Last year's fall in Lithuania's labor productivity both good and bad sign – economists

VILNIUS – Lithuania's labor productivity dropped by 3.3 percent last year, based on OECD data, but economists differ in their assessment of the indicator, saying that it affects the country's competitiveness both positively and negatively.

Swedbank's economist Nerijus Maciulis believes that the decline in Lithuania's labor productivity in 2022 was not due to negative reasons.

"Last year saw a leap in employment in Lithuania, with the number of employed people rising by more than 4 percent," Maciulis told BNS. "As value added grew by less than 2 percent nationwide, value added per employee fell accordingly."  

The most important factor in assessing a country's competitiveness is how productivity is changing in its exporting sectors, where Lithuania is a leader in the EU, according to the economist.

Justina Zajankauskaite, senior economist at the Macroeconomics and Forecasting Division of the central Bank of Lithuania, says, however, that the fact that labor productivity growth is not as fast as wage growth is a risk to Lithuania's competitiveness.  

According to the OECD data, Latvia's labor productivity rose by 3.3 percent last year, but Estonia recorded a 5.8 percent decline.   

Poland posted the highest annual labor productivity growth rate among the organization's members, at 5.5 percent.   

Labor productivity in OECD countries fell by 1.2 percent on average last year.

GDP per hour worked, another labor productivity indicator, jumped by 19 percent in Lithuania in 2015-2022, one of the highest growth rates among OECD members, according to the organization's data.