Lithuania: EIRO CAR on the Changing Business Landscape in the Electricity sector and Industrial Relations in Europe
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There are several electricity production and distribution companies in the Lithuanian electricity sector. As a tradition, social dialogue in these companies is quite well developed: trade union density there stands at 30-40%, collective bargaining coverage is close to 100%. By contrast, newly emerging power plants using RES actually have no trade unions at all. The main reason appears to be the size of such companies which is very small. Despite the presence of a large sectoral trade union (LEDPSF), it doesn’t have a partner at sectoral level (employer associations in the Lithuanian electricity sector neither assume the functions of the employer nor participate in sectoral collective bargaining); in the electricity sector, social dialogue takes place at enterprise level only.
1. General background information on the energy policy in your country and employment trends
1.1. Please explain briefly the main governmental strategies/action in relation to the electricity production and energy source mix. In your answer, please include information on the following aspects, where possible:
Final closing of Unit 2 at the Ignalina Nuclear Power Plant (IAE) on 31 December 2009 badly worsened the already existing dependence of the Lithuanian energy sector on the sole external energy supplier. Power generated in the IAE and satisfying about 70-80% of power demands in Lithuania was replaced by imported electricity (mainly from Russia) and increased imports of natural gas (which, inter alia, is used to generate power).
Given the absence of power links between Lithuania and the continental part of the EU and the fact that the total quantities of natural gas and most of electricity are bought from the sole monopolist supplier as well as the fact of many local power generation capacities being obsolete and little competitive, the above-mentioned changes even more worsened the energy security situation in Lithuania and reduced the reliability of energy supplies.
It is therefore extremely important in strategic terms that Lithuania reduces its dependence on the sole (monopolistic) energy supplier through increasing the use of local and renewable resources, strengthening the competitiveness of local power generation capacities and diversifying imports of energy resources that cannot be replaced by local ones.
The above-listed goals shall be primarily implemented by systematic restructuring of the energy sector, implementation of large strategic energy infrastructure projects (project of a new nuclear power plant, projects of power links with Poland and Sweden, construction of liquefied natural gas terminals and underground gas storages and other projects) and increase of overall efficiency of the power generation, transmission and consumption cycle, concurrently aiming at the development of renewable energy sources.
1.2. Government policy for increase of the share of renewable resources according to the RES directive
The National Strategy for the Development of Renewable Energy Sources approved by the Government of the Republic of Lithuania (LRV) in June 2010 indicates that Lithuanian energy policy places an increasingly great emphasis on the development of renewable energy sources. It is considered to be one of the most important priorities of the National Energy Policy.
With a view to creating more favourable conditions for the development of RES in the country, the following development directions of RES have been established for the three sectors, namely electricity, heating, and transport:
- to improve the legal basis – to create more favourable conditions of administrative regulation and access to infrastructure for the development of RES;
- to regulate separate fields and thus to encourage consumers and energy producers to opt for RES. To create conditions for producers of energy from renewable sources to participate in the market;
- to involve municipal institutions in the implementation of the policy for the development of RES and thus to ensure cooperation between state and municipal institutions; to implement the established goals in a more efficient manner;
- to create effective financial (including indirect) support schemes for the development of RES designated for consumers and producers taking into account added value generated in the course of using RES in the country as well as external benefit with a focus on projects resulting in the effective use of renewable sources, implementation of advanced technologies, and maximum economic efficiency as well to improve the attractiveness of RES to investors;
- to support scientific research and promote cooperation between science and business in the field of RES as well as to strengthen the scientific base and create conditions for the development of technologies of RES in the country;
- to improve public information and education, to organise trainings for relevant specialists on issues of RES as well as to enhance public understanding and acceptance of the development of RES and to ensure the quality of services to be provided.
In Lithuania, the Law on Energy from Renewable Sources (LERS) was adopted in May 2011. The Law, inter alia, provides for promoting the use of RES in Lithuania through application of a definite scheme of support, comprised of one or several promotion measures. The promotion measures are deemed to include the following:
- fixed rate;
- purchase of energy generated from RES;
- reimbursement of costs of connecting RES-using equipment to power networks or grids;
- reservation of power and conductivity or other relevant technical parameters in power networks or grids for connecting RES-using equipment;
- priority transfer of energy from RES;
- releasing electric power producers from the responsibility for balancing the produced electric power and/or reservation of power plant’s production capacities during the period of promotion (stimulation);
- support for the production and processing of agricultural raw materials for bio-fuel, bio-fuels for transport and bio-oils;
- requirements for the obligatory use of RES to generate power and/or of energy from RES as well as for the use of bio-fuels for transport;
- support for investments to RES-using technologies;
- other statutory privileges.
