EMCC European Monitoring Centre on Change

Lithuania: ERM comparative analytical report on emerging forms of entrepreneurship

  • Observatory: EMCC
  • Topic:
  • Published on: 21 March 2011



About
Country:
Lithuania
Author:
Inga Blaziene, Rasa Zabarauskaite
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

There are no different forms of self-employment separated and discussed in Lithuania –both public discussion and economic and social policy is mainly oriented towards self-employment as such. The Lithuanian economic policy proclaims the self-employment, as a component of small and medium business, to be a priority area of the country’s economic development. Therefore main policy initiatives are oriented towards development of self employment.

1. Public/policy discussion

1.1. National definitions

One-person enterprises/self-employed not employing any workers

There is no one unified definition of self-employed workers applicable in Lithuania. The Law on State Social Insurance (LSSI) provides following definition of self employed persons: ‘Self-employed persons mean owners of individual enterprises, members of general partnerships, members of limited partnerships; the persons who are engaged in individual activities as defined in the Law on Personal Income Tax (PIT) – lawyers, assistant lawyers, notaries, bailiffs, the persons holding business certificates and other persons’. According to PIT individual activity is understood as ‘economic activity performed by the natural person, by which he/she seeks to receive financial or other economic benefits during a certain period of time’. In Lithuania natural persons might carry out individual activity under business certificates or certificates for individual activity. Part of self-employed are working unofficially, i.e. not registering activities performed.

The Labour Force Survey (LFS), carried out by Lithuanian Statistics (STD), collects data on ‘employers and self-employed individuals’.

Self-employed individuals are defined by the LFS as ‘persons who work in their own enterprise (registered or not) with one or more partners and do not have permanent employees. Their activity is based on individual or family members’ work. They continuously manufacture products, render services with the purpose of getting income and profit. Persons who work self-dependently include farmers and other land users ascribed to the category of the employed, craft trades workers (builders, producers of goods, tailors, barbers, etc), musicians, painters, i.e. persons who do not belong to any company or enterprise. Persons working under business certificates are also ascribed to this group’.

Part-time entrepreneurs (next to other activities)

In Lithuania when speaking about part-time employment, actually part-time job or work under part-staff is taken in mind. It is described as a job for less than 40 hours per week and is applicable for all groups of employees – both self-employed and employees and employers.

LFS single out main job and second job. Main job is described as a job done by a person during working hours in the reference week. In case a person has two jobs the main job is the one where the person works more hours. Second job is described as work carried out at a time other than the main job, for which the person is paid a wage or salary.

Parallel entrepreneurs (running two or more businesses at the same time)

There is no definition set in Lithuania.

Serial entrepreneurs (starting up one business after selling/closing or bringing in new management in the previous one)

There is no definition set in Lithuania.

Business transfers and successions (transfer of management and ownership to a new entrepreneur while the business as such continues)

There is no definition set in Lithuania.

1.2. General policy discussions and policy approach

Do the public/policy discussions specifically deal with the different forms of business activities, since when and for how long?

Table 1: Presence of the different emerging forms of entrepreneurship in the public debate
 

Yes, continuously since xx year? (Please indicate year)

Yes, on and off in the last 10 years

(Please indicate yes where it applies)

Yes, has been on the public agenda, but since xx year it is no longer part of the agenda (Please indicate year)

No, it has never been part of the public agenda

(Please indicate X where it applies)

One-person enterprises /self-employed  

+

   
Part-time entrepreneurs  

+

   
Parallel entrepreneurs      

+

Serial entrepreneurs      

+

Business transfers and successions      

+

For each of the entrepreneurship/business activities covered by policy discussions, which policy domains are they covered in? Please indicate with an ’X‘ where relevant.

Table 2: Policy domains engaged in the policy discussion of the emerging forms of entrepreneurship
 

Labour policies

Educational policies

Economic/Industrial policies

Innovation policies

Regional policies

Taxation

Social policies

One-person enterprises /self-employed

+

       

+

+

Part-time entrepreneurs

+

       

+

+

Parallel entrepreneurs              
Serial entrepreneurs              
Business transfers and successions              

In which media and forum do the public debate and policy discussions about the different types of entrepreneurship take place?

