4% in 2012. Unemployment is foreseen to decrease gradually from its former peaks to 13.8% in 2012; however, unemployment remains high particularly among young and unskilled workers.

Helped by robust economic growth in 2011, Lithuania's general government deficit narrowed to 5.5% of GDP, and is expected to decrease further to 3.2% of GDP in 2012. Lithuania made progress in improving tax collection and reforming its state-owned enterprises.

Lithuania continues to face important policy challenges:  demographic developments cast a doubt on Lithuania’s long-term fiscal sustainability, especially of its pension system. A low labour force participation rate, very high youth unemployment, shortage of skilled labour and skill mismatches, aggravated by high emigration, are other major concerns in the medium to long term. The growing poverty and social exclusion threatens to put an even higher strain on public finances in the near future. The country’s infrastructure, particularly its energy system, lacks competition and interconnections, thus hindering growth. Low energy efficiency, especially of buildings, as well as the low level of R&D spending and poor performance in innovation, are pressing issues. Modernising public administration and finalising the reform of state-owned enterprises are also essential to boosting competitiveness.

Overview of recommendations

1. Ensure planned progress towards the timely correction of the excessive deficit. To this end, fully implement the budget for the year 2012 and achieve the structural adjustment effort specified in the Council recommendation under the Excessive Deficit Procedure. Thereafter, specify the measures necessary to ensure implementation of the budgetary strategy for the year 2013 and beyond as envisaged, ensuring an adequate structural adjustment effort to make sufficient progress towards the medium-term budgetary objective, including meeting the expenditure benchmark, while minimising cuts in growth-enhancing expenditure. In that respect, consider increasing taxes least detrimental to growth, such as housing and environmental taxation, including car taxation, while reinforcing tax compliance. Strengthen the fiscal framework, in particular by introducing enforceable and binding expenditure ceilings in the medium-term budgetary framework.
   More information on Lithuania’s economy
2. Adopt legislation on a comprehensive pension system reform. Align the statutory retirement age with life expectancy, establish clear rules for the indexation of pensions, and improve complementary savings schemes. Underpin pension reform with active ageing measures.
   More information on pensions in the EU
3. Tackle high unemployment, in particular among youth, low-skilled and long-term unemployed, by focusing resources on active labour market policies while improving their efficiency. Enhance the effectiveness of apprenticeship schemes. Amend the labour legislation with regard to flexible contract agreements, dismissal provisions and flexible working time arrangements.
   More information on the European employment strategy
4. Increase work incentives and strengthen the links between the social assistance reform and activation measures, in particular for the most vulnerable, to reduce poverty and social exclusion.
   More information on social protection and social inclusion
5. Implement all aspects of the State-Owned Enterprise reform package and in particular ensure a separation of ownership and regulatory functions and a separation of commercial and non-commercial activities. Install appropriate monitoring tools to assess the effectiveness of the reforms and ensure compliance of all State-Owned Enterprises with the requirements of the reform.
   More information on the EU enterprise policy
6. Step up measures to improve the energy efficiency of buildings, including through removing disincentives and a rapid implementation of the Holding Fund. Promote competition in energy networks by improving interconnectivity with EU countries for both electricity and gas.
   More information on the energy strategy for Europe

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European Semester Documents

National Reform Programme

All Member States have committed to the Europe 2020 strategy. However, each country has different economic circumstances and translates the overall EU objectives into national targets in its National Reform Programme – a document which presents the country's policies and measures to sustain growth and jobs and to reach the Europe 2020 targets. The National Reform Programme is presented in parallel with its Stability/Convergence Programme, which sets out the country's budgetary plans for the coming three or four years.

Macroeconomic indicators

Europe 2020 targets – State of play