Lithuania: Annual Review – 2011

  • Observatory: EurWORK
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  • Published on: 28 November 2012


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There were no significant political developments taking place in Lithuania in 2011. Social partners widely discussed possibilities to liberalise labour legislation; amendments extending the retirement age were adopted. The main development in the organisation and role of social partners in 2011 was related to the consolidation of Lithuanian trade unions. In 2011 national level social partners further discussed the possibility to sign National Agreement however the consensus was not reached. Two mass protest actions – meetings/rallies were organised by trade unions in 2011.

1. Political and economic developments

There were no significant political developments taking place in Lithuania in 2011. 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 2011 with minor changes. (The next elections to the LRS will take place in October 2012). President of the Republic of Lithuania Ms. Dalia Grybauskaite was elected in May 2009.

The only political event was municipal elections hold in February 2011. Four political parties received more than 10% of mandates: the Social Democratic Party of Lithuania (21%), the Homeland Union – Lithuanian Christian Democrats (16%), the Labour Party (11%) and the Justice and Order Party (10%).

Having started in 2010, economic growth further continued to expand in Lithuania in 2011. According to the data provided by the Lithuanian Statistics (STD), in 2011 GDP at current prices was LTL 105,713 million (EUR 30,641 million) in Lithuania, displaying 5.8% growth compared to 2010. The most rapid value-added growth in the 2011 was observed in construction (15%) and trade, transport and communication service (7.3%) sector.

2. Legislative developments

To the recently taken (or planned) legislative developments with implications for industrial relations and working conditions we might attribute initiatives for liberalisation of the labour law in the country. In September 2011, by the order of the minister of Social Security and Labour, a working group was built from representatives of the Lithuanian social partners and public authorities to prepare drafts to the Labour Code of the Republic of Lithuania (LC) and related legislation by 15 November in order to liberalise the regulation of employment relations in Lithuania. Though no consensus has been reached, the proposals submitted for the consideration by the group included inter alia the following: liberalisation of the regulation of working hours, liberalisation of the replacement of full-time employment contracts by part-time employment contracts, liberalisation of the conditions for terminating employment contracts (period of notice, severance pays, other), etc.

In June 2011 the Law on State Social Insurance Pensions was amended as well. The amendments (effective since 1 January 2012) serve as a basis for gradual extension of the retirement age in Lithuania. The statutory retirement age in 2011 was 62.5 years for men and 60 years for women. According to the amendments the retirement age will be increased by annually adding four months for women and two months for men to reach the retirement age of 65 for both sexes in 2026. It should be noted that extension of the retirement age will not only contribute to better balancing of the social insurance system, but also to increasing employment of older population. Therefore greater attention should be paid to adapting jobs and employment relations to older people and to proper qualification improvement and re-skilling of older employees.

3. Organisation and role of the social partners

There were no fundamental changes in the organisation and role of the social partners in 2011 – there were three peak trade union and two peak employer organisations operating in Lithuania. According to the Statistics Lithuania (STD) about 10% of total employees were covered by trade unions and some 14% of active economic entities were members of various business and employer associations at the beginning of 2011. A similar pattern apparently prevailed in the previous years, too.

The main development in the organisation and role of social partners in 2011 was related to the consolidation of Lithuanian trade unions (LT1111019I). By tradition, the aforementioned three large national trade union associations were functioning in Lithuania and participating, inter alia, in social dialogue at national level (signing trilateral/bilateral agreements at national level, initiating major protest campaigns in the country, negotiating national agreements with the government, etc.). As a rule, a number of small trade union organisations unaffiliated with the peak centres would stay disengaged from such processes. The first meeting of the representatives of all the Lithuanian trade unions took place in October 2011.

A happening of 17 October 2011 may be called a historical event in the development of Lithuanian trade unions. The meeting was attended by the representatives from nearly all (nine) trade unions existing in Lithuania. At the meeting trade unions agreed about their main objectives – the trade unions must overcome their past grievances and consolidate their efforts for contributing to the improvement of social and economic situation of Lithuanian people and being able to strongly oppose inappropriate decisions of the LRV. During the meeting, the trade unions’ representatives agreed to set up a coordination group ‘to develop in the nearest future the guidelines, opportunities and forms for the cooperation of trade unions’ (LT1111019I).

4. Developments in collective bargaining and social dialogue

In 2011 national level social partners further discussed the possibility to sign National Agreement, however the consensus was not reached (for more details see Chapter 5).

