Lithuania: Annual Review – 2010

  • Observatory: EurWORK
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  • Published on: 17 November 2011



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In 2010, there were no fundamental in politics or industrial relations in Lithuania. There were no new collective agreements signed at national or sectoral level in 2010. The National Agreement of 2009 remained valid throughout 2010 and ensured certain social peace during the economic downturn. Despite the complicated economic and social situation, not a single strike or warning strike was staged by trade unions in 2010. There were some laws and/or amendments were adopted/drafted in 2010 with a view to ensuring better flexibility in the labour market. Likewise, amendments to the Law on Trade Unions were drafted whereby membership in trade unions was extended providing more people with an opportunity to join trade unions. In 2010 social partners agreed to establish 11 new committees under the LRTT, working in particular areas. The LRTT discussed the possibilities of increasing the minimum monthly wage and the necessity to start pension reform in Lithuania.

1. Political developments

No significant political developments took place in Lithuania in 2010. The elections to the Parliament of the Republic of Lithuania (LRS) took place in October 2008 and in December the new Government of the Republic of Lithuania (LRV) was formed (LT0903029Q). Both LRS and LRV continued working in 2010 with minor changes. President of the Republic of Lithuania Ms. Dalia Grybauskaite was elected in May 2009. At the end of 2010, activities were started in preparation for municipal elections to be held in March 2011. This added activity to various political campaigns.

2. Legislative developments

The main legislative developments that took place in 2010 were related to the amendments of the Labour Code (LC) and drafting of two new legal acts – the Law on Temporary Employment and the Law on Illegal Work Prohibition.

LC amendments

The LC amendments legalised an opportunity to sign fixed-term employment contracts on a temporary basis (for a maximum period of 2 years) for newly established jobs. This is believed to encourage creation of new job opportunities, as employers would have fewer obligations than in case of permanent employment contracts.

With the view of ensuring employment security, the LC amendments legalised a new institute in labour law – suspension of employment contract in case of employer’s failure to fulfil his obligations. An employee shall be entitled to suspend his employment contract for a period of up to 3 months if the employer fails to perform his obligations in respect of the employee or to pay the whole wage/salary due to the employee for 2 consecutive months.

Furthermore, the LC amendments entrenched a new type of employment contract which has been applied in other Member States for quite long, i.e., employment contract for teleworkers which is also expected to contribute to more flexible labour organisation in the country. The LC amendments stipulate that specific features of a telework contract will be regulated by legislation adopted by the Government and in collective agreements, taking into account the provisions of the Framework Agreement on Telework.

LC amendments liberalised some conditions of opt out and overtime as well.

New draft laws

The Draft Law on Temporary Employment contains definitions of a temporary employment enterprise (TEE), temporary employee (TE) and temporary work user (TWU). The Draft Law defines the rights and obligations of a TE and TWU, and entrenches the legal relations between a TEE and TWU. According to the law drafters, adoption of this law will serve as a basis for the establishment of TEEs and for the engagement of TEEs in the specific activities of temporary employment, i.e., for the creation of jobs.

In November 2010 the Law on Illegal Work Prohibition was drafted by the SADM and submitted for the consideration by the stakeholders and social partners. The purpose of the law is to prohibit illegal work, including employment of illegally staying third-country nationals. The draft law defines the characteristics of illegal work, sanctions and measures against employers who allow illegal work and against illegal employees, procedure for imposing such sanctions and measures, illegal work control authorities and their functions as well as protection of the rights of illegally employed people. The drafters of the law expect the law to come into force on July 2011.

3. Organisation and role of the social partners

Again, there were no fundamental changes in the organisation and role of the social partners in 2010 – there were three peak trade union and two peak employer organisations operating in Lithuania. According to findings published by the Statistics Lithuania (STD) in 2010, about 13% of total employees were covered by trade unions and some 15% of active economic entities were members of various business and employer associations in 2009. A similar pattern apparently prevailed in 2010, too.

The current Law of the Republic of Lithuania on Trade Unions (LTU) stipulates that only employed persons are allowed to join trade unions, while unemployed, retired and other people are not allowed to exercise this right. In order to modify the existing legislation, in 2010 amendments to the LTU have been drafted and submitted for consideration by the parties. The amendments are aimed at granting the right to establish and join trade unions to all citizens of the Republic of Lithuania and foreigners capable of work. The amendments are expected to be adopted already at the beginning of 2011.

The main developments in 2010 took place in the organisation and activities of the main national level social dialogue institution – the Tripartite Council of the Republic of Lithuania (LRTT). In 2010 social partners at the LRTT have decided to set up several new committees in order to extend the scope of the council’s activities. The LRTT has approved basic regulations of the committees, establishing their functions and rights, as well as their formation, work organisation and dissolution procedures. In 2010 social partners agreed to establish 11 new committees, working in particular areas, however currently only nine of them are active.

