Will Bread Baker Be Allowed to Work as Cakemaker? Lithuania Reforms Its Labor Migration Regulation

Edgar Degas: Portraits at the Stock Exchange // Public domain

After months of debate, in late 2022, the Lithuanian Parliament passed into law a package of legislative amendments that reforms Lithuania’s migration system. The reform creates more favorable conditions for the recruitment of non-EU nationals and reduces the administrative burden on workers, employers, and public authorities.

Lithuania cut the time it takes to receive temporary residence permits and allowed foreigners to apply for permits from abroad. Employers will now be able to hire migrant workers regardless of their qualifications or work experience. Job openings for high-skilled migrant specialists will not be subject to so-called labor market tests meant to give priority to local candidates.

The reform was passed into law just under a year after the Lithuanian Free Market Institute (LFMI) had initiated discussions on the need of systemic reform to address looming demographic and labor market challenges. LFMI‘s systemic analysis and multiple top-level discussions had laid the groundwork and roadmap for the reform. Importantly, they catalyzed a landmark policy shift toward easing employment regulations for low- and mid-skilled workers and not just high-value-added specialists.

Less Formal Requirements

Before the reform, an employer willing to hire a non-EU national was required to provide information and proof of the candidate’s qualifications and work experience. Exceptional conditions applied only to whitelisted companies that were approved based on a number of criteria by the Migration Department. For them, it was sufficient to provide information either on the candidate’s work experience or qualifications, not both.

Now, this policy applies to all, while no proof of qualifications or work experience is required if a migrant worker will earn more than the country’s average salary. By endorsing this simplified procedure for all, the reform effectively abolished the whitelist of companies.

Proving an employee’s experience and qualifications to the authorities was an excessive requirement that placed an unjustified burden on employers. We argued that it was up to the employer to make a decision regarding the suitability of a candidate for the job, and in mane cases required documents would not event be available.

Furthermore, even if a migrant worker had the right experience and qualifications, problems would arise in meeting the formal criteria as the actual position offered by the employer would not necessarily match word-for-word  the formal qualifications possessed by the candidates.

For example, under the old regulation, a third-country national with the formal qualifications as a cakemaker would not necessarily be allowed to take a job of a bread baker as the qualifications would not match according to the formal requirement. The authorities would not care at all that the candidates can bake bread just as well. In such cases, the whole recruitment process would stall as soon as it started.

After the reform took effect, the employers now have to prove either the qualifications or work experience of their candidates. While it would have made more sense to eliminate both requirements and leave the responsibility for recruitment in the hands of the employers, the new policy is still a step forward that will reduce bureaucracy and the times it takes to recruit a foreign national.

The abolition of company whitelisting for simplified recruitment procedures is another step forward in terms of putting companies on an equal footing and improving the competitive environment. Previously, it was almost impossible for a smaller company to comply with the criteria and get on the list. This reform also removes part of the administrative burden that was shouldered by the Migration Department which was responsible for maintaining the list of companies approved to take advantage of the simplified recruitment procedures.

Breaking the Vicious Circle

Labor market testing is another instrument applied in the Lithuanian migration system. Under the labor market test, an employer must register a vacancy in the Employment Service’s information system and wait for five working days to see if a suitable local candidate comes forward. After this five-day period, an application for a work permit or a decision on labor market needs must be completed.

Before the reform, labor market tests were applicable to all third-country nationals entering Lithuania‘s labor market, with the exception of occupations included in the government-administered lists of shortage occupations or shortage occupations requiring a high professional qualification.

From August, labor market tests no longer apply to workers of high professional qualifications, which also effectively removes the government-compiled list of shortage professions requiring high qualifications. This creates more favorable conditions for the recruitment of highly skilled workers and for a timely response to changing market needs. For other categories of workers, however, labor market tests and the lists of shortage occupations reminiscent of a planned economy remain in place.

Labor market tests are supposed to help the labor market give priority to local citizens and make it harder for foreign nationals to get a job. However, there is little logic behind labor market tests given that employers tend to recruit local people first anyways for various reasons relating to language barriers and cultural nuances. The futility of labor market tests is acknowledged by both external experts and civil servants working in the labor migration system.

However, in every case where a foreigner is employed, the Employment Service has to carry out a labor market test, monitor the availability of suitable local workers, and only then it can issue a permit. Even if an employer wants to recruit several workers for the same occupation, say that of a confectioner, and a week after one labor market test was carried out and it was ascertained that the local market did not meet the demand, labor market tests must be carried out in each and every position individually.

The authorities had been looking for solutions to avoid this pointless and time-consuming process. But one regulation was replaced by another one. The government came up with a list of shortage professions by economic activity, compiled by the Employment Service, and a list of shortage professions requiring high professional qualifications, compiled by the Ministry of Economy and Innovation. The enlisted occupations were exempted from labor market testing and work permit requirements.

However, the lists are based on the data from the year before and on forecasts, while market conditions change quickly and constantly. The government-administered lists can in no way reflect the real needs of the market. In the IT sector alone, many new occupations evolve day by day, and no central authority can possibly keep pace or track of these developments.

Do Not Disturb the Balance

Notably, there has been an enormous shift in the official policy and rhetoric as the government of Lithuania acknowledged in its official program that there was a shortage not only of high-skilled professionals but also mid- and low-skilled workforce. The government had officially recognized the need to ease labor migration procedures for all categories of workers, which eventually paved the way for the reform.

Obviously, the reform should not stop with the recently adopted changes. It is important to fully avoid the mimicking of market processes by government authorities and delegate the responsibility for assessing the suitability of foreign nationals for the jobs offered to the employers. Labor market tests should be removed for all categories of workers, thereby reducing the administrative burden for the Employment Service and the costs associated with it.

The needs on the labor market change constantly, and a prompt response to rapidly changing circumstances is only possible when the relationship between the employers and the employees are not obstructed by meaningless centralized regulations.

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