Chairman of the Lithuanian Union of Nutritionists: companies that pay the minimum wage must close

As Raimondas Tamošauskas, chairman of the Lithuanian Union of Nutritionists, said, the growth of MMA was discussed a year ago, but the set goals often remain unachieved. In his opinion, 1,200 euros is the amount that MMA should aim for next year, but businesses warn of certain risks and possible bankruptcies. R. Tomašauskas also responded to such fears.

“It’s been talked about for 10 or 15 years, but never once did it work, never once did it happen and nothing started.” On the contrary, unemployment is decreasing, the income of residents is increasing, and the average salary is increasing. Keep getting scared, but it never happens. Bankruptcies and all that, it happens because of other things.

You take any industrialist and he would say: I don’t pay the minimum wage to my workers, I am ashamed to do so. There are no such. The minimum wage is important for us in the service sector, which tries to squeeze even more from those people: all kinds of couriers, bartenders, who are forced to earn from tips. That industry, which is sufficiently well developed here in Lithuania, does not pay the minimum wage”, the interviewer pointed out.

There are those who believe that businesses that pay their employees MMA are not worthy of the business name. In principle, R. Tamošauskas also agreed to this.

“I say that such companies must close. My position is very simple. If a person is unable to pay his employee, as an example, if people work in a pizzeria and cannot buy themselves a pizza to eat every day or go to a competitor to eat – then what is the value of such a job that you do not even earn a meal in the company where you work? Here we need to start talking about the fact that a person has to earn enough to be a full member of our society and to be able to use the services from which that businessman wants to earn”, he did not spare the criticism.

According to the interviewer, now certain situations seem somewhat funny to him.

“I want to make a lot of money, but I won’t pay my employees so they can’t go to a competitor to eat. So where will that money come from and where will the turnover come from so that small businesses can start making money? Here is a simple rule. We need more money in our economy, so that we can start living better”, assured R. Tamošauskas.

Fears are also heard that raising the MMA will also increase the prices of various services and products. However, R. Tomašauskas does not see a big problem in this area as well.

“What is expensive? Will electricity and heating be expensive? There are hairdressers, massages, entertainment, there is food that is in cafes and everything else. Who makes food and everything else – I don’t know any companies that pay minimum wage,” he said.

Vidmantas Janulevičius, president of the Confederation of Lithuanian Industrialists, also shared his insights on the show. At the beginning, he drew attention to the past year.

“I would think we are silent, but we all know very well that the past year has been a year of contraction. In many areas. We see it in the increased unemployment and many other things. Let’s hope that this first quarter is a sustained recovery and that is the forecast, despite the fact that our markets are not recovering very strongly either. The main export markets – both Scandinavia and Germany – are already climbing out of the hole, but there is still no sustainable, reliable growth,” the interviewer noted.

According to him, it is a fact that MMA will rise somewhat, but it is important not to forget one very significant thing.

“It’s very easy to raise, it’s very easy to move when the economy is moving up and there’s no problem.” For now, those clouds are dissipating, there will be growth, but is it really 1070 – at this point, we have skepticism. I think the growth that will be there, maybe around 1,000, will be the logical, sustainable growth that has been there for the last 20 years. I think he is more understandable and close to us”, said V. Janulevičius.

According to the interviewee, we have to look at raising wages in a very balanced way.

“Raising the minimum wage pushes up all wages. When we talk now that Lithuania is a country of extreme poverty – if the upper level is raised by 12 percentage points every year, then, of course, the salaries in the regions do not have time to rise to this level and then we fall into the poverty level. We need to understand what level we are counting from here. Our suggestion is to take a balanced view. It is a fact that the minimum wage needs to be raised, but we need to see what those forecasts are,” said V. Janulevičius.

In addition, he pointed out that efficiency, productivity and productivity in Lithuania do not grow in the same way as wages.

“We need to maintain the most competitive economy in the Baltic countries, as we have been until now and we hope to be for the next 20 years. For 20 years, salaries in Lithuania rose the most from all European Union countries. GDP growth was also the highest. We want to maintain the same momentum so that we can move forward, and for that we need all the discussions, argumentative speeches, how and what we should do to make the future sustainable”, said the president of the Confederation of Lithuanian Industrialists.

