EMCC European Monitoring Centre on Change

Lithuania: Young people and temporary employment in Europe

  • Observatory: EMCC
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  • Published on: 08 December 2013



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Rasa Zabarauskaite, Inga Blaziene
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In Lithuania, temporary employment is considerably less widespread that in the EU as a whole. On the other hand, as in the EU, the share of young people working under fixed-term employment contracts in Lithuania is three times the share of the total employed. Moreover, this share quite visibly increased during the crisis (2009-11). On the one hand, young people themselves appear to prefer certain seasonal jobs and, on the other hand, the increase in temporary employment of youth could have been influenced by a legal provision introduced in 2010 allowing for the conclusion of fixed-term employment contracts for newly established jobs. According to Lithuanian law, employees working under fixed-term or non-term employment contracts formally enjoy equal social guarantees. In practice, however, temporary employees tend to appear in less favourable situations than those in permanent jobs.

1. Importance of temporary employment for young people

1.1. Do the figures shown in the attached tables (on the number of temporary employed as a % of total employees based on Eurostat LFS data) give a reliable indication of the scale of temporary employment among the young in your country and the way that it has changed over recent years? Are there young people employed in temporary jobs who do not show up in the Eurostat figures? Are there national statistics which show a different picture from the Eurostat data? If so, please indicate what they show and give the source of the data.

The Eurostat figures show a total of 30.4 thousand temporary employees aged 15-64 working in Lithuania in 2011. They roughly accounted for 2.8% of the total number of employees in this age group in Lithuania, including 6.7 thousand temporary employees aged 15-24, accounting for around 8.7% of the total number of employees in this age group (see Tables 1-2). These indicators are considerably below the EU-27 average in 2011 which reflects 14.1% and 42.5% in the aforementioned age groups respectively. Likewise, Tables 1 and 2 below show that both the number of temporary employees and their share in the total number of employees in both age groups kept gradually shrinking in Lithuania from 2004 to 2008. The number of temporary employees aged 15-24 almost halved from 12.4 thousand in 2004 to 6.7 thousand in 2011, while their share in the total number of employees fell from 13.8% in 2004 to 8.7% in 2011.

Table 1. The number of temporary employees in Lithuania in 2004-2011 (thous.)
 

2004

2005

2006

2007

2008

2009

2010

2011

15-64

76.3

67.4

56.3

46.0

31.4

27.6

28.7

30.4

15-24

12.4

13.6

12.1

12.1

9.9

5.4

6.9

6.7

Source: Eurostat

Table 2. Temporary employees as percentage of the total number of employees in Lithuania and EU in the age groups of 15-64 and 15-24 (%)
 

2004

2005

2006

2007

2008

2009

2010

2011

EU-27 (15-64)

13.2

14

14.5

14.6

14.1

13.6

13.9

14.1

EU-27 (15-24)

37.6

40

40.9

41.3

40.2

40.4

42.1

42.5

Lithuania (15-64)

6.6

5.6

4.5

3.5

2.4

2.3

2.4

2.8

Lithuania (15-24)

13.8

13.5

10.5

9.8

7.3

5

7.5

8.7

Source: Eurostat

One of the key reasons for the low number of people working under fixed-term employment contracts in Lithuania is statutory restrictions imposed on employment under fixed-term contracts in Lithuania. Legal relations between employees and employers, including the grounds and procedure of contracting for fixed-term employment, are regulated by the Labour Code of the Republic of Lithuania (LC) enacted in 2003 (Law No IX-926 on the Approval, Enforcement and Implementation of the Labour Code of the Republic of Lithuania, Official Gazette, No 64-2569, 26 June 2002.). According to the Article 109 of the LC, it shall be prohibited to conclude a fixed-term employment contract if work is of a permanent nature, except for the cases when this is provided by laws or collective agreements.

It should be noted that starting from 1 August 2010, there were a few anti-crisis changes introduced into the Lithuanian labour law. One of them allows concluding fixed-term employment contracts for newly established positions if work is of permanent nature (for more details see Section 3.1).

