Prime Minister proposes raising minimum wages to EUR 261 on condition that Parliament liberalizes labor relations

As planned before, the minimum wages would be raised to 850 litas from July. At the same time, the Cabinet plans to submit Labor Code amendments to to the Seimas.

“All studies show that flexibility of labor relations is one of the fundamental provisions for creating more jobs in Lithuania,” Prime Minister Andrius Kubilius told reporters after the government’s sitting on Monday.

The raising of minimum wages without “balancing” labor relations “might see the number of jobs decline” by up to 5 percent, he said.

Kubilius would not agree that the amendments represented downgrading og labor conditions for the workforce.

“I disagree with such a statement [that the conditions are being worsened] categorically. We are just implementing what other states, like Estonia, implemented long time ago,” he said.

Kubilius pointed out that the government sought to protect workers and also to ensure that the employers were “not afraid” to create jobs.

Transport Minister Eligijus Masiulis, who chairs the Liberal Union party, agreed that labor relations should be reviewed concurrently with raising minimum wages.

“The wages shall grow but labor relations shall be reviewed,” he told reporters.

The raising of wages by up to 5 percent might lead to a reduction in the number of jobs hence this measure had to be offset by more liberal labor relations, the minister said.

The government proposes to reduce the period of notice of dismissal, to cut the severance pay, to shorten annual minimum leave to 20 workdays and to eliminate extra leave. Other amendments to the Labor Code also include possibilities to conclude fixed-duration contracts of employment for permanent work and to simplify the procedures for the dismissal of pensioners.

In April, the Tripartite Council proposed to the government to raise the minimum wages by 100 litas, to 900 litas. President Dalia Grybauskaitė has also proposed to raise the minimum wages to 900 litas.

However, Kubilius said in late April that businesses that had sufficient financial resources could raise the wages of their workers at their own initiative and the issues pertaining to minimum wages were given ‘undue prominence’.

Some analysts find it likely that the minimum wages may be raised by 100 litas from as early as July. They note that it is unfavorable for the authorities to postpone the decisions favored by the majority of population on the eve of general elections.