4. Collective bargaining developments

Collective bargaining at national, sectoral and enterprise level

The national agreement (NA), signed between the LRV and social partners in October 2009 (LT0911019I), expired at the end of 2010. Although not all provisions of the NA have been implemented, all parties agreed about benefits of the NA to all signatory parties. Therefore, discussions concerning renewal of the NA were started at the end of 2010 (LT1011019I). Suggestions for a new agreement included calls for more involvement of the social partners, proposals to combat the shadow economy and for reforms in education, health and social security. Despite consent reached among the social partners to discuss a new NA, no serious negotiations on the NA were initiated by the end of 2010.

The task of registering national, sectoral and territorial collective agreements in Lithuania is assigned to the Ministry of Social Security and Labour (SADM). In 2010 only one valid sectoral collective agreement was in the register of the SADM – sectoral collective agreement signed on 19 January 2007 between the Lithuanian Journalist Union (LŽS) and the Association of National Regional and Urban Newspaper Publishers (NRMLLA) (LT0702029I). There were no new sectoral collective agreements signed and duly registered with the SADM in 2010. Accordingly, there is only one valid (and officially registered with the SADM) sectoral collective agreement in Lithuania; the same situation persisted in 2007-2009.

Enterprise-level collective agreements are not registered in Lithuania and therefore the exact number of enterprise-level collective agreements is unknown. The State Labour Inspectorate (VDI) provides with information on the enterprises inspected in 2010 and social dialogue situation thereat. According to VDI’s data, out of nearly 7,500 enterprises inspected during 2010, almost 250 enterprises have collective agreements signed. This amounts to more than 3% of all the inspected enterprises. In earlier years, the VDI has recorded bigger share (approximately 6% in 2009) of enterprises with collective agreements in place. This figure however does not reflect the situation on the national scale, because the VDI normally conducts its inspections in enterprises in response to claims/complaints.

Wages and salaries

The Labour Code of the Republic of Lithuania (LC) sets forth, that 'conditions and rates of remuneration for work, tariffs and qualification requirements for professions and positions, work quotas, the procedure for setting tariffs for work and employees shall be laid down in collective agreements. Specific hourly pay on the rate basis, monthly wages, other forms of remuneration for work and conditions, work requirements (output, time, service and other requirements) shall be laid down in collective agreements and contracts of employment'. As there is neither national collective agreement, nor sectoral collective agreement signed in the country, the wage issues are set forth in some enterprise level collective agreement, however they are not publicly available. Further we present the the general trends in pay in 2010.

After some 20% annual growth in 2006-2008, wages and salaries in 2010 continued to decrease – the overall decrease in 2010 comparing to the 2009 was equal 3.2% (whereas in public sector wages and salaries decreased by 5.1%, in the private – by 2% (see Table 1).

Table 1. Average monthly gross wages and salaries in Lithuania in 2008-2010 (including individual companies), LTL
 

2008

2009

2010

Total

2151.7

2056.0

1990.0

Public sector

2334.9

2285.6

2168.0

Private sector

2058.3

1915.5

1878.0

Increase (comparing to the previous year, %)
Total

119.4

95.6

96.8

Public sector

123.4

97.9

94.9

Private sector

117.2

93.1

98.0

Source: Lithuanian Statistics

The situation stabilised at the end of 2010, when average wages stopped decreasing and even showed a slight increase in the public sector (as compared with the corresponding period last year). However, wages were 9% lower both in the public and the private sector in the 4th quarter of 2010 compared with the 4th quarter of 2008 (see Table 2).

Table 2. Average monthly gross wages and salaries in Lithuania in 2008-2010 (without individual companies), LTL

Year

2008

2009

2010

Quarter

1

2

3

4

1

2

3

4

1

2

3

4

Total

2151

2237

2320

2319

2193

2173

2142

2118

2031

2056

2082

2122

Public sector

2179

2287

2390

2465

2319

2317

2272

2209

2136

2167

2178

2251

Private sector

2136

2208

2279

2230

2111

2074

2052

2052

1955

1977

2017

2033

Increase (comparing to the same quarter of previous year, %)
Total

124

123

119

113

102

97

92

91

93

95

97

100

Public sector

123

124

123

121

106

101

95

90

92

94

96

102

Private sector

124

122

117

108

99

94

90

92

93

95

98

99

Source: Lithuanian Statistics

Wage levels (along with limited supply of job vacancies) remains one of the main reasons for emigration of Lithuanian people (particularly young people and those capable of work).