Although certain growth in the number of people working under fixed-term employment contracts (which was slightly more significant among employees aged 15-24) was observed in Lithuania since 2010 after introduction of the amendments, these amendments will hardly have somewhat greater implications for the spread of temporary employment in Lithuania. A more thorough analysis of the data of the Lithuanian Labour Exchange (LDB) shows that in 2009 (when the amendments to the Law were not yet in force) newly registered temporary jobs accounted for one fourth of the total newly registered jobs on average, while in 2012 this share was only about one fifth of the total number of newly registered jobs (see Table 3).

Table 3. The share of registered temporary jobs vs. the total number of newly registered jobs in Lithuania in 2009 and 2012 (%)

Year

Jan

Feb

March

April

May

June

July

Aug

Sept

Oct

Nov

Dec

2009

11.0

12.5

15.3

26.9

26.9

26.2

27.3

30.2

30.9

29.8

31.3

33.3

2012

22.5

19.5

19.7

25.3

24.2

20.8

22.0

21.5

22.2

20.3

18.3

19.5

Source: Lithuanian Labour Exchange

In general, we could assume that a low number of fixed-term workers in Lithuania could also be related to the fact that employers are not well aware of various nuances of entering into fixed-term employment contracts and therefore avoid hiring fixed-term workers in fear of claims and litigation costs.

Unfortunately, Lithuanian Statistics (STD) provides only general information on the distribution of employees in permanent/temporary jobs in Lithuania; no information is available broken down by age groups or nature of work. In addition, there are no databases in Lithuania to record other forms of employment such as traineeships, apprenticeships, bogus self-employment, etc. Therefore, there is no possibility to identify the most common contract types or contractual arrangements under which young people are employed on a temporary basis. According to expert analyses, we can say that youth (18+) employment situation hardly differs from that of older employees. Young persons are usually recruited under non-term contracts with a trial period not exceeding three months. According to Article 106(2) of the LC, in order to assess the suitability of an employee for the agreed work, longer trial periods, but not exceeding six months, may be applied in the cases specified by laws.

Although there are no studies conducted in Lithuania giving grounds for objective generalisations, on the one hand, young people themselves appear to prefer certain seasonal jobs and, on the other hand, the increase in temporary employment of youth could have been influenced by a legal provision introduced in 2010 allowing conclusion of fixed-term employment contracts for newly established jobs (for more details see Section 3.1).

As for persons under 16, there is a general principle entrenched in Lithuanian labour laws prohibiting employment of persons under 16 years of age except for light work that meets their physical abilities. The exceptions are defined by the Labour Code and other laws. The main legal act regulating employment of persons under 18 years of age in Lithuania is Resolution No 138 of the Government of the Republic of Lithuania of 29 January 2003 approving the procedure for employing persons aged under 18, checking their health and establishing their capacity to perform certain work, the working hours of such persons, and the list of jobs they are prohibited from undertaking and activities which are hazardous and harmful to health (Official Gazette, 2003, No 13-502). The Resolution defines two age categories of young persons: teenagers (persons from 16 to 18 years of age) and children (minors under 16).

1.2. Is there any evidence that other forms of employment are used as a substitute for temporary contracts, such as bogus self-employment where young people are contracted to provide services to a single work provider in a continuous manner so acting de facto as employees? If so, please give the source of the evidence and indicate the scale of the phenomenon in terms of the number of people concerned.

Though phenomenon of bogus self-employment exists in Lithuania (LT0702069I) it is actually not relevant for youth – usually in bogus self-employment are engaged persons with rather high qualification in the area – translators, hairdressers, qualified construction employees, etc.

1.3. Please list (and give summary details, i.e. purpose and duration of the contract) the most common contract types or contractual arrangements under which young people are employed on a temporary basis (such as for traineeships, apprenticeships, probationary periods, replacement of workers on leave or projects of a fixed duration). What is the relative importance of each type of contract or arrangement in terms of the number of young people employed under them?

In addition to fixed-term employment contracts, the LC provides possibilities for employers to conclude short-term (a temporary employment contract regulated in Article 113 of the LC was replaced by a short-term employment contract from 1 December 2011) and seasonal employment contracts with employees. A short-term employment contract is a type of fixed-term employment contract providing for better opportunities to employ temporary workers. Such contract can be concluded for a period not exceeding two months. Short-term contracts can be terminated in a simple procedure; they do not require setting a trial period; employees are not entitled to holidays during a short-term contract.

