Lithuania’s industrial productivity lags behind the EU average: what is holding back growth?

Although Lithuania’s industry is rapidly modernising, its productivity still reaches only about 70% of the EU average. According to experts, a breakthrough will require faster modernisation, more highly qualified specialists, and more effective use of technology.

Technology can boost productivity, but there is a shortage of people capable of using it
The wood industry is one of Lithuania’s strongest export sectors. However, according to Ingrida Grikpėdienė, head of VMG Group company “VMG Wood Invest,” the country’s industry still faces fundamental challenges.

“Lithuania’s industrial productivity lags behind the EU, while the US outperforms the EU by a factor of two. Many factors contribute to this, but one of them is the discussion about a four-day workweek — when, if we want to remain competitive in the global market, we shouldn’t even be considering it. Another issue is a harmful benefits policy that does not encourage people to work and, in some cases, even creates incentives to celebrate unemployment,” says Grikpėdienė.

According to her, the technologies implemented within VMG Group are already significantly reducing dependence on manual labour and enabling more efficient organisation of production processes. For example, the robotisation of packaging lines at AB “Klaipėdos mediena” has replaced previously manual processes, increasing operational efficiency by 33%. However, advanced technologies require high technological competencies — and Lithuania still trains too few such specialists.

Lithuania has the potential to surpass the EU productivity average
Titas Budreika, Chief Economist at the Ministry of the Economy and Innovation, notes that the main factor limiting the productivity of Lithuania’s industry is external and internal economic pressure.

However, the situation is far from hopeless — on the contrary, according to the ministry representative, Lithuania has significant breakthrough potential.

“Our tax system remains one of the most competitive in the world. The instant depreciation model for long-term assets, effective from January 1, will allow businesses to invest more confidently in equipment and modernisation. The greatest potential for national progress lies in more ambitious modernisation within companies themselves — robotisation, automation, and the adoption of artificial intelligence,” the economist says.

Few students choose engineering, but their motivation is exceptionally strong
Prof. Dr. Vytautas Bučinskas, Head of the Department of Mechatronics, Robotics and Digital Manufacturing at VILNIUS TECH, states that Lithuania’s industrial productivity challenges remain strongly linked to insufficient investment in workplace modernisation. Nevertheless, he emphasises that engineering specialists trained in Lithuania are of high quality — the biggest challenge is attracting more students.

“The study content meets industry needs, but engineering is not the first choice for many school-leavers. Those who choose to study often prioritise medicine, biotechnology or information technology,” notes Prof. Dr. Bučinskas.