MMA should reach 1030-1040 euros next year – this is the position taken by SEB bank economist Tadas Povilauskas. According to the interviewee, when it comes to raising wages, a golden mean should be found, and we could reach the amount of MMA he named quite easily.

“Lietuvos bankas – it will still present its official calculations in the Tripartite Council, according to the formula, how much the minimum monthly salary should increase next year. It seems that the maximum amount is 1070, if the forecasts of the Ministry of Finance will be for the better.

According to the formula, it could be 1090 euros next year, but I think it is normal that there will be negotiations. The employers’ representatives will have their position, the employees will have theirs, and if it is settled somewhere in the middle, those 1030 or 1040 euros – that would be more than 100 euros more compared to this year’s minimum monthly salary, so the growth would be 12 percent,” explained T. Povilauskas.

According to the economist, this is certainly not little.

“Let’s remember that this year the minimum monthly wage grew by 10 percent. Next year there should be something similar, and if there are 1030-1040 euros, it would be even more,” he said.

True, whether such an increase in the minimum wage would also increase the average wage is not yet clear. The economist reviewed the situation we could observe before.

“For the time being, according to the data of “Sodra”, the assumptions are justified that in January-February we saw a much higher wage growth than we expected. It was 11-12 percent compared to January-February last year. Recently, Sodra also published data for the month of March, where the growth was about 10 percent. Most often, in March-April, salary revisions take place in the private sector, and this is probably the annual change – it should fall to a single-digit amount. That’s what happened.

If we look at closed joint-stock companies, the annual change in March was already less than 9 percent. The total number is over 10 percent, but it is also determined by the government sector – be it budget institutions or public institutions, where the growth is both 14 and 16 percent. It is the government sector that is significantly improving those data this year, but for now, I think that this year the average salary can increase by about 9-9.5 percent”, said T. Povilauskas.

In general, according to the economist, questions about whether the MMA should increase should not arise.

“The level of MMA is low, that’s why we talk about MMA having to grow. It must increase by 8-10 or 12 percent so that the level is not too low,” he asserted.

Vytautas Šilinskas, Deputy Minister of Social Security and Labor, commented on the program what problems related to wages the Government sees in Lithuania.

“The problem with salaries is that at the beginning of the term, an hour cost Lithuanians about 3 times less than the European Union average. Those wages were low enough, we were ahead of Romania, Bulgaria and Hungary. That Lithuanians work more hours is another fact. During this term, we managed to overtake as many as four countries – Poland, Latvia, Croatia, and in 2023 we overtook Malta. The pace is good, the OECD says that since 2019, since covid, real wages in many developed countries, adjusted for inflation, have still not reached pre-war levels, but Lithuania is not among those countries. “Lithuania is among the countries where wages grew the fastest,” said the vice-minister.

Thus, according to V. Šilinskas, despite the high inflation we had in Lithuania, we had the highest wage growth.

“Therefore, even after taking inflation into account, the growth of real wages in Lithuania was the highest among the OECD countries,” he said.

However, the interviewees added that the situation we are in today is still quite bad.

“As I said, at the beginning of the term, we were 3 times behind the European Union average per hour. For today, we are behind about 2 times. An hour cost about 10 euros, now it is about 15 euros, according to the data of 2023. The average of the European Union is 32 euros,” said the vice-minister.

According to V. Šilinskas, this is the merit of the whole society.

“We achieve everything together. Business does not exist without employees and employees do not exist without business, and the main job of the Government is not to interfere and to help as much as possible. Here, apparently, everyone managed to get together. Like a small business, the main advantage of a small state is speed. We really reacted to all crises much faster than other countries”, he said.

The Vice Minister of Social Security and Labor also commented on the growth dynamics of MMA and what effects it can have. True, he did not hide that this is a discussion he does not particularly like.

“Minimum wage is my least favorite topic”, admitted V. Šilinskas.

According to him, in general, 25-26 thousand people working full-time receive MMA in Lithuania.

“If we hire people who work part-time, we get a lot of those people. “Sodra” once counted over 100,000, but there are also managers who are employed for one hour,” said V. Šilinskas.

According to the Deputy Minister, such numbers remain relatively stable, which, according to him, is a good indicator.

“The fact that the number of people working for the minimum wage is not growing, despite the fact that the minimum wage has gone up, is a pretty good indicator. It remains stable,” V. Šilinskas assured.