LPSS for a EU Directive on Fair Minimum Wages and Collective Bargaining

autorius Jovita

The Lithuanian trade union Solidarumas (LPSS) supports the EC initiative on the minimum monthly wage (referred to as MMW) and upholds  the position taken by the European Trade Union Confederation (ETUC). The Directive is a positive step towards enshrining the principles of adequate pay and promoting collective bargaining.

We agree to the following provisions:

  • When setting the MMW, the national traditions would be taken into account. However, the minimum decency threshold for adequate minimum wages, below which no minimum wage should be set, is 60 per cent of the gross median wage and 50 per cent of the gross average wage for full-time workers; 
  • It is imperative that the social partners are involved in the negotiations on setting the MMW;
  • MMW shall not be a reduced for any group of employees (such as young employees, etc.).

In particular, we fully support the EC’s initiative on the promotion of collective bargaining. We do agree that attention should be focused on the sectors and employers that refuse to negotiate with trade unions but receive funding from the EU through various funds, including the post-Covid-19 European recovery fund.

The countries in which the coverage of collective agreements is less than 70 per cent of employees, are required to additionally, after having reached an agreement  with the social partners, develop an action plan aimed at promoting collective bargaining. This action plan must be made public and submitted to the European Commission. We firmly believe this is the top priority for Lithuania..

The Tripartite Council of the Republic of Lithuania, of which the Lithuanian Trade Union Solidarumas is a member, discussed the draft Directive on Adequate Minimum Wage at a Tripartite Council meeting. We are deeply concerned that the proposal did not receive the support of the former Government and employers, and no efforts were made to seek a compromise. Acting as social partnes, representatives of the Government and employers  failed to heed the European Commission’s proposal to promote social partnership and collective bargaining as well as the conclusion of collective agreements. We are more than surprised by the radical expressions from the employers that more countries will be leaving the EU after the adoption of this Directive. The desire of employers and the former Government to regard this issue as a matter of merely national importance is nothing more than the avoidance of collective bargaining on wage policy and the desire to hold Lithuanian workers hostage to cheap labor.

We fully support the ideas expressed in the European Commission’s cover letter on the MMW Directive that an adequate  MMW will ensure decent living conditions for workers, encourage the unemployed to enter the labor market, reduce in-work poverty and wage inequality, promote sustainable growth of  domestic demand, which in turn will contribute to increasing business revenue. Furthermore, it will benefit the businesses which pay employees decent remuneration as it will help to ensure fair competition.

Unfortunately, at present the Lithuanian MMW cannot be regarded as adequate. According to the data of the Statistics Lithuania, in 2019 the at-risk-of-poverty threshold in Lithuania was  445 EUR per month per person. This is just a little over the MMW of 2020, which stood at  447 EUR (net wage).

According to the European Commission, the MMW must ensure decent living conditions for workers, so the MMW, which nearly equals the risk of poverty rate, cannot be called a decent wage.

The Lithuanian trade union Solidarumas supports the proposal made in the Directive on MMW that the criterion of MMW purchasing power should also be included in the determination of MMW.

Lithuania’s MMW and the average wage, on the basis of which MMW is calculated, do not correspond to Lithuania’s level of economic development and the country’s overall labor productivity. According to this indicator, Lithuania is ahead of all the new European Union (EU) countries, except the Czech Republic, and the old EU countries such as Spain, Portugal and Greece.

In 2020, the minimum net wage in Lithuania was 447 euros, while in Estonia it was 546 EUR, in Slovenia – 687 EUR, in Spain – 850 EUR, in Poland – 481 EUR, in Slovakia – 470 EUR. The MMW Directive provides for various measures such as the controls, measures to strengthen the social partners‘ capacity and  pursue the social dialogue, promotion of collective bargaining and conclusion of collective agreements (in 2018 the coverage of collective agreements in Lithuania was the lowest in the EU). The above measures will help to ensure that Lithuanian workers are paid adequate wages, social exclusion is reduced and more unskilled workers are involved in the labor market.  These measures will also contribute to declining emigration and  the shrinking share of employees receiving “envelope” wages, thus curbing the “shadow” economy, while increasing the revenue of the state, municipalities and fair business.

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