In order to increase the share of renewable resources, Lithuania extensively uses support from the EUs structural funds. In June 2010, measure VP3-3.4-ŪM-02-K “The use of renewable energy sources for energy production” was approved, under which up to 50% of projects’ value should be co-funded. A total of LTL 480 million is to be allocated for the measure. 15 projects are currently in progress; EU’s contribution to these projects amounts to LTL 144 million in total (for more details see http://www.esparama.lt/2007-2013/lt/gaires/priemones/priemone?priem_id=000bdd538000119d).
1.3. Are there any studies and documents assessing the employment impact of energy policies and of prospective changes in the energy mix within the electricity sector? This could include, for instance,
LERS defines only the issues relating to the qualifications and certification of professionals installing RES-using equipment. The Law stipulates that professionals installing the following equipment for renewable energy sources shall be certified in the established procedure:
- fuelled boilers and non-brick furnaces;
- and solar thermal energy production equipment;
- systems and heat pumps.
In 2007, a study on the regional and structural needs for training of professionals in the energy sector was conducted by UAB Ekonominės Konsultacijos ir Tyrimai (Economic Consultations and Research) by the order of the Ministry of Economy (UM). The purpose of the study was to analyse, substantiate and identify the regional and structural needs for training of professionals in the area of the use of resources, design, use and maintaining of energy using equipment and systems. The final version of the Study is available at http://www.ena.lt/Ataskaitos/Energ_spec_poreikis.pdf.
In 2008, the Vocational Education and Training Methodology Centre (KPMPC) prepared a report on labour market and education and training indicators ‘Monitoring skills demand and supply. Report on activities and analysis of the education indicators’. The electricity, gas and water supply sector is analysed among other sectors in the report.
In 2008, by the order of the Lithuanian Labour Exchange (LDB) ‘Medium- term forecasting methodology for skills demand in the Lithuanian labour market and forecasts by economic sectors’ were prepared (by BGI Consulting). The study focused on the electricity, gas and water supply sector.
In 2008, by the order of the Ministry of Education and Science (SMM), a study on forecasting the demand for professionals in Lithuania was prepared by the National Development Institute (NPI). This study identified the demand for professions in the energy study field.
To coordinate strategic issues of the formation of the qualification system, the Central Vocational Committee (CVC) and sectoral vocational committees (SVC) were established in Lithuania in 2010. A SVC is a collegial advisory body functioning on a cooperation basis and coordinating qualification-related issues in a specific economic sector. Energy sector is covered by the Energy and Environmental SVC. The SVC and the Qualifications Management Institution together ensure the match between qualifications and needs of a specific sector; advise the Qualifications Management Institution on issues relating to qualifications and competences required for such qualifications; set priorities for the preparation of vocational standards within the sector; submits proposals concerning preparation of vocational standards, qualification improvement of vocational teachers, etc.
A National Plan for the Training of Nuclear Power Professionals was approved in Lithuania in June 2011. The plan is aimed at ensuring sufficient availability of highly skilled nuclear power professionals required for a new nuclear power plant in Visaginas and the entire nuclear energy infrastructure. Implementation of the plan provides for the creation of the conditions for qualification improvement in teaching and research staff, and of the system for the organisation of students’ internships in foreign countries. Participants of the National Plan for the Training of Nuclear Power Professionals will include Kaunas Technological University (KTU), Vilnius University (VU), Centre for Physical Sciences and Technology (FTMC), Lithuanian Energy Institute (LEI).
1.4 To what extent are the social partners involved or consulted concerning the governmental energy policy, notably in relation to employment impacts? Has this happened on an ad-hoc basis or on a structural, permanent basis? Is there a special tripartite social dialogue body for such consultations? Did consultation take place at national level, at sector level, or at the initiative of individual companies? Please briefly provide details.