Table 3: Media and forums discussing the emerging forms of entrepreneurship
 

Public media such as newspapers and magazines incl. electronic media

Policy documents and analysis

Proposed legislation and/or business support schemes

Others, please specify

One-person enterprises/self-employed

+

+

+

 
Part-time entrepreneurs

+

+

+

 
Parallel entrepreneurs        
Serial entrepreneurs        
Business transfers and successions        

1.3. Specific topics to describe the different types of entrepreneurship

What has motivated the public debate?

Table 4: What has motivated the public debate of the emerging forms of entrepreneurship

Type of Entrepreneurship

Motivator

One-person enterprises/self-employed

  • insufficient financial resources to carry out a business;
  • high tax burden;
  • administrative burden;
  • undeclared work/unofficial self-employment.
Part-time entrepreneurs
  • application of monetary social support schemes;
  • conditions for the payment of unemployment social insurance benefit.
Parallel entrepreneurs

n.a.

Serial entrepreneurs

n.a.

Business transfers and successions

n.a.

What has been the focus of the policy discussion?

To help you answer question 5, we list some examples of key issues that could be addressed in the policy discussion:

Please specify for each of the five forms of entrepreneurship:

Table 5: The policy focus in the public debate within each of the emerging forms of entrepreneurship

Type of Entrepreneurship

Policy focus

One-person enterprises/self-employed
  • reduction of tax burden for small and medium enterprises (inter alia – self employed);
  • improvement of social insurance schemes for self-employed;
  • improvement of social care services for self-employed;
  • promoting entrepreneurship;
  • access to finance – improving access to finance through grants, loans or equity capital;
  • financial incentives for business creation by unemployed people;
  • education – awareness raising and training to improve business skills and competences;
  • counselling and information dissemination, e.g. business planning, information campaigns;
  • provision of business facilities – easy access to business services;
  • raising entrepreneurial spirit among certain population groups, e.g. women, youth;
  • facilitate business creation through administrative simplification.
Part-time entrepreneurs
  • improvement of cash social assistance for part-time entrepreneurs;
  • improvement of the conditions for accessibility for unemployment social insurance benefit for working full-tome students.
Parallel entrepreneurs

n.a.

Serial entrepreneurs

n.a.

Business transfers and successions

n.a.

Has the public discussion resulted in a concrete outcome/impact?

Please specify for each of the five forms of entrepreneurship:

Table 6: Outcome or impact of the public debate of the emerging forms of entrepreneurship

Type of Entrepreneurship

Outcome/Impact

One-person enterprises/self-employed

Law on Small and Medium-sized Business (SMB) Development (with effect from December 2007) was adopted. The Law provides for the following forms of State aid for SMB entities:

  • tax privileges, relieves on charges;
  • financial support: granting of micro-credits and loans on favourable terms, partial or full payment of interest, provision of guarantees, etc.;
  • provision of public services to business in business incubators, business information centres, technology parks, etc.

Public institutions for SMB support

The network of business services for micro, small and medium enterprises as well as for businesses at the start-up stage, comprised of business information centres (BIC) and business incubators (BI) was created in Lithuania. BICs and BIs represent the State-developed business support infrastructure aimed at stimulating the setting-up and development of small and medium-sized enterprises and ensuring high-quality business services provided to and accessed on easy terms by businessmen in all regions of Lithuania.

Promoting entrepreneurship in different population groups

  • In April 2008 the National Programme for the Training and Inducement of Youth Entrepreneurship for the years 2008–2012 was approved by the Government (LRV). The purpose of the Programme – to create an effectively functioning system for responsible entrepreneurship training in youth. The programme is aimed at developing, implementing and improving measures for entrepreneurship training; monitoring the entrepreneurship situation and its promotion; informing public institutions and the society on the promotion of entrepreneurship in Lithuania.
  • Traditionally, quite much attention is paid in Lithuania to promote entrepreneurship in women: information on women entrepreneurship initiatives is prepared and published by the Women Information Centre (MIC). There are a number of projects, financed from EU’s structural funds, in progress to encourage women to set up their own business. Following the initiative of the Association of the Lithuanian Chambers of Commerce, Industry and Crafts (LPPARA), a Business Women Centre was established in 2008 with a view to stimulate entrepreneurship in women, to seek for ensuring the principle of equal opportunities in business, to provide inter-network assistance to members, etc.
  • Promotion of self-employment in unemployed individuals is foreseen in the Law on Support for Employment. According to the Law, support for self-employment shall be organised for jobseekers registered with a local labour exchange (LE) in order to support creation of jobs for oneself or employment of other unemployed persons. The LE provides information about the conditions for starting up a business, its development, the employment of employees and the opportunities for pursuing their activities under a business certificate, and organises basic business training for jobseekers. Self-employment seeking persons, meeting the conditions set by the Law, may be granted a subsidy for the establishment of jobs.