The task of registering national, sectoral and territorial collective agreements in Lithuania is assigned to the Ministry of Social Security and Labour (SADM). In 2011 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 2011. Accordingly, there is only one valid (and officially registered with the SADM) sectoral collective agreement in Lithuania; the same situation persisted in 2007-2010.

Although no new sectoral collective agreements were registered in Lithuania in 2011, we should nonetheless give due mention to quite active negotiations (or at least discussions) held in certain sectors. First of all, this refers to the public sector where sharp intensification of dialogue was observed in 2011 between sectoral committees functioning at the Tripartite Council of the Republic of Lithuania (LRTT), namely, the Education Committee and the Public Service Committee. In addition, in 2011 efforts (though unsuccessful) were made to initiate the signing of a sectoral collective agreement of social workers. Likewise, a preliminary draft version of a collective agreement of civil servants was drawn up. The intensified dialogue between trade unions of the public sector and state authorities revealed the lack of clarity in defining a party to social dialogue in national legislation in case of the public sector. Despite active debates held on these issues in 2011, no specific decisions have been made.

Company-level collective agreements are not registered in Lithuania and therefore the exact number of such agreements is unknown. Such information is neither provided by peak social partners – trade unions and/or employers – organisations. However from the interviews with trade union representatives and publications available we may conclude that the crisis had negative impact on the collective bargaining process at company level in Lithuania and this negative impact persisted in 2011 as well: ‘according to trade unions, their negotiation positions badly weakened in many undertakings during the recession, including those where social dialogue had been in place for many years’. The worsened situation in the area of social dialogue at company level is indirectly confirmed by information on complaints provided by the State Labour Inspectorate (VDI): complaints received by the VDI regarding collective labour relations more than tripled in the number in 2011, as compared to 2010 (from 16 in 2011 up to 59 in 2011).

5. Responses to the economic situation

As already written the first national agreement (NA), signed between the LRV and social partners expired at the end of 2010 (LT1105049Q). The social partners agreed that the NA was crucial to the development of relations between them and the government and kept regularly discussing renewal of the NA during the whole 2011 till a new NA Draft was finally prepared and submitted for the consideration by the social partners in September 2011. By this Draft Agreement, the LRV offered the social partners ‘to agree on the fundamental social and economic issues of the state’ for the year 2012. The Draft NA identified the following priority tasks of the state: 1) ensuring macroeconomic stability of the country; 2) reducing unemployment; 3) creating a fairer system of the remuneration for work and more flexible employment relations. However after prolonged discussions LRV and social partners failed to reach the final agreement in 2011 and transferred discussions further into the year 2012.

In a situation with high unemployment rates (unemployment level remained close to 15% in 2011) on the one hand and shortage of workers possessing required qualifications on the other hand, the social partners (employers in particular) during 2011 often discussed the issues of improvement of vocational education system of unemployed (for more details see Chapter 6) and liberalisation of labour relations (for more details see Chapter 2).

The question of the minimum monthly wage’s (MMW) increase was further discussed by social partners during 2011 however the final agreement was not reached (LT1105029I).

6. Developments in working conditions

In 2011, there were no comprehensive surveys carried out in Lithuania enabling objective evaluation of developments in working conditions during a year (or data of such surveys are not publicly available/accessible). The main national level 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’s Information on the State of Occupational Health and Safety and Compliance with Legal Regulations in Lithuanian Enterprises in 2011.

Career and employment security

According to the Lithuanian Statistics (Labour Force Survey) in 2011 there were 1,371 million (or by 2% more comparing to 2010) employed persons in Lithuania. In the third quarter 2011 (same as in 2010) approximately 9% of all employed persons were self employed, 89% - employees and 2% - contributing family workers.

In 2011 labour flexibility was increasing in Lithuania – in the third quarter 2011 up to 8.4% increased share of employed persons working part-time (in the third quarter 2010 this share was 7%) and up to 3.3% - share of temporary employees (in the third quarter 2010 this share was 2.3%).

Average wage after two years (2009-2010) decrease in 2011 finally started recovering and reached level of year 2009 – in 2011 the average gross wage in Lithuania was equal to LTL 2,042 (€ 592) per month. Gender wage gap in 2011 remained same as in previous year – 14%.

Health and well-being of workers

Information on accidents at work is collected and analysed by the VDI. According to the VDI number of fatal and severe accidents at work in 2011 remained unchanged comparing to 2010. However, an increase both in the number of fatal and severe accidents at work was observed in 2011 in construction and transport sectors. In 2011 13 fatal accidents were recorded in construction sector comparing to 6 recorded in 2010; in transport sector number of fatal accidents in 2011 increased up to 15, comparing to 11 recorded in 2010.

