A new EU directive sets out common rules for setting the minimum wage. This will be felt in Lithuania, where pay disparities remain high.
Algis, who works as a plumber in the Panevezys Emergency Service, makes a few euros more than the minimum wage, which is currently 730 euros on paper or 550 after tax.
“When fuel and all other prices go up by leaps and bounds, the minimum wage is really low, and our salary is not much different from the minimum wage,” says Algis.
According to the Ministry of Social Security and Labour (SADM), around 150,000 workers – about a tenth of the workforce – are paid the minimum wage. Trade unions say the actual figure is much higher. The law says that the minimum wage can only be paid for unskilled work, so employers employ simple tricks to bypass the rule.
“What our employers do is add 20 euros and the worker falls into the category of skilled workers who are paid above minimum wage,” says Inga Ruginiene, chair of the Confederation of Trade Unions.
EU countries have agreed to establish criteria for setting the minimum wage in EU countries and to transpose the directive into national law within two years.
Lithuania does not follow all the criteria at the moment, says Vita Baliukeviciene, a lawyer at the Ministry of Social Security and Labour. For instance, the country does not take into account purchasing power when setting the minimum wage.
When the directive was being discussed, there were also proposals for a more specific community minimum wage.
“The EC says that the minimum wage in each member state should be 60% of the average wage. Unfortunately, some countries, including Lithuania, challenged that figure because employers immediately stood up against it,” stresses Ruginiene.
Currently, the minimum wage in Lithuania, which can only be paid to unskilled workers, is equal to 48% of the average wage.
“In some regions, the average wage is not much higher than the minimum wage, and if we were to raise it to 60%, imagine the pressure that would exert in, say, Ignalina and Zarasai,” says Danas Arlauskas, president of the Employers’ Confederation.
Former social security minister, MP Linas Kukuraitis says that currently the ration is even lower, because it uses last year’s average wage.
“We say it is 48%, but in reality it is closer to 43%. If we aim for the minimum wage to be 50% of the average wage, then we have a lot of room for improvement,” says Kukuraitis.
If the EU directive is adopted, it will have a significant impact on Lithuania, he adds.
“The prospect of having to raise the minimum wage is very real,” notes the former minister.
In absolute terms, Lithuania’s 730-euro minimum monthly wage is among the lowest in the EU, where the average is over 1,000 euros. The highest minimum wage is in Luxembourg, at over 2,200, and the lowest in Bulgaria, at under 400 before tax.
The directive will also oblige some countries – including Lithuania – to make effort to have more workers covered under collective agreements.
Meanwhile, six EU countries – including Austria, Denmark and Sweden – where pay levels, including the minimum wage, are set by collective agreements between workers and employers, will be exempted from the directive.
It still needs to be approved by the European Parliament. (LRT/Business World Magazine)