In recent decades, increasingly rapid innovation in medicine, education, means of transport, data storage, and communication have contributed to a general improvement in living standards. Still, from time to time, this successful narrative is hit by worries about the job-destroying effect of automation. If it closes old doors, opens new ones too.
Today we know that mass production machines lowered costs and prices, enabling working-class consumers to purchase things that before only aristocrats had access to and that today we take for granted (sugar, tea, coffee, watches, porcelain, glass, curtains, colorful clothes, etc.).
But how about jobs lost? Sometimes a single machine can replace dozens of workers. So aren’t machines a threat? In 1930, John Maynard Keyes wrote an essay suggesting that there would be mass unemployment following the automation of manufacturing.
Keynes was proven quite wrong though. Unemployment has not become endemic to the modern economy even though mechanization has meant manufacturing dropped from 32 percent of the workforce in 1910 to 8.5 percent in 2018. Jobs created in new areas replaced the jobs in manufacturing.
Moreover, as the twentieth century progressed, the job force grew to the point where female participation in the workforce grew to levels never before seen.
Hence, if technology eliminated some jobs, it clearly also brought some new ones into being: where a door is closed, others are opened.
In this scenario, the manufacturing industry plays an important role in Lithuania’s economy, generating 20% of the country’s GDP. Out of the 23,086 companies that comprise the sector, 576 are foreign-owned. Although outnumbered by their domestic counterparts, foreign-owned companies are often larger in size. They employ around 25% of the Lithuanian manufacturing labor force.
When it comes to talent availability, the sector employs around 13% of the country’s labor pool. Talent availability is especially high in smaller Lithuanian towns with strong manufacturing traditions.
“Establishing a factory in a smaller town provides us with ample choices when it comes to employees. If needed, we could hire 300 additional staff members within a single month”, said Vaidotas Grikšas, Plant Manager at Deltrian, UAB.
High education levels are a key characteristic of the Lithuanian talent pool, and engineering is a popular choice among students. In fact, according to Eurostat, Lithuania is third in CEE for the share of students choosing STEM studies. At the same time, more than 4 in 10 STEM students in Lithuania are enrolled in an engineering-related degree.
“Our original intent was to just set up a manufacturing facility in Lithuania. But after spending time here, we were impressed by the available talent and quality of education. Because of this, we decided to move our R&D activities to Lithuania as well. It was definitely the right choice for us”, shared Jacqueline Thormities, Director at GRH LT, specializing in Insulated Building Systems.
While the manufacturing landscape in Lithuania is growing as a whole, the automotive sector in particular has been making great strides in the past few years. According to the Baltic Automotive Components Cluster, in 2022 the sector created more than 2000 new jobs.
Automotive is leading not just in terms of jobs created but also in capital expenditure. Across the 127 manufacturing FDI projects implemented since 2012, capital expenditure (CAPEX) amounts to €3.5B, more than 10% of this being attributed to the automotive sector.
Released on April 27th, the Invest Lithuania Manufacturing Sector Report 2023 provides a comprehensive overview of the country’s manufacturing industry, with a special focus on FDI. The survey saw the participation of 62 foreign direct investment companies employing over 14,200 professionals. Together they represent 20% of the total FDI manufacturing labor pool in Lithuania.
In conclusion, it is the dynamic nature of the economy that leads to the constant expansion of industries, which in turn leads to the expansion of other industries that rely on goods previously produced. And as this process guides economic progress, new industries come about. Economic progression will never end, so long as we continue demanding goods, which will only lead to an increase in the quality of living.