In 2010, there were a number of profiled committees set up at the Tripartite Council of the Republic of Lithuania (LRTT), including the Committee for Energy (CE). Regulations of the CE, as approved in June 2010, stipulate that the key tasks of the CE include the analysis and assessment of the main problems and perspectives of national energy as well as providing LRTT with opinions, conclusions and proposals on important issues in the area of energy pricing methodology, competition strengthening, optimisation of energy-related activities and licensing with a view to ensuring balanced and sustainable development of energy and other related sectors, satisfaction of the needs of energy and other resource consumers at the lowest cost, as well as on other energy-related issues that are reasonable to be put on the agenda at the sittings of the LRTT, consider with the LRV, ministries, Parliament of the Republic of Lithuania (LRS), National Control Commission for Prices and Energy (VKEKK) and other national authorities.
The CE consists of eight members representing Lithuanian employers and trade unions. The following permanent working groups are functioning at the CE: Electrical Power Group, Thermal Group, Law Group, Alternative Energy Group, Public Relations Group. Sittings of the CE are held once in 2-3 months. During 18 months of its activities, the CE considered several questions related to the price setting for heat, the need for a new nuclear power plant, etc. However, despite CE’s functioning at the LRTT, the committee has not analysed (at least till now) any issues relating to the development of social dialogue and industrial relations.
In general, trade unions think that the social partners are poorly involved in the governmental energy policy making. As a rule, the Ministry of Energy independently prepares various strategies relating to the development of the sector without the social partners, particularly trade unions, being involved in the process. According to the trade unions, they usually receive no answer from the ministry despite applying to it about a number of various issues.
2. Composition, structure and employment trends for the different resources used for electricity production
2.1 Please give an overview of the current sectoral composition of electricity production in your country, by giving for each of these seven groups of energy sources, the NAME of the three largest producing, the NUMBER OF EMPLOYEES of these companies, and the public or private STATUS of the EMPLOYMENT RELATIONSHIP with their employees.
On 31 December 2010, total installed capacity of Lithuanian power plants was 3,872 MW, of which thermal (fossil) power plants accounted for 68.2%, hydroelectric power plants - for 26.5% and RES-fuelled plants (plants using wind power and bio-fuel) – for some 5.3%. Most of power plants using RES are micro-enterprises. Lithuania generates up to 40% of total energy consumed in the country, while imports account for more than 60%.
Electricity production with
(the largest 3 in market share)
NUMBER OF EMPLOYEES
Reference year for the number of employees
Private/Public STATUS of WORKERS
|FOSSIL FUELS|| |
AB ‘Lietuvos energija’ (Lietuvos elektrinė)
UAB ‘Vilniaus energija’ (Vilniaus elektrinė 3)
Total number of ‘Vilniaus energija’ – 920
Kauno termofikacinė elektrinė
AB ‘Lietuvos energija’ (Kruonio hidroakumuliacinė elektrinė)
AB ‘Lietuvos energija’ (Kauno hidroelektrinė)
UAB Energogrupė (Kairėnų VE grupė)
Total number of ‘Energogrupė’ – 5
Laukžemės vėjo elektrinė
UAB ‘Vėjo gūsis’ (Liepynės vėjo elektrinių parkas)
Total number of ‘Vėjo gūsis’ – 11
UAB ‘Vilniaus energija’ (Vilniaus elektrinė 2)
Total number of ‘Vilniaus energija’ – 920
UAB ‘Arginta’ (Arginta FVJ-1)
Despite the number of companies indicated in the table above, the main electric power producers in Lithuania are the Lithuanian Power Plant (Lietuvos elektrinė), Kruonis Pumped Storage Plant (Kruonio hidroakumuliacinė elektrinė) and Kaunas Hydroelectric Power Plant (Kauno hidroelektrinė). Other electricity producers are micro enterprises generating a very tiny share of electric power.
2.2 Please provide an overview of the current organisation of electricity distribution in your country. Is there a single distributing company/body? Are there multiple companies? At national or territorial level?