Economy Stimulation Plan

The Economy Stimulation Plan (ESP) – a package of measures proposed by the LRV with a view to alleviating business conditions, attracting additional funds to the Lithuanian market and enhancing business borrowing opportunities as well as maintaining jobs and this way reducing a social strain in the society – was elaborated in February 2009. The ESP provides for a number of measures for SMB, including promotion of self-employment:

  • Promoting entrepreneurship. In order to address one of the most relevant today’s problems of SMB – the lack of financial resources, concurrently promoting entrepreneurship and self-employment, the ESP provided for a financial engineering measure aimed at changing the attitude of labour-market players towards self-employment, consulting and training businessmen at early stages and providing them with financial support in the form of loans and/or subsidies. Being responsible for implementation of the measure, the Ministry of Social Security and Labour (SADM) seeks that activities funded through the financial engineering instrument would be accessible not only for the urban population but for rural residents as well. The following priority groups are singled out in the context of implementation of this measure: the unemployed, the disabled, youth under 29 and 50+ persons.
  • SMB crediting – business crediting instruments to fund investment projects and circulating assets, i.e., granting of micro-credits and small loans to SMB entities at lower interest rates than those prevailing in the market.
  • Measures reducing the risk of lending agencies – State guarantees for loans to SMB, i.e., the State issues guarantees and by doing so it encourages granting loans to SMB entities, etc.
  • Improving business environment. This measure is aimed at ensuring expeditious receipt of proposals concerning improvement of business environment by the LRV and implementation of such proposals approved by the LRV.

National Agreement

Looking for the best solutions to all parties in overcoming the consequences of the financial and economic crisis, on 28 October 2009 the social partners signed a National Agreement (NA), committing themselves, inter alia, to support SMB entities. The LRV committed to “promoting entrepreneurship by reducing bureaucratic hurdles to setting up small enterprises and by taking efforts to create SMB-favourable tax environment”. In addition, the social partners agreed in the NA about the package of proposals submitted to the SMB Council on the issues relevant to small business to be considered and signed in a special protocol. The protocol was signed on 9 December. It included and stipulated the issues to be consulted by relevant ministries with associated business structure in the process of deciding on SMB-relevant issues.

Activities of the SMB Council

In order to help SMB entities to survive under the downturn conditions, in July 2009 the SMB Council – a public advisory body, comprised of representatives of business associations with a view to ensuring cooperation between SMB representatives and state authorities – signed a memorandum of understanding with the Ministry of Economy (UM) on business consulting, support and export stimulation as well as optimisation of the support system in Lithuania. In the memorandum, support for SMB by the UM and stimulation of exports were defined as priority trends of UM’s activities. In addition, the parties agreed on the reorganisation of the network of public services for business (business information centres and business incubators) and establishment of Public Institution ‘Exporting Lithuania’.

Other initiatives

  • In order to even more facilitate jobless people to engage in business, amendments to the Law on Support for Employment were adopted in June 2010 stipulating that unemployed people willing to engage in individual activities on the basis of a business certificate will receive reimbursement of the costs for acquisition of the business certificate and payment of State social insurance contributions. This is expected to encourage unemployed people, who set up their own business, to tackle unemployment problems independently, to facilitate employment of long-term unemployed people and to reduce shadow business.
  • In order to improve Lithuanian legislation governing tax and social insurance contribution policy of the self-employed, The Parliament of the Republic of Lithuania (LRS) has recently adopted a protocol resolution suggesting that the LRV should review the procedure for taxation of self-employed people on a complex basis ‘in order to proportionally distribute the tax burden among different groups of self-employed people’.
Part-time entrepreneurs
  • Currently amendments to the Law on Cash Social Assistance for Low-Income Families (Single Residents) are considered in order to improve conditions for social assistance part of the part-time entrepreneurs.
Parallel entrepreneurs

n.a.

