Bank of Lithuania
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Lithuania’s expenditure on general public services is one of the lowest in the European Union (EU). Looking beyond the notable differences in the level of expenditure, what stands in marked contrast to other EU countries is also the untapped potential for more efficient allocation of funds.

Comment by Vaidotas Tuzikas, Principal Economist at the Macroeconomics and Forecasting Division of the Bank of Lithuania.

The share of funds allocated to social security in Lithuania is lower than in other EU Member States, which is one of the root causes behind small old-age pensions. Old-age and survivors pension expenditure in Lithuania is significantly lower than in other EU Member States: based on data for 2016 (latest available data), Lithuania spends roughly 5 percentage points less compared to the EU average. The share of the total population who are pension beneficiaries is significantly higher than the EU average, which might suggest that the main reason behind small old-age pensions is the gap between the large number of beneficiaries and a relatively low share of GDP allocated to pensions.

Old-age pension expenditure and beneficiaries in EU countries

Why do pensioners live in poverty and hospital beds remain empty?

Lithuania is middling in terms of the share of GDP allocated to wages of healthcare workers, yet the relative number of medical personnel in the country is above the EU average. In 2016, Lithuania’s spending on wages of healthcare workers was slightly higher than, on average, in the old and the new EU Member States. Therefore, the relatively low average wage of Lithuanian medical personnel may be explained by a higher number of hospital and medical personnel per 100,000 inhabitants compared to the EU average.

Expenditure on wages and total number of healthcare workers in selected EU countries in 2016

Why do pensioners live in poverty and hospital beds remain empty?

The number of medical diagnostic equipment per 100,000 inhabitants in Lithuania lags behind the EU average and is significantly lower than the EU-15 average. Given higher economic development in the majority of the old EU Member States and their greater financial capacities to acquire diagnostic equipment, the lower availability of such equipment in Lithuania should come as no surprise. However, considering the number of hospital beds per 100,000 inhabitants, Lithuania is well placed to increase accessibility of diagnostic equipment. In 2016, the number of beds per 100,000 inhabitants in Lithuanian hospitals was one of the highest in the EU. Furthermore, Lithuanian hospitals are also facing other problems, including the surplus of hospital beds for active treatment (particularly outside the country’s largest cities), insufficient hospital bed occupancy (on an annual basis, 243 out of 1,000 Lithuanians are treated in hospitals, in Europe – 150 residents), excessive rates of unnecessary hospital treatment or hospitalisation for social reasons. Maintenance costs for a hospital bed approximate €20,000 per year, which might suggest that bringing the number of beds in Lithuanian hospitals closer to the EU average could step up funding for medical diagnostic equipment and improve its accessibility to Lithuanian residents.

For more information about expenditure on general public services in Lithuania and other EU countries, see the Lithuanian Economic Review which will be published on 27 March.