Working time

There is no collectively agreed working time in Lithuania. Working hours are not regulated by the collective agreements. The LC set forth statutory maximum working week and statutory maximum working day in Lithuania. According to LC the statutory maximum working week in Lithuania is equal to 40 hours (maximum working time, including overtime, must not exceed 48 hours per 7 working days) and statutory maximum working day is equal to 8 hours (for employees employed in more than one workplace or in one workplace but under two or more employment contracts, the daily working time may not be longer than 12 hours).

Actual average monthly working time per employee in Lithuania in 2008-2010 is presented below (see Table 3).

Table 3. Average actual working time per employee per month in Lithuania in 2008-2010 (hours)

Year

2008

2009

2010

Quarter

1

2

3

4

1

2

3

4

1

2

3

4

Hours

150

152

144

157

150

150

143

160

151

153

144

159

Source: Lithuanian Statistics

As one can see from the table, on average number of working hours in 2010 increased compared to both 2008 and 2009.

5. Responses to economic downturn

As already mentioned (LT1004019Q), in response to the extremely complicated economic situation in the country (with GDP drop by almost 15% in 2009) and the government’s (LRV) pursal of unpopular austerity measures, in 2009 the government initiated signing of the National Agreement (NA) (LT0911019I), which remained in force for the whole year 2010. The NA expired on the 31 December 2010. The NA, inter alia, provided that during the crisis the LRV would not adopt any decisions having effects on the social and economic condition of the population without prior consultation of the social partners. In their turn, the social partners committed themselves to ensure social peace – not a single strike or larger protest campaign was held in 2010.

With extremely high levels of unemployment in Lithuania, Social partners devoted a lot of time to seeking measures to boost employment (Unemployment reached 18% in 2010). There was shortage of workers possessing required qualifications. Hence, the social partners (employers in particular) frequently initiated discussions on how to better match between labour supply and demand. In 2010, issues relating to vocational education and training, lifelong learning, quality of high education in Lithuania, etc. were repeatedly raised and put on the agenda of Lithuanian Confederation of Industrialists (LPK) meetings and various public events.

In November 2010, the LPK and representatives of governmental institutions discussed possibilities to promote incentives to work in Lithuania (LT1012019I). As one of the tools to promote incentives to work – the question of the minimum monthly wage’s (MMW) increase was raised by the social partners towards the end of 2010 (in the context of discussing opportunities for the renewal of the NA). Though social partners in general agreed on the necessity to increase the MMW, the final agreement on the MMW increase in 2010 was not reached (LT1102019I).

6. Pensions

Pension reductions in 2010-2011

The economic downturn, which started in Lithuania at the end of 2008, had dramatic implications on the financial capacity of the State (including that of the State Social Insurance Fund, Valstybinis socialinio draudimo fondas (Sodra)). As a result, at the end of 2009 the LRS passed a Temporary Law on Recalculation and Payment of Social Benefits providing for, inter alia, temporary reduction of old-age pensions in 2010-2011. On demand of the President of the Republic of Lithuania, no reductions were applied to pensions amounting to LTL 650 (EUR 188) and less. All other pensions were reduced pro rata to their size applying a reduction rate from 2% to 12%. In addition, the temporary law provided for reduction of pensions to working pensioners. This type of reduction also depended on the earnings of pensioners: earners of LTL 200 (EUR 58) per month were applied a 2.5% pension reduction rate and pensioners earning LTL 4,200 (EUR 1217) and more per month were applied a 70% pension reduction rate.

The Law stipulated that the reduced pensions will be compensated from 2012. Procedure of compensation is to be considered at the LRS in 2011. There was no draft procedure for the mentioned compensation prepared by the LRV in 2010. However, Concept of the Procedure for Compensation of Reduced State Social Insurance Old-Age Pensions and Incapacity for Work Pensions was approved in July 2010.

Pension system reform

In 2010, a working group led by Mr. D.Jankauskas, Minister of Social Security and Labour, worked out a proposal for the reform of state social insurance and the pension system providing for short-term and long-term measures. The plan was approved by the LRV in June 2010.

One more working group was set up in July 2010 with a view to elaborating the pension system reform and submit it to the LRV at the beginning of 2011. In autumn 2010, hearings at the LRS were organised for the concerned members of the LRS, representatives of the social partners, other non-governmental organisations and public authorities. The purpose of the questionnaire survey was to seek a broader political consensus for the reform not only at the LRV, but at the LRS as well.

In December 2010, a draft resolution was registered at the LRS ‘On the Approval of Guidelines for the Reform of State Social Insurance and Pension System’. The draft resolution proposed to commission the LRV to approve an implementation plan for the mentioned reform guidelines by 1 April 2011 and to submit relevant legislation drafts to the Parliament during the 2011 spring session of the LRS. It is expected that the draft resolution will be approved by the Parliament at the 2011 spring session.

