Decision on minimum wage increase delayed

  • 1998-10-29
  • Paul Beckman
VILNIUS - A three-sided discussion concerning an increase to the minimum wage in Lithuania Oct. 20, adjourned until the middle of November after no clear decision was reached.

In an effort to compensate for past increases in inflation, the government has proposed tacking on a 7 percent increase to minimum salaries. Major employers, however, argue that the increase would put a suffocating squeeze on businesses, considering their current economical situation.

A spokesman for the Social Welfare and Labor Ministry explained that the government proposed increasing the hourly minimum wage from 2.53 litas ($0.63) to 2.71 and the monthly minimum from 430 litas to 460 litas.

With 20 percent of the Lithuania's labor force currently working for the smallest salary the law allows, the spokesman hinted that the increase was deserved due to past increases in inflation.

The government believed the issue was important enough to get feedback from all involved parties. According to the spokesman, the project was therefore put in the lap of a three sided panel consisting of government, trade union and employer representatives.

"The trade unions were interested in the minimum wage increase," said the spokesman. "Plus they wanted to increase the non-taxable minimum living standard, of which the government side was against. The employers were against the wage increase, because in light of the Russian crisis, they said they would be forced to fire people should it be implemented."

By the meeting's end, a decision was reached which required the employers and trade unions to hammer out a compromise. Should they find common ground on the subject, the two sides will present their proposal to the government in their next scheduled meeting in mid-November.

The Confederation of Lithuanian Industrialists represented the interests of the major employers during the meeting.

According to Marija Jeciuviene of the confederation, the situation surrounding a minimum wage increase is not as clear cut as the local press suggested.

"The confederation is extremely worried because an opinion has developed that employers do not agree with the 7 percent increase, which is simply not true," said Jeciuviene. "But considering the conditions in the industrial economic sphere, this project as it is now is unrealistic."

Jeciuviene explained that the payment situation between Russia and Lithuania does not allow employers to increase wages at the moment. She also stated that as a result of Russia's financial crisis, industrial companies have incurred a significant debt to the state insurance company, Sodra.

"Actually, it is a move by the government to gain populistic favor," said Jeciuviene. "How can the government do this when some big factories are almost bankrupt? We are worried about workers and their families and offered to increase the minimum salary earlier, but step by step until the year 2000."

The confederation claims the proposed increase would produce such a strain on employers that it would result in the firing of workers. Those who received the wage increase would only benefit slightly because of the amount which would be eaten away by Sodra taxes.

All parties involved are hopeful that a settlement which is fair to all sides will emerge by the next scheduled meeting in November.

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