According to the National Register of Occupational Diseases 402 occupational diseases were diagnosed to 250 persons in Lithuania in 2011 (in 2010 these figures accounted to 472 and 313 respectively). In 2011, diseases of the musculoskeletal system and connective tissue accounted for 53%, aural diseases accounted for 24%, nervous system diseases accounted for 19% and other diseases made up 5% of the identified occupational diseases. By the types of economic activities, construction (30%), manufacturing (26%), agriculture (13%) and transport (10%) accounted for the majority of occupational diseases in 2011.

Developing skills and competences

In November 2011, the Parliament of the Republic of Lithuania (LRS) approved targeted training of the unemployed and those notified of pending dismissal with a view to accessing employment in a particular workplace. The amendments to the Law on Support for Employment came into effect on 1 January 2012. It is expected that amendments will serve as a basis for implementing a system to activate cooperation between the State, employers and unemployed people to seek a specific goal – to train a person for a specific job in a particular workplace and to get him or her employed there. Not only registered unemployed individuals but also those notified of pending dismissal are eligible to the aforesaid courses. A trilateral agreement will be signed between an unemployed person, labour exchange and employer. The unemployed individual for whom vocational training will be organised will be able to choose the place of training. The training courses will be fully or in part paid by the labour exchange. In this case, the employer would be obliged to maintain a job for a person so employed for a minimum period of one year and the person so employed would be obliged to work for the employer for a minimum period of half a year. This system, the so-called ‘voucher system’, is expected to encourage people to seek for training with a specific goal of getting employed and also to encourage employers to get people trained in accordance with the employer’s needs.

Work-life balance

Amendments to the LC, effective since 1 December 2011 legalised a long-discussed type of work agreement – temporary work agreement. With effect from 1 December, contracts made between temporary work agencies and temporary workers shall be categorised as temporary work agreements. The above-mentioned amendments have been launched taking into account the Law on Temporary Agency Work adopted in Lithuania in May 2011 (effective since November 2011) with a view to entrenching legislative regulation of the activities of temporary work agencies and contracts defining employment relations of this type, i.e., temporary work agreements. It is difficult to forecast how these amendments will influence the labour market and working conditions of the employees, but they should be treated as amendments increasing labour market flexibility and therefore – better opportunities for work-life balance.

Amendments to the Law on Sickness and Maternity Social Insurance were issued in 2011 in order to encourage parents on child care leaves to sooner return to the labour market. The amendments set forth two alternatives of payment of maternity (paternity) allowances to parents: one-year allowance and two-year allowance. In case of the latter alternative, parents would be able to gradually re-enter the labour market during the second year of their maternity (paternity) leave without any reduction of the maternity (paternity) allowance received by them. (In order to create good conditions for balancing family and work responsibilities for parents, the LRV regularly alleviates the environment for setting up private pre-school establishments in which attendance rates are regularly growing).

7. Industrial action

Usually there are very few strikes and warning strikes recorded in Lithuania. With the exception of 2007-2008, there are 0-5 strikes per year usually staged in Lithuania. In 2011, same as in 2010 there were no strikes and/or warning strikes registered in Lithuania.

Two mass protest actions – meetings/rallies were organised by trade unions in 2011. On 19 March, after more than a two-year’s interval, trade unions organised first mass protest action in Vilnius. This rally was repeatedly postponed for various reasons. The main requirements of trade unions were related to MMW increase, introduction of progressive taxes, employment increase, reduction of the value added tax on basic food products and increase of pensions to pre-crisis levels (LT1104019I). The second action took place in Vilnius in December 2011. Among the demands of trade unions were the increase of MMW and remuneration for public sector employees, decrease in labour force tax burden, etc.

8. Restructuring

In 2011, the LLE registered 77 notices of group redundancies and about 4,400 employees were notified of pending dismissals. As compared to 2010, the number of notices and employees notified has fallen by 30%. The greatest redundancy was registered in December 2011 when the fifth biggest bank ‘Snoras’ (Snoras) operating in Lithuania went bankrupt (almost 1,400 Snoras’ employees were notified of pending dismissals in December). Other significant cases in 2011 were recorded in public sector – State Social Insurance Fund Board (Sodra), Lithuanian Public Police Office ‘Vytis’. There is no information on any important industrial dispute or collective agreement or other notable industrial relations implications of the aforementioned restructuring.

Inga Blaziene, Boguslavas Gruzevskis, Institute of Labour and Social Research

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