Government Watch. Position paper on increasing wages in budgetary institutions

The Lithuanian Free Market Institute has examined draft Government decrees that proposed an increase in wages of budgetary institution employees and formulated its comments and proposals.

In its position paper LFMI notes that the implementation of this proposal would cost €50 million a year. Additionally, the stated aim of these projects is to increase the salaries in order to avoid equalization of wages paid for qualified and unqualified labour in case of any further minimum wage increases from July 1, 2015. In LFMI’s view, this intention disregards the fact that minimum wage increases are detrimental to the unemployed, minimum wage earners and investment. Moreover, the project is to be implemented by using current budgetary allocations. It means that this year’s overall budgetary expenditure will not be increased. Therefore, the way budgetary institutions will have to find enough money for higher salaries remains unclear.

In the light of the aforesaid arguments LFMI calls for the rejection of the proposal and an increase in the income of the lowest paid workers by increasing the tax-exempt threshold.

The full position paper (in Lithuanian) is available at