A seasonal employment contract (LC Article 113) is similar in its nature to the short-term contract. A seasonal contract can be concluded for the performance of certain jobs for a period not exceeding eight months (listed in Resolution No 154 of the Government of the Republic of Lithuania (LRV) of 21 July 2010). Seasonal employment contracts suit for various construction and reconstruction works, road cleaning, land reclamation, mining activities, sugar production from sugar-beets, cultivation of vegetables, flowers, etc.

Unfortunately, there is no reliable information making it possible to judge on the spread of the above-mentioned contracts in Lithuania. Moreover, it is impossible to find out the type of contracts most frequently used for young persons’ employment. Basing on practical experience, we can assume that the absolute majority of young and other temporary employees work under usual fixed-term employment contracts in Lithuania. In addition, young employees are, as a rule, subject to three months’ trial period (in case of non-term employment), although such information is not reflected in official statistics.

Student apprenticeships undertaken within the framework of their studies can be also considered a certain form of temporary employment. However, such apprenticeships are not qualified as employment and are not reflected in employment statistics, either.

1.4. Please indicate the main reasons for the emergence and development of the different types of temporary contract which you have listed in response to question 1.3. To what extent are they linked to particular conditions in the labour market or employment protection legislation/regulation in your country? What is the main attraction of such contracts to employers? What effect has the crisis had on the use of such contracts?

In Lithuania, the main type of temporary contract is a fixed-tem employment contract. The main reason for employers to prefer this type of contract lies in that employers do not have to pay severance pays to employees dismissed after expiration of the employment contract.

Although, as it was mentioned above, seasonal and short-term employment contracts are not very popular in Lithuania, such contracts could be useful for employers in cases of increased workloads for one or another reason, or some other sudden changes in the workplace.

1.5. To what extent are temporary contracts a ‘stepping stone’ to ‘permanent’ jobs (or those with standard contracts of employment of undefined duration)? Are apprentices and trainees typically taken on by the companies or other organisations concerned on standard permanent contracts once they complete their training? Has the situation changed over the crisis period? Please summarise any relevant studies which have been carried out in your country or other evidence at the national level which exists and give the reference to them.

Unfortunately, there is no data in Lithuania suggesting to what extent temporary contracts are a ‘stepping stone’ to ‘permanent’ jobs. There have been no special studies recently carried out in Lithuania to address possibilities of employees working under fixed-term employment contracts to step from temporary to permanent jobs. Such a situation is mainly determined by a low number of employees working under fixed-term employment contracts in Lithuania and the fact that fixed-term employment contracts can be concluded only for jobs that are not of a permanent nature.

In Lithuania, as a rule, the main ‘stepping stone’ to ‘permanent’ job is a trial period during which both the employer and the employee have to decide whether they meet each other’s needs.

To a certain degree, student apprenticeships/traineeships undertaken within the framework of their studies can be also considered ‘stepping stones’, as employers often decide to offer permanent jobs to apprentices/ trainees. Unfortunately, there is no statistical data available on the number of young people engaged in such apprenticeships or traineeships in Lithuania.

2. Access to social benefits

2.1. Does entitlement of young people to (contributory) unemployment insurance benefits and (non-contributory) unemployment assistance (i.e. benefits, usually means-tested, which provide a minimum level of income) differ if they are employed on temporary contracts as opposed to permanent ones? If so, please indicate briefly the differences in eligibility conditions and any differences between types of temporary contract (including those working as self-employed for a single employer). Have there been any changes over the period of the crisis?

In compliance with the Law on Unemployment Social Insurance adopted in Lithuania on 16 December 2003 (Official Gazette, 2004, No 4-26), a uniform procedure for the payment of unemployment social insurance benefits (USIB) applies both to persons working under fixed-term employment contracts and to those working under non-term employment contracts. Pursuant to the Law, insured persons who have registered as unemployed at a local labour exchange and who have not been offered by the local labour exchange a suitable job or active labour market policy measures shall be entitled to the unemployment insurance benefit provided that they:

1) prior to registration at a local labour exchange have acquired the unemployment insurance record not shorter than 18 months during the last 36 months;

2) are dismissed, in accordance with the procedure set forth by laws, from work or from the office of a civil servant through no fault of the employee or the civil servant due to circumstances beyond the employee’s or civil servant’s control or in the event of the employer’s bankruptcy;

3) have completed the mandatory initial military service or the alternative national defence service or have been discharged  from these services after having served at least half of the established time period.