Serial entrepreneurs

n.a.

Business transfers and successions

n.a.

1.4. Overall assessment

Within the last couple of years, to which extent has the public and policy discussion been more focused on the following different types of entrepreneurship compared to the business policy/entrepreneurship debate in general?

Table 7: Increased focus at the emerging forms of entrepreneurship?
 

To a low degree To a high degree

 

1

2

3

4

5

One-person enterprises/self-employed      

+

 
Part-time entrepreneurs  

+

     
Parallel entrepreneurs

+

       
Serial entrepreneurs

+

       
Business transfers and successions

+

       

Please list the main sources of information in the search for the above

1. Blaziene I. Economically dependent workers in Lithuania. European Industrial Relations Observatory, 2007. Report available at: /ef/observatories/eurwork/articles/economically-dependent-workers-in-lithuania

2. Blaziene I. Lithuania: Self-employed workers. European Industrial Relations Observatory, 2009. Report available at: /ef/observatories/eurwork/erm/comparative-information/national-contributions/lithuania/lithuania-self-employed-workers

3. Economic Development Plan. Ministry of Economy, 2009. Document available at: http://www.skatinimoplanas.lt/

4. Gruzevskis B., Blaziene I. Self-employment in Lithuania. European Employment Observatory Review, 2010.

5. On the Approval of the National Programme for the Training and Inducement of Youth Entrepreneurship for the years 2008–2012. 2 April 2008. Resolution No. 339 of the GRL.

6. Law No. VIII-935 on Small and Medium-Sized Business Development. 24 November 1998.

7. Law on Support for Employment No X-694. 15 June 2006.

8. National Agreement. 28 October 2009.

9. Protocol to the National Agreement. 9 December 2009.

10. Memorandum of Understanding between the Ministry of Economy of the Republic of Lithuania and the Lithuanian Small and Medium-sized Business Council on the business consulting, support and export stimulation as well as optimisation of the support system in Lithuania. 14 July 2009.

Web pages:

www.ldb.lt (Lithuanian Labour Exchange)

www.ldrmt.lt (Lithuanian Labour Market Training Authority)

www.lrs.lt (Lithuanian Parliament)

www.lrtt.lt (Tripartite Council of the Republic of Lithuania)

www.smm.lt (Ministry of Education)

www.socmin.lt (Ministry of Labour and Social Security)

www.stat.gov.lt (Lithuanian Statistics)

www.ukmin.lt (Ministry of Economy)

www.vdi.lt (National Labour Inspectorate)

2. Standardised structural data

2.1. Which standardised business statistics are available covering the different forms of entrepreneurship/business activities (explicitly or implicitly, i.e. also data that could be used to describe these forms of entrepreneurship without being published with this specific objective/heading)?

Table 8: Availability of business statistics about the emerging forms of entrepreneurship
 

Type of data available

Indicate access to data by an ‘X’ in the first column

First published

Indicate year

Time series of data

(Biannually, annually, quarterly, monthly, once only, other)

Data source for the data

One-person enterprises/ self-employed

Number of enterprises

X

2002

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530); http://db1.stat.gov.lt/statbank/default.asp?w=1024

Enterprises by branch (please specify which NACE code digit level is available)

X (2 digit)

2002

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

Availability of regional data (please specify)

X (counties)

2002

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

X (individual enterprises)

2002

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

Economic performance e.g.:

Turnover

X

2002

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

Exports

X

2002

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

Employment

X

2005

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1852)

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

X (individual enterprises_

2006

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

Number of discontinued enterprises, incl. bankruptcies –

X (individual enterprises_

2006

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

survival rate of enterprises

       

Others, specify:

       
Part-time entrepreneurs

Number of enterprises

       

Enterprises by branch (please specify which NACE code digit level is available)

       

Availability of regional data (please specify)

       

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

       

Economic performance e.g.:

Turnover

       

Exports

       

Employment

X

2005

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1852)

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

       

Number of discontinued enterprises, incl. bankruptcies –

       

Survival rate of enterprises

       

Others, specify:

       

2.2. Is it possible to crosstab or merge the demographic data identifying the individual persons running any of the five forms of entrepreneurships/business activities with the company data specified in question 9 in a common database for analytical purpose?