7. Developments in working conditions

In 2010, there were no comprehensive surveys carried out in Lithuania enabling objective evaluation of developments in working conditions during 2010 (or data of such surveys are not publicly available/accessible). The main sources for drawing some conclusions about developments in working conditions include information published by STD on employment status, working time, job stability, wages and salaries, and VDI review of occupational health and safety situation and compliance with legal regulations in Lithuanian enterprises in 2010.

Career and employment security

According to the Lithuanian Statistics (Labour Force Survey), in 2010 there were 1,344 million (or by 5.1% less comparing to 2009) employed persons in Lithuania. In the third quarter 2010 approximately 9% of all employed persons were self employed, 89% - employees and 2% - contributing family workers; comparing to the same period of 2009 share of self employed decreased by 1 percentage point.

Accordingly in the third quarter 2010 less employed persons were working part-time – almost 7% (in the third quarter 2009 this share was 8%).

In the 2010 by almost 40% increased number of employees working under temporary contracts – from twenty thousand four hundred up to twenty eight thousand. Accordingly the share of temporary employees increased from 1.7% up to 2.3%.

Average wages in 2010 decreased further and only in the fourth quarter was a minor increase recorded. At the end of 2010 the average gross wage in Lithuania was equal to LTL 2122 (EUR 615) per month, gender wage gap at the same period was equal to 14%.

Health and well-being of workers

The main purpose identified in the Strategy of Occupational Health and Safety for 2007-2012 of the Republic of Lithuania is to seek a reduction in accidents at work by 25% per 100,000 workers. In 2010, as compared to 2006, a decrease in fatal accidents at work per 100,000 workers was about 33%. However, an increase both in the number of fatal and severe accidents at work was observed in 2010, as compared to 2009 – fatal accidents in 2010 accounted for 4.8 per 100,000 workers (in 2009 for 4.3), severe accidents in 2010 accounted for 12.3 per 100,000 workers (in 2009 for 9.2). According to data published by VDI, transport, manufacturing and agricultural companies accounted for most fatal accidents at work – in 2010 22% of all fatal accidents at work were recorded in transport sector, 20% – in manufacturing and 16% – in agricultural companies. The biggest number of severe accidents at work was recorded in construction, transport, manufacturing companies (particularly, in wood processing and furniture companies) – in 2010 24% of all severe accidents at work were recorded in construction, 21% – in transport sector and 18% – in manufacturing companies.

According to the National Register of Occupational Diseases, 472 occupational diseases were diagnosed to 313 persons in Lithuania in 2010. This is nearly half of the number in 2009. In 2010, diseases of the musculoskeletal system and connective tissue accounted for 49%, aural diseases accounted for 26%, nervous system diseases accounted for 20% and other diseases made up 6% of the identified occupational diseases. By the types of economic activities, manufacturing, construction and transport accounted for the majority of occupational diseases in 2010.

8. Major conflicts and restructuring cases

Industrial action

Traditionally, there are very few strikes and warning strikes held in Lithuania. With the exception of 2007-2008, there are 1-5 strikes per year staged in the Lithuania. As already mentioned, in 2010 the National Agreement of 2009 was in force, so not a single strike or warning strike was held in Lithuania in 2010.

In 2010, trade unions took some efforts to initiate a mass protest meeting, but these efforts confined to low-scale pickets held near ministries and other public authorities in October - the picketers gathered at the Ministry of Culture (KM), Ministry of Economy (ŪM), Ministry of Education and Science (SMM), Ministry of Environment (AAM), Ministry of Finance (FM), Ministry of Health (SAM), Ministry of Justice (TM), Ministry of Social Security and Labour (SADM), Ministry of Transport and Communications (SM), the Lithuanian Confederation of Industrialists (LPK), the Lithuanian Business Employers’ Confederation (LVDK) and the Municipality of Vilnius City (VMS). Afterwards the picketers pointedly marched past the headquarters of the LRV and LRS and later gathered in the courtyard of the Lithuanian Trade Union Confederation (LPSK) to speak out against growing unemployment, rising prices, economic migration of working-age people and wage cuts. (LT1010019I).

Restructuring

In 2010, the Lithuanian Labour Exchange (LDB) registered 107 notices of group redundancies and about 6,000 employees were notified of pending dismissals. As compared to 2009, the number of notices has fell by three times and the number of employees notified of pending dismissals has halved. Major redundancies were observed in the public sector at the beginning of the year. These group redundancies had to do with elimination of administrations of county governors, reorganisation/closing of some schools, health care institutions and territorial (local) customs officers as well as reorganisation of the Lithuanian Post (LP).

According to the Centre of Registers (RC), in 2010 most companies were liquidated in January and February (800-900 companies per month). Later on there was a significant decrease in these numbers.

9. Other relevant developments

In 2010, there were no other significant developments in Lithuania.

Inga Blaziene, Institute of Labour and Social Research

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