linked to the average annual change in the economy - wide wage level. from today ’ s perspective, this is undoubtedly the right solution, which is to be viewed as a precondition for a more consistent and sustainable pension system, dissociated from political cycles. or rather – as one of the necessary preconditions. and clearly not sufficient. after carrying out comprehensive research, we came to the conclusion that changes which ( should we commit to implementing them ) would increase transparency of the pension system, boost motivation to participate in the social security net and reduce incentives for acting in the shadow, are both necessary and possible. people need clarity. if, on our virtual personal account, we could see how much we would accumulate for our future pension given our official wage “ on paper ”, everyone would think twice before agreeing to take payments “ under the table ”. this would not cost much and would not require particular expenses or long - term investments. yet, it would bring us closer to a few of our basic goals. it would improve the situation of sodra. more importantly – it would enhance the financial situation of each future pensioner. and, most importantly, it would change our understanding of what social security is and whom – the authorities or the insurance policy holder as well – it is necessary for. one more thing that we need to keep in mind when discussing this reform – we must see the pension system as an integral whole. this implies not making artificial divisions between its elements ( pillars ). i mentioned education. i am not going to argue for what is obvious. income possibilities are directly linked to the possibilities for achieving quality education. meanwhile, insufficient utilisation of the human capital potential increases the risk of getting stuck in the “ average income trap ” without having caught up with the wealthier western economies. this is why i hope that in our today ’ s discussions on the causes of income inequality and the possible solutions, we will also focus on this, i dare say, essential pillar. we have been hearing about the necessity of reforming the education system nearly as long as we can remember. however, today we really are at the “ either – or ” point, when we must undertake essential reforms. with these reforms, we must make sure that the bulk of money allocated to the sector is used to ensure high quality education in the whole country rather than just maintaining the existing infrastructure. this is the piece of advice that we constantly receive from various international organisations. 3 / 4 bis central

bankers'speeches dear colleagues, a few days ago, while discussing the latest economic projections, a colleague of ours presented the following facts : labour resources are depleting ; the reserves have dried up. hence, the number of the employed has decreased as well. projections suggest that it will continue on the downward path. the conclusion was laconic : we have reached the end of the road – lithuania is shrinking. i must say that until now the insights of our economists have been rather precise. i hope the latter insight will not come true. to be more exact, i hope that we will finally undertake solutions and, most importantly, actions for it not to be fulfilled. let me assure you that the bank of lithuania is ready to contribute with its expertise. i am sure that members of the academia, policymakers and representatives of the private sector participating in today ’ s conference will add to this by sharing their knowledge as well. a multilayer discussion and insights from different perspectives should help us better comprehend the underlying causes of the issue at hand and, hopefully, provide us with effective solutions. thank you for your attention. i wish you a meaningful discussion. 4 / 4 bis central bankers'speeches