Lack of consensus over national agreement on economic crisis

In light of the current economic crisis, Lithuania’s government and social partner organisations, as well as bodies representing the interests of retired people, are negotiating the possibility of signing a national agreement. Although a draft version of the national agreement has been debated several times, the parties have failed to reach consensus on many of the issues that have arisen. Therefore, it is still unclear when and if a national agreement will be signed.

Impact of economic crisis

The impact of the global economic crisis has hit Lithuania severely: in the second quarter of 2009, the country’s gross domestic product (GDP) fell by more than 20% compared with the same period in the previous year. Moreover, the unemployment rate currently exceeds 10%, while an increasing number of companies are going bankrupt, and the budget deficit is continuing to grow. Against this background, the government of the Republic of Lithuania (Lietuvos Respublikos Vyriausybė, LRV) needs support from all political parties and social partners.

Negotiations on national agreement

While the idea of signing a national agreement has been considered for some time, concrete negotiations between the government and social partners only began at the beginning of July 2009. The negotiations followed a hunger strike initiative by the Lithuanian Trade Union Confederation (Lietuvos profesinių sąjungų konfederacija, LPSK) against public sector pay cuts in front of the Parliament of the Republic of Lithuania (Lietuvos Respublikos Seimas, LRS) at the beginning of July (LT0907029I).

The national agreement was originally planned to be signed between the government and representatives of the trade unions and employer organisations. However, it was later agreed that other non-governmental organisations (NGOs) – such as those representing the interests of retired people – would also join the tripartite negotiations. On 22 July, representatives of 12 organisations met at the office of the Prime Minister, Andrius Kubilius, to agree on the wording of such a national agreement; however, a final version was not agreed upon. It was decided to continue improving the document and to possibly sign its final version before September 2009.

Draft national agreement

The draft of the national agreement – entitled ‘For a state without debts, for a safe future of Lithuania’ – states the following:

During this complicated period for Lithuania, the government and social partners (trade unions, business, employer and pensioner organisations) give the highest value to solidarity and social peace. Driven by solidarity, after lengthy but constructive negotiations, the partners managed to reach a National Agreement on the fundamental principles of stable financial policy of the state for 2009–2012 and an Action Plan for the nearest period of time.

By signing a national agreement, the government would be obliged to implement fiscal consolidation measures agreed on with the social partners. Moreover, it would be required to draft, by 1 October 2009, the second national agreement on support for business and the improvement of business conditions, and to agree on this accord with the social partners. This supplementary agreement would serve to approve the action plan for attracting, through a public-private partnership (PPP), additional funds to the Lithuanian economy in 2010–2011 in the region of LTL 3 4 billion (about €869 million–€1.16 billion) a year. These funds are needed to improve the country’s public infrastructure in areas such as education and science, transport, healthcare and social security, and social housing. They are also required for projects and an ambitious business conditions improvement plan, the implementation of which would make business conditions in Lithuania the most attractive in the Baltic region in the next couple of years.

Key issues

The following issues should be agreed on in the national agreement:

  • reducing general government expenditure;
  • optimising the tax environment;
  • balancing the budget of the State Social Insurance Fund (Valstybinio socialinio draudimo fondo valdyba, Sodra);
  • restoring the order in local authority finances;
  • implementing social insurance, healthcare and education reforms.

The government would be obliged to make the most urgent decisions necessary for the implementation of the national agreement during August and September 2009. In addition, it is planned to agree on conflicting issues with opposing LRS fractions during negotiations to be held once a month to discuss the country’s economic and financial situation.

Consensus not yet reached

Despite multiple discussions between the parties concerning the provisions of the proposed national agreement, many issues remain open to debate due to the parties’ failure to reach consensus. Therefore, it is still not clear when, and even if, the agreement will be signed.

Inga Blaziene, Institute of Labour and Social Research

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