AB LITGRID, electricity transmission block, was established in Lithuania in 2010 and AB LESTO, distribution network operator, started functioning at the beginning of 2011. Accordingly, the system of electrical energy in Lithuania is currently consisting of:
- Power plants producing electricity;
- High voltage electricity transmission lines and equipment, which are used to transmit electricity across long distances (LITGRID);
- Low and medium voltage lines and equipment grid for supplying electricity to end users (LESTO);
- Companies servicing the energy sector (TETAS, TIC, NT Valdos, etc.)
2.3 Please indicate the NAME of the three largest distributing companies, the NUMBER OF EMPLOYEES of these companies, and the public or private STATUS of the EMPLOYMENT RELATIONSHIP with their employees.
(the largest 3 in market share)
NUMBER OF EMPLOYEES
Reference year for the number of employees
Private/Public STATUS of WORKERS
|Distribution GRID|| |
2.4. Where there any significant developments/changes since 2008 for a specific company or source of electricity production in numbers of employees or in their public/private status? Was this due to the current economic crisis? Were there any instances of unbundling or mergers? With what consequences in terms of employment and industrial relations?
The shutdown of the IAE Unit 2 on 31 December 2009 reduced the installed capacity of Lithuanian power plants from 5,070 MW to 3,811 MW. Today the IAE employs about 2,000 workers. At the start of preparations for the closing of the power plant, there were some 5,000 employees.
Within the framework of restructuring of the electric energy sector according to the requirements laid down in the Third Energy Package of the European Union, there were four blocks of electric power companies formed in 2010. Electric power generation block was formed on the basis AB ‘Lietuvos energija’ (LE) by merging thereto Kauno hidroelektrinė (KHE), Kruonio hidroakumuliacinė elektrinė (KHAE) and Lietuvos elektrinė (LEL). Although there is no reliable information on the number of employees made redundant in anticipation of the merger, trade unions mention several hundreds employees dismissed as a result of the above-mentioned process.
Electricity distribution block was formed by setting up AB LESTO (LESTO). LESTO was established through a merger following the reorganisation of distribution network operators – AB Rytų skirstomieji tinklai and AB VST. LESTO started functioning on 1 January 2011. In the process of anticipation of the merger and in order to improve efficiency of the companies, more than 1,000 employees were made redundant.
Though the Lithuanian electricity production and distribution sector has been recently subjected to a number of changes, we can nevertheless say that the changes have not resulted in any fundamental changes in industrial relations. All the merged companies, which had trade unions and established social dialogue traditions in place before the merger, retained the same in the new companies, too (for more details see below).
3. Industrial relations in the electricity sector: Actors
1.1 Please provide details on the membership in the electricity sector and membership of the top 3 producing and distributing companies in employer’s organisation (see questions 2.1-2.3 above). Please provide information on the name of the trade unions organising in this subsector and the level of their membership, or otherwise provide overall data but please include indications on differences in membership densities across subsectors.
There is one strong sectoral trade union confederation functioning in the Lithuanian energy sector and joining workers from the electricity and thermal sectors, i.e. the Lithuanian Energy Workers’ Trade Unions Federation (LEDPSF). The trade union joins about 3,000 members in total, of which some 2,000 represent the electrical energy sector. Trade unions of all leading Lithuanian electricity production and distribution companies are the members of the LEDPSF.
Despite the presence of employer associations in Lithuania (Lithuanian National Association of Electricity Network Owners (NETVA), Lithuanian Electricity Association (LEEA), etc., which unite the main companies operating in the electricity sector, none of these associations assume the functions of the employer at sectoral level. If trade unions apply to such associations about collective bargaining, they are told that the associations “do not have powers” to bargain.
Therefore, the main level at which social dialogue takes place in the electricity sector in Lithuania is enterprise level – according to different judgements, trade union density in the Lithuanian electricity sector is about 30-40%; collective bargaining and collective agreements are in place in all leading electricity production and distribution companies (LE, LESTO, LITGRID).
LE, leading company uniting the three largest Lithuanian power plants, has four trade unions with a joint representation body of the trade unions; the company has a collective agreement in place.
LESTO has eight trade unions with a joint representation body; the company also has a collective agreement in place (signed in 2011).
LITGRID has one trade union functioning; a collective agreement was signed in the company in 2011.
