Agreement finally reached on minimum wage increase

After six months of debate on the issue, in January 2005 the Lithuanian government and social partners finally agreed to increase the national minimum wage by 10% with effect from 1 July 2005.

The issue of the next increase to the national minimum wage increase was discussed by the social partners and government four times during the second half of 2004 (LT0410101N and LT0501101N). Currently the minimum wage is LTL 500 (EUR 145) per month and LTL 2.95 (EUR 0.85) per hour. These rates were established after Lithuania joined the EU on 1 May 2004. In September 2004, the Ministry of Social Security and Labour (Lietuvos Respublikos Socialinės apsaugos ir darbo ministerija, SADM) proposed to the social partners a 20% increase in the minimum wage. However, it was decided to suspend debate on the issue until any potential negative consequences of such a rise had been assessed.

On November 2004, a research report was submitted to SADM which concluded that all the preconditions for an increase in the monthly minimum wage up to LTL 600 (EUR 174) were in place. Though the government and social partners agreed with the conclusions of the report in principle, when the issue was discussed at the Tripartite Council of the Republic of Lithuania (Lietuvos Respublikos Trišalė taryba, LRTT) (LT0501103F) on 7 December 2004, it was only the representatives of trade unions that unambiguously supported the idea of increasing the minimum wage. Representatives of employers and the government opposed the increase, though without indicating any substantive arguments.

Finally, the social partners and government met again on 25 January 2005 to discuss the increase in the national minimum wage. Trade unions unambiguously supported the idea of a major minimum wage increase, as they had at previous meetings. The new government stated its general approach of supporting further increases in the minimum wage until it reaches the level of LTL 600 (EUR 174) a month in 2006, and proposed to the social partners a 10% increase from 1 July 2005.

After prolonged discussions - employers’ representatives on the LRTT, for example, complained about permanently increasing production costs due to rising prices - the social partners agreed to accept the government proposal to increase the national minimum wage to LTL 550 (EUR 159) with effect from 1 July 2005. All three trade union confederations (LT0412102F), the representatives of the government and the Lithuanian Business Employers’ Confederation (Lietuvos verslo darbdavių konfederacija, LVDK) (LT0410102F) supported the decision. The Lithuanian Confederation of Industrialists (Lietuvos pramoninkų konfederacija, LPK) abstained.