From the lips of our politicians we often hear that we should continue to increase the minimum monthly wage (MMW). That is the theme of the Tripartite Council meeting of today as well. Though it is worth noting that we have not even properly estimated the consequences of the most recent increase in the MMW by 25 percent (from 800 to 1000 litas).
Firstly, misleading or false language is used by those who say that a quarter of the Lithuanians earn only the MMW. 2013 statistics show that only 10 percent of employees working full-time earned up to 1000 litas. We must be aware that we cannot count those working part-time in these statistics. If you work part-time and earn 1000 litas that means that you earn twice more than the MMW.
Secondly, if we want to increase the MMW ostensibly because the introduction of the euro will increase the prices, we face at least two problems. Such a scenario clashes with the government’s position that the euro will not increase the prices and that the prices will not even be allowed to increase. If anything, it is precisely raising the MMW that may trigger price increases. It is so because a higher MMW means an increase of each item or service costs. It is the consumers that would have to bear these additional costs. So, if the euro will increase the prices, it will be due to the increased MMW and not the private sector “abusing” the introduction of the euro.
Thirdly, politicians keep repeating that productivity of labour is increasing and that means that it is the right time to increase the MMW as well. Yes, the average productivity is increasing, but so too is the average salary. During the past years, the average productivity increased by 4.5 percent per hour and the average wage increased by 5 percent. But that does not mean that all workers were 4.5 percent more productive, and that all employees have earned 5 percent more. The productivity and wage growth occurred in IT and manufacturing sectors, in which people have long been earning more than the MMW.
Fourthly, we must remember what was discussed on the debate on raising the MMW and modernizing the Labour Code a few years ago. It has been said that the modernization of the Labour Code requires increasing the MMW. What do we have today? A 25 percent higher MMW and the same Labour Code. Changing a couple of tiny details should not be called making labour relations more flexible – the latter has never happened. Depending on how much the Labour Code has been modernized, the MMW should have been raised by no more than twenty litas.
Finally and most importantly, a false image that both employers and employees agree on raising the MMW is being painted. Even if this is explicitly agreed upon at the Tripartite Council, this would mean that only the largest business organizations and representatives that represent only 5-8 percent of the employees have actually agreed with the policy. Yet small businesses, companies based in the smaller regions, and the unemployed – that is, all those who would feel the greatest negative impact of the increased MMW were ignored.
