Flash comment: Lithuania - November 10, 2017
Unemployment down to 6.6%, but employment declines in Q3

The unemployment rate declined to 6.6% in the third quarter of this year and was 0.9 pp lower than a year ago. Activity rate remained flat at 76.1% and thus did not alleviate the negative effect of the shrinking working age population on the labour market. As a result labour force decreased by 1.7% compared with a year ago and was the only reason behind the decline in unemployment. Annual decline in employment picked up to 0.7%.

The tensions in the labour market are becoming more pronounced – more companies are reporting shortage of labour as the factor limiting activity.

Outlook: tightening labour market

Activity rate is close to its limits and is unlikely to compensate for the decline in the working age population. Therefore we expect the decline in employment to continue. However, unemployment is still expected to decline to 6.8% next year and 6.5% in 2019 due to shrinking labour force. Thanks to strong cyclical upswing in the Lithuanian economy, demand for labour will not ease in the short- to medium-term, but filling the vacancies will become increasingly difficult, thus wage pressures are expected to remain high.

For more information about this report, please contact Mrs. Laura Galdikienė, +370 5 258 2275, Laura.Galdikiene@swedbank.lt

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