In reference to electricity production subsectors, we can say that social dialogue is in place at a full extent in many leading companies in the fossil and hydro subsectors covered by the electricity sector. On the other hand, the wind, biomass and photovoltaic subsectors are comprised of very small power plants with few employees in each of them. Therefore, these companies, as a rule, don’t have trade unions in place though many companies operating in this area have joined relevant associations, such as the Lithuanian Wind Electricity Association (LVEA), the Lithuanian Biomass Energy Association LITBIOMA (LITBIOMA), the Association of Photo Electric Technologies and Business (FTVA).
3.2 To what extent are employees in the different subsectors (fossil/nuclear/RES) covered by trade union representation? Has there been any impact of the crisis on trade union representation?
Traditionally, employees are covered by trade unions in the largest electricity production companies, i.e. in large fossil and hydro companies (see above).
In Lithuania, trade unions of large electricity production and distribution companies cover up to 40% of the employees, while most of RES-fuelled power plants (using wind and/or photovoltaic sources) are very small (micro) companies with few employees only. As a rule, trade unions are absent in such companies.
3.3 Have there been major reorganisations/splits/mergers of trade unions or employers organisations in the sector during the last five years?
Major reorganisations/splits/mergers of trade unions are linked to the reorganisations/splits/mergers in the main companies of the electricity production and distribution sector. Following the reorganisation of the leading electricity production and distribution companies in 2009-2010 (by merging LEL, KHE and KHAE into LE and RST & VST into LESTO), the trade unions functioning in the former companies set up their joint representation bodies in the new companies and are now working together.
As a result of the reorganisation of the electricity sector, there also emerged a new employer association, NETVA, which joined LE, LSETO, LITGRID and other companies. However, as already mentioned, NETVA does not assume the role of sectoral employer organisation and does not participate in the sectoral social dialogue, either.
Development of RES-using power plants in Lithuania was followed by the establishment of new associations related to these fields (LVEA, LITBIOMA, FTVA).
3.4. Have new actors (trade unions or employers organisations) been founded in recent years, especially in the newly evolving RES industries? Or is the industry covered by established actors?
As it was mentioned above, RES industries (except large hydro subsector companies) consist of micro-enterprises in Lithuania and usually have no trade unions in place. ‘Old’ trade unions do not appear to attempt to cover employees of the newly emerging sector.
Likewise, new employer organisations - LVEA, LITBIOMA, FTVA – have been recently established in Lithuania to join enterprises functioning in the RES sector. Although all three associations are the members of the peak employers’ organisation – Confederation of Lithuanian Industrialists (LPK) – they do not take the role of the sectoral employer.
3.5. Have the established sectoral actors (both trade unions and employer organisations) started any initiative to extend their representation to the new emerging parts of the sector? Please describe such initiatives and their results so far.
As already mentioned, established sectoral trade unions have not started any initiative to extend their representation to the new emerging parts of the sector, and employers of newly emerging parts of the sector established new associations (however, these associations do not assume the role of sectoral employers’ organisations and do not participate in the sectoral social dialogue).
4. Role of collective bargaining and social dialogue
4.1 Please provide information on the structure of collective bargaining in the electricity sector
Similar to any other economic sectors, collective agreements in the Lithuanian electricity sector are traditionally signed at company level only. As it was mentioned before, despite the presence of several employer associations in the sector, none of them has assumed the functions of the sectoral employer and participated in sectoral collective bargaining.
The situation is absolutely different if we compare the ‘old’ sectors, covering large fossil and hydro power plants and electricity distribution companies, and newly emerging sectors comprised of small hydro, wind, photovoltaic RES-using power plants.
Almost 100% of the employees working in the ‘old’ electricity sector are covered by collective bargaining and collective agreements in Lithuania – trade unions are functioning in all large Lithuanian electricity production and distribution companies along with collective bargaining and collective agreements being in place at company level.
By contrast, the newly emerging sectors actually don’t have trade unions and collective bargaining does not take place in theses enterprises, either.
4.2 Please comment on the most recent collective agreements reached at sector level and at company level
As already mentioned before, there have been no collective agreements signed at sectoral level in the electricity sector in Lithuania so far.
In 2010-2011, new collective agreements were signed in all main ‘old’ electricity production and distribution companies – LE, LESTO and LITGRID.