Table 9: Availability of demographic statistics about the entrepreneur within the emerging forms of entrepreneurship
 

Type of data available

Indicated access to data by an ‘X’ in the first column

First published

Indicate year

Time series of data

(Biannually, annually, quarterly, monthly, once only, other)

Data source for the data

One-person enterprises/ self-employed Number of enterprises held by each entrepreneur/owner        
Gender

X

2005

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1852)

Ethnicity        
Civic status (married, single, children)        
Age        
Geographical location

X (counties)

2002

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

Educational background (last registered education)

       
Current/previous employment of entrepreneurs (business experience)        

Sector familiarity of the entrepreneur – branch/NACE

X

2002

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

Working hours of the entrepreneur

X

2002

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

Income of the entrepreneur        
Other types of data (Specify):        
Part-time entrepreneurs Number of enterprises held by each entrepreneur/owner        
Gender

X

2002

annually

Lithuanian Statistics (http://www.stat.gov.lt/lt/catalog/viewfree/?id=1530)

Ethnicity        
Civic status (married, single, children)        
Age        
Geographical location        

Educational background (last registered education)

       
Current/previous employment of entrepreneurs (business experience)        

Sector familiarity of the entrepreneur – branch/NACE

       
Working hours of the entrepreneur        
Income of the entrepreneur        
Other types of data (Specify):        

2.3. Is the data freely accessible or does it require registration, payment and/or a special effort to access the data? Please explain the accessibility for each of the forms of entrepreneurs/business activities and datasets referred to above.

Table 10: List of statistical sources about the emerging forms of entrepreneurship

List data source/dataset

Explain the accessibility

Statistics Lithuania, Labour Force Survey

Freely accessible; more detailed information – available under special request

Statistics Lithuania, Statistics on Economic entities

Freely accessible

3. Research

3.1. Please describe studies and research available nationally for each of the forms of entrepreneurs/business activities.

Table 11: List of studies and research about the emerging forms of entrepreneurship
 

List the references (author’s name, title of publication etc, year of publication, organisation)

A short summary of the contents (e.g. topic covered, methodology applied)

One-person enterprises/self-employed

Analysis of regulation of individual activity. Study, prepared for the UM, 2007.

Current regulation of individual activity is analysed in the study. Regulation of individual activities is compared to the regulation of legal entities in particular European Union countries. Tax burden, information dissemination methods and other issues are analysed.

Blaziene I. Economically dependent workers in Lithuania. European Industrial Relations Observatory, 2007.

The category of economically dependent workers is analysed in the report. Three types of economically active individuals are analysed: self-employed individuals, individuals employed under authors’ contracts, individuals working in unofficial employment. Industrial relations, legal provisions, competitiveness as well as trade union representation of economically dependent workers are considered in the analysis.

Evaluation of optimal insolvency model of natural persons engaged in individual activities, farmers and other natural persons. National Association of Business Administrators, 2008.

The main principals of insolvency of natural persons engaged in economic activities (business) are described in the study. The proposals for legal regulation of insolvency of natural persons are proposed.

Blaziene I. Lithuania: Self-employed workers. European Industrial Relations Observatory, 2009.

The definition of self-employed workers applicable in Lithuania, social security regime of self-employed workers and employees as well as legal forms of employment other than dependent employment (work under business certificates, Work under individual activity certificates) are analysed in the study. Recent trends in self-employment and distribution of self-employment, economically dependent employment and distribution of economically dependent employment are presented. Collective representation and collective bargaining as well as employment and working conditions of self-employed are evaluated in the study.

Gruzevskis B., Blaziene I. Self-employment in Lithuania. European Employment Observatory Review, 2010

Distribution of self-employment in Lithuania is presented in the study. The study consists of the assessment of national labour market policies and recovery measures and analysis of quality of self-employment jobs.

Inga Blaziene, Rasa Zabarauskaite, Institute of Labour and Social Research

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