It is obvious that young people, fresh graduates and/or persons without work experiences of sufficient length are not eligible to USIB. However, according to a new version of the Law on Cash Social Assistance for Poor Families and Single Residents enacted on 1 January 2012, persons who lack funds for living and are registered with a local labour exchange shall be eligible to social assistance (Official Gazette, 2011, No 155-7353).

One more negative aspect of temporary employment from the point of view of social guarantees is possibility to dismiss temporary employees after expiration of fixed-term employment contract without paying them any severance pays that would be due to permanent employees in case of their dismissal.

2.2. Does entitlement of young people to sickness benefits and maternity benefits differ if they are employed on temporary contracts as opposed to permanent ones? If so, please indicate briefly the differences in eligibility conditions and any differences between types of temporary contract (including those working as self-employed for a single employer). Have there been any changes over the period of the crisis?

According to the Lithuanian legislation, formally there are no differences in eligibility conditions for different social security benefits. However, according to the Law on State Social Insurance (Official Gazette, 1991, No 17-447), social insurance record (required for the eligibility to sickness and/or maternity benefits) in Lithuania is determined on the basis of the length of payment and the amount of social insurance contributions. It is therefore obvious that younger persons or those with shorter employment record or longer interruptions of employment appear in a worse situation with regard to receiving sickness and/or maternity benefits.

2.3. Are there any differences in the entitlement of young people to old-age pensions between those employed in temporary jobs as opposed to permanent ones? If so, please indicate what these are. Have conditions of eligibility to pensions changed over the period of the crisis (including through pension reforms introduced as part of a long-term strategy to improve the financial sustainability of the system)?

According to Lithuanian legislation there are no differences in the entitlement of young people to old-age pensions between those employed in temporary jobs as compared to permanent ones.

2.4. Are there any differences in entitlement of young people to health care between those employed in temporary jobs as opposed to permanent ones? If so, please indicate what these are. Have conditions of eligibility to health care changed over the period of the crisis?

According to the Lithuanian legislation there are no differences in entitlement of young people to health care between those employed in temporary jobs as opposed to permanent ones.

3. Regulation of temporary contracts and policies to support transitions into permanent contracts

3.1. Please describe briefly the regulations applying to the main types of temporary contract in your country. Do restrictions exist on the maximum duration of the different types of temporary contract for young workers or the number of times they can be renewed? Do these regulations differ by age (i.e. between young people and older workers) and/or by type of temporary contract (as mentioned in question 1.3), by occupation, or by sector of activity? Do special regulations exist for those completing apprenticeships or traineeships? Have the regulations changed over the period of the crisis – i.e. has there been a tendency for them to have been tightened or relaxed?

Article 108 of the LC effective in Lithuania from 1 January 2003 and regulating the types of employment contract defines fixed-term employment contracts as one of the types of the contracts. The LC stipulates that a fixed-term employment contract may be concluded for a certain period of time or for the period of the performance of certain work which shall not exceed five years. The article 111(3) of the LC suggests that there should be a break of at least 1 month between fixed-term contracts ‘to start the clock’ again. It shall be prohibited to conclude a fixed-term employment contract if work is of a permanent nature, except for the cases when this is provided by laws or collective agreements (Article 109(2)).

The term of an employment contract may be set until a specific calendar date or the occurrence, change or cessation of specific circumstances. If the term of an employment contract is not specified therein or is specified unduly, the employment contract shall be considered non-term. In compliance with the LC, an employer shall be entitled to terminate a fixed-term employment contract before the expiry thereof only in extraordinary cases where the employee cannot, with his consent, be transferred to another work, or upon the payment of the average wage to the employee for the remaining period of the employment contract (Article 129(5)). The above provisions apply to all employees irrespective of their age.

