Last year, Lithuanian SMEs accounted for around 72% of all employees. Over the past year, the SMEs sector has recorded stable employment growth. These businesses are estimated to attract around 2–4% of new employees every six months.
Among the leaders in employment
The European Commission SMEs report shows that employment in Lithuanian SMEs reached as high as 4% last year, the third-highest result among all EU countries. In the first half of this year, employment grew by 2.1% compared to the previous year. For example, the labour markets in Latvia and Estonia grew by 1.6% and 1.8%, respectively, in the first half of this year.
The growth in the Lithuanian labour market is particularly noticeable in the technology, healthcare, and service sectors. At the same time, the technology sector posted a record growth of 4.5%, while the healthcare sector grew by almost 4%. The services sector, including hotels and restaurants, rose by 3.2%. This means that companies will expand their product range and increase the demand for specialists in the future. All this can be reflected in the creation of new businesses.
Over the past year, around 20,000 new companies have been established in the country. The vast majority of these companies are small or very small businesses. Lithuania also leads the EU regarding the number of new company formations.
Last year, Lithuania also recorded one of the EU's most positive ratios of new business to bankruptcies. It indicates that most companies have survived economic stagnation and have had opportunities to expand, offering additional services and creating new job opportunities.
What specialists are in short supply?
According to Eurostat data, Lithuania is among the EU leaders in employment growth in the IT sector. This growth is driven by investment in digital infrastructure and the creation of technology parks. Additionally, incentives for foreign talent coming to the country contribute to this growth.
The financial sector, which is showing signs of recovery, can also be linked to the growth in IT employment. Although Lithuania's economy contracted slightly this year, an increase of approximately 2.5% is forecast for next year, which is expected to positively impact the job market in the financial sector.
Not surprisingly, the most sought-after professionals in the financial sector will be those with experience in financial technology. IT and data analysts, cyber security specialists, and financial technology experts are in the highest demand today. As the sector grows, the demand for these specialists will likely increase, especially given the ongoing shift towards digitalisation. In addition, as the overall economy recovers, there may be a growing need for professionals such as financial analysts and investment managers.
Lithuania also surpasses the average growth in the healthcare sector in the EU. This is due to increased public investments in healthcare infrastructure and the training of qualified specialists.
Therefore, it is unsurprising that IT specialists, healthcare workers, and service sector employees are the most sought-after employees. The IT sector, in particular, seeks software developers and data analysts. In the healthcare sector, the highest demand is for nurses and doctors, while in the service sector, there is a need for cooks, waitstaff, and hotel administrators.
Support for businesses
Government decisions also leverage SMEs' potential. The government provides financial support, tax incentives, advice, and encouragement. It also promotes the creation and popularisation of certain specialities.
However, Lithuania's demography does not allow us to rest on our laurels. Specialists are already long-term employees in some areas, and there is simply no one to replace them in the future. Businesses should pay additional attention to this issue and plan for potential succession in advance.
Different perceptions of business development may emerge over time. Why might this happen? Technologies are evolving at lightning speed, with new software being developed to simplify specific future tasks and may even replace physical human labour. It is no secret that as technology advances, so must people. And even if someone doesn't fully embrace these technologies, individuals must at least understand how technological advancements can benefit the business.
The situation is similar with funding. Expansion is no longer just about opening an additional branch in a foreign country. Today, the concept of expansion is much broader. It can include investments in renewable resources, modernisation of facilities, and even continuous employee training to keep them updated with technology.
If someone had said 20 years ago that we could pay for goods by simply tapping a phone to a terminal, they would likely have been considered opportunists. However, today, this is a reality. It is important to note that financial technologies are now advancing yearly, monthly, or even weekly. A modern bank must be a reliable financial partner and offer fast, modern solutions—whether a service or a technological innovation. Everything must be implemented quickly, and today, speed correlates with reliability because those who grow together also help businesses grow.
Forecasted growth
The first half of 2024 has shown that stable economic growth and investment in critical sectors offer a positive outlook for the future. The technology and healthcare sectors will likely continue to be the main drivers of labour market growth. The services sector should also maintain its upward trend, boosting tourist and business travel. However, this does not mean that other sectors should become complacent.
According to the European Commission's SMEs annual report, Lithuania is expected to rank among the top five countries with the highest growth in SMEs activity this year. Lithuania is forecasted to achieve a 4.4% growth, while the EU average is expected to be around 2.2%. Lithuania is also likely to be among the leaders in employment, with a projected 3% increase in new employee recruitment. This result would place Lithuania fourth.
Sarp Demiray, the CEO and Board Member at the European Merchant Bank (EMBank)