Labour Market and Social Policies in the Baltic Countries by Anders Reutersward, Organisation for Economic Co-Operation

By Anders Reutersward, Organisation for Economic Co-Operation and Development

Ebook by means of Reutersward, Anders, enterprise for monetary Co-Operation and improvement

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165. 59 As discussed in Chapter I, relative wages in the Baltic States show some remarkable characteristics, including an unusually strong wage premium for higher education and surprisingly small wage differences depending on age and experience. There are also considerable regional variations, with lower wages in regions with high unemployment. Most of these results appear possible to explain as "rational" responses to supply and demand in the labour market rather than as a result of institutional constraints.

But Lithuania pays only very low unemployment benefits, so some increase may be justified in the near future. However, an effective administration of unemployment benefits will depend crucially on the capacity of the public employment service (PES) to provide job counselling and jobsearch assistance. This capacity is now very limited in Estonia, while it is better adapted to the requirements in Latvia and Lithuania. All three countries face a need for more adult training in the future, both on and off the job; much of this should be privately financed.

9. Reform unemployment and related benefit systems – and their interactions with the tax system – such that societies' fundamental equity goals are achieved in ways that impinge far less on the efficient functioning of labour markets. 10. Enhance product market competition so as to reduce monopolistic tendencies and weaken insider-outsider mechanisms while also contributing to a more innovative and dynamic economy. 55 Similarly, the EU adopted the European Employment Strategy (EES) in 1997. It has served as a basis for national Employment Action Plans in Member countries and in countries applying for membership, including the Baltic States.

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