As previously mentioned, starting from 1 August 2010, there were a few anti-crisis changes introduced into Lithuanian labour law. On 22 June 2010, the Parliament of the Republic of Lithuania (LRS) adopted amendments to the LC aimed at making employment regulation more flexible and thus helping businesses to adapt to changing market conditions (these amendments were renewed in 2012). The LC amendments allow fixed-term employment contracts for newly established positions if work is of permanent nature. However, companies that wish to use this possibility must also comply with the following requirements:

(1) Fixed-term employment contracts are allowed only for new jobs, i.e. those established after 1 August 2010; (2) the number of fixed-term employment contracts cannot exceed 50% of all positions in the company; (3) fixed-term employment contracts cannot be made with former employees dismissed by mutual employment termination agreement or on the employer’s initiative without employee fault; (4) fixed-term employment contracts for newly established positions may be concluded for a maximum period of two years ending no later than on 31 July 2015.

3.2. Do incentives exists in your country to encourage employers to opt for standard rather than temporary contracts of employment, to convert temporary contracts into permanent ones or to make it easier for employees to move from temporary to permanent contracts? If so, please briefly describe the form that these incentives take. Do they apply equally to young people as well as to older workers? Are any incentives in place to encourage employers to take on young people who have completed an apprenticeship or traineeship on permanent contracts? Have there been any changes to incentives over the period of the crisis? Are any such changes being proposed or being actively discussed at present in your country?

Amendments of the LC adopted on 1 December 2011 introduced a provision stipulating that an employment contract, as a rule, shall be concluded for an indefinite period of time (non-term). Though not being an imperative provision, it expresses a certain view of the legislator to the types of contract.

According to the Article 111 of the LC if the term of an employment contract has expired, whereas employment relations are actually continued and neither of the parties has, prior to the expiry of the term, requested to terminate the contract, it shall be considered extended for an indefinite period of time. Also LC stipulates that a fixed-term employment contract shall become a non-term contract when the circumstances in respect whereof the term of the contract has been defined cease to exist during the period of employment relations (an employee does not return to work after his leave, etc.).

If an employment contract, upon the expiry of its term, is not extended or is terminated, but within one month from the day of its termination another fixed-term employment contract is concluded with the dismissed employee for the same work, then, at the request of the employee, such a contract shall be recognised as concluded for an indefinite period of time (there are some exemptions as well). The above provisions apply to all employees irrespective of their age.

On 1 August 2012, a new measure to promote youth employment – Support for the first job – was launched in Lithuania. This measure can be basically attributed to the measures promoting employment of young people under non-term employment contracts. Under this measure, support shall be granted to persons from 16 to 29 who have no previous employment experience and access their first jobs under employment contracts. Employers will be compensated a part of employee‘s wage/salary costs (approx. 23%). The compensation is available for a period of up to 12 months.

3.3. Is the employment of young people on temporary contracts an important issue of concern for the social partners? Are there strong differences in attitudes and policies between employers and trade unions towards the use of temporary contracts? Have any initiatives been taken by the social partners, either jointly or separately, to encourage the use of permanent rather than temporary contracts? Have any specific initiatives been taken in respect of young people completing apprenticeships or traineeships over the types of job they are offered when their temporary position comes to an end?

In general, we can say that trade unions support permanent contracts, while employers often prefer having more opportunities to conclude temporary contracts in order to have greater labour market flexibility. One of the current debates in the country includes long-lasting efforts of the social partners regarding the possibilities to introduce ‘service cheques’, which are considered to be a very flexible and short-term form of employment, throughout the labour market in Lithuania (The use of service cheques would enable an employer to hire a worker without many administrative requirements, simply by issuing a special service cheque. It would be enough to specify usual particulars in this document: service recipient and service provider, type of service, time of service provision, service price rate, amount of health insurance contributions, etc.). However, this idea has been abandoned as a result of strong resistance on the part of trade unions.

On the other hand, youth is not singled out in this debate. Yet, trade unions do agree that youth is more often exposed to temporary employment than other workers and due to this face certain inconveniences. For example, acquisition of loans (consumer loans, mortgage loans), which is relevant for young people, is easier for people who work under non-term (permanent) employment contracts rather than under fixed-term (temporary) contracts.

Rasa Zabarauskaite, Inga Blaziene, Lithuanian Social Research Centre

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