As regards wages, we can say that workpay in the energy sector has always been higher than the average in Lithuania (by 50% or 1.5 times). For example, in 2010 average gross wage in the NACE D.35 (Electricity, gas, steam and air conditioning supply) sector in Lithuania was equal to LTL 2950 (EUR 855), whereas the average in the country was equal to LTL 1988 (EUR 576). In 2008-2011, average gross wage in Lithuania decreased by 7.6%, whereas in the D.35 sector – increased by 1.1%.
Currently, trade unions of the energy sector are focused on the implementation of an objective system of the remuneration for work both in individual sector enterprises and at sectoral level, where signing of a sectoral collective agreement is expected one day to entrench a wage-setting system common for the whole sector.
With this in mind, many electricity-sector companies try to insert certain provisions concerning the objective wage-setting system in their company-level collective agreements. For example, such provisions may stipulate that wage-setting principles will be developed and considered at the company in the nearest future. (Some companies already have the said principles and wage-setting methods in place).
As a rule, collective agreements of a number of electricity-sector companies stipulate that “Wage shall consist of a fixed part and a variable part as well as of benefits and additions (payable in accordance with the Labour Code (LC) and other laws)’.
Referring to working time, we should say that the Labour Code valid in Lithuania is quite extensive and explicit in terms of working hours in Lithuania. Therefore, this issue, as a rule, is not a subject of bargaining.
It is worth mentioning that collective agreements of electricity-sector companies usually point out employee training and qualification improvement, stipulating that “the employer plans to assign funds for employee training and create conditions for qualification improvement”, “seeks to provide training to the employees and create them conditions to improve”, etc.
4.3. Cooperation between the social partners and government
As it was mentioned above, the social partners are weakly involved in strategy building in the energy and/or electricity sectors in Lithuania. As a rule, this function is deemed a prerogative of the EM.
It was likewise mentioned, that the Committee for Energy was set up at the LRTT in 2010 to have the most important issues of the energy sector discussed by the social partners. Although the committee is functioning (with sittings held once in 2-3 months), it doesn’t appear to play somewhat more important role in energy policy (at least so far).
4.4. Please provide information about the views of the trade unions and employer organisations on the main changes regarding employment and working conditions affecting the sector since 2008 and especially on the impact of the current crisis (for instance on employment trends, quality of jobs, working hours, wages, fixed-term employment, part-time, temporary agency work, participation in training, outsourcing, subcontracting etc.).
It is worth while noting that restructuring of the electricity sector in Lithuania coincided with the global financial and economic crisis. It is therefore quite difficult to identify the impacts of the crisis and that of the reorganisation.
We can say in general that both of the above-mentioned situations contributed to the choosing of activity efficiency improvement as one of the core principles of the restructuring of the electricity sector. This resulted in certain processes of cutting the number of employees in the companies to be merged and considerable increase in the workload for employees who continued employment in the new companies. Naturally, the increased workload has both direct and indirect impact on a number of other working conditions of the employees. Unfortunately, we cannot further elaborate on the issue due to the lack of any studies or research in this field.
It’s worth mentioning that the electricity sector has been recently exposed to many changes, restructuring, mergers, etc. in general. Decommissioning of the IAE has taken long efforts (the IAE was shut down on 31 December 2009) followed by the reorganisation of main electricity production and distribution companies, emerging of new RES-using power plants, etc. Yet, in spite of the aforementioned quite fundamental restructuring processes, they didn’t appear to have any major impacts on industrial relations: long-established trade unions of the sector, operating in the large electricity production and distribution companies, though caused to form certain joint representation bodies, nevertheless remained unchanged. Large Lithuanian enterprises continue collective bargaining and have collective agreements in place.
By contrast, there is actually no social dialogue in the newly emerging sectors. We believe the main reason for this is the size of most of new RES-using enterprises, which are either micro or small ones, and, as a rule, have no trade unions. On the other hand, ‘old’ trade unions do not attempt to cover the new sector. This is probably not a coincidence, as small, RES-oriented enterprises are establishing different relationships between employers and employees, facing different problems and having different working conditions, as compared to large electricity production and distribution companies in Lithuania. That’s why ‘old’ trade unions don’t find it very reasonable to assume representation of the interests of these workers.
Inga Blaziene, Institute of Labour and Social Research