More residents working for minimum wage

  • 2009-04-22
  • By Adam Mullett
VILNIUS - A recent Statistics Department report has revealed that the number of Lithuanians working for the minimum monthly wage is drastically increasing, having risen 0.8 percent year on year to 13.2 percent.
Trade Union leaders have cited the numbers as an indication of the impoverished state of Lithuania. The current minimum wage in the country is 800 litas (232 euros).

"The situation that so many people are working for the minimum wage shows very high social exclusion and poverty in the country. Lithuania is one of the countries with the highest social exclusion rate," Lithuanian Labor Federation Secretary General Janina Svediene told The Baltic Times.
"This situation also shows that some people get money in 'envelopes' 's illegal money for which employers do not pay taxes," Svediene said.
Giedrius Kadziauskas, vice president of the Lithuanian Free Market Institute, told TBT the minimum wage is too high.

"We may look at this particular number from two sides 's it is a pity that so many Lithuanians are only getting this for their monthly work, but on the other hand it shows that this high number shows that the minimum wage is too high. There are too many workers fixed on this amount and there is a possibility that some jobs have been cut from the market because of this high minimum wage."
"In this climate where people are losing jobs, potential jobs could arise, but this is hampered because the employers cannot promise [less] than the minimum wage," he said.

Svediene, however, attacked claims the minimum wage could be lower.
"The minimum salary is the state guarantee that allows people to survive and to ensure minimal living conditions. For these reasons, trade unions proposed to raise the minimum salary in 2008."
"Especially in the current situation when the costs for heating and products became so high, trade unions think that the minimum salary is too small. It shows that employers don't want to share the added value that employees earn for the company," she said.

Kadziauskas said that a high minimum wage is good in a boom time, ensuring that people get the right amount of money, but in a downturn, it can marginalize some groups in society who are not in high demand, but want to work.

"There will be big consequences for these unprotected people who are willing to work lower than minimum 's for example, young people without qualifications and people just out of prison, people with difficulties getting into the labor market. It is in their interest that the minimum wage not be decreased," he said.
"People would rather work for less than the minimum and just have a job to go to rather than being unemployed."

Public sector employees fared better than private with a drop in monthly minimum wage compared to all employees from 5.2 percent in 2007 to 4.9 in 2008.
In the private sector however, a rise from 8.0 to 8.6 percent was recorded.
Of the 13.2 percent, around half were part time employees.
The lowest paid portion of the economy is the accommodation and food service activities, with 21.7 percent earning the minimum wage. Second and third were other service activities at 17.7 percent and real estate activities at 14.4 percent.

The majority of Lithuanians earn between 2,501 and 3,500 litas per month, with 18.5 percent of society falling in between these boundaries. More than half of Lithuanians earn less than the average monthly wage of 2,327 litas per month.

This report was based on data of an annual earnings survey, the number of employees who earned the minimum wage or lower in October 2008 compared to October 2007.
The growth in minimum wage earners was reported to be partly influenced by an increase in the minimum wage from 700 to 800 litas from the beginning of 2008 and the consequent redistribution in earnings groups.