2024-07-27 04:04:59
The fact that the MMA should be determined taking into account the long-term level of labor productivity and its changes is also foreseen by the EU directive coming into force at the end of this year.
E. Leontjeva states that increasing the MMA faster than labor productivity increases reduces the competitiveness of the Lithuanian economy and the ability of companies to invest in increasing productivity.
There is also a risk that part of the workers may lose their jobs – due to the inadequate remuneration and productivity ratio of low-skilled workers, it will not be economically viable for companies to hire them. By over-inflating MMA like this, the people it is meant to help will suffer the most.
Taking into account the specific requirements of the EU directive on the determination of MMA, LLRI prepared and proposed to the institutions a revised formula, according to which the annual growth of MMA is linked to the average of the nominal labor productivity growth of the last three years.
“Such a mechanism would ensure a fair and proportionate increase in wages, corresponding to the state of the Lithuanian economy and the ability to pay higher wages determined by progress, while not sacrificing jobs and investments,” says E. Leontjeva.
According to the formula proposed by LLRI, the size of MMA could grow by 9.2 percent next year. up to 1009 EUR.
“The size of the MMA has grown significantly faster than labor productivity in recent years, as a result of which Lithuania’s competitiveness is experiencing additional difficulties against the general background of declining investments. Last year, the loss of competitiveness was noticed by the European Commission (EC), which emphasized that nominal labor costs in Lithuania grew the fastest in Europe over three years – 27.7 percent, while the EU average – 7.8 percent.
In order to reduce the gap between MMA and productivity, we need to remember the balance and increase MMA in such a way as to maintain a functioning economy and jobs”, says the president of LLRI.
Analyzing the trends and effects of increasing MMA, LLRI found that due to significant differences in economic development between the regions of Lithuania, the impact of MMA differs in different areas of the country.
Although the average of Lithuanian MMA and average wage (VDU) this year is about 43 percent, in Utena county it exceeds even 54 percent. county VDU. Accordingly, the employment rate in this county is the lowest in Lithuania.
According to E. Leontjeva, the data shows a clear correlation between the ratio of MMA and VDU and the level of employment in a specific county. The higher the ratio of MMA to VDU, the higher unemployment and lower employment in the municipality.
As a result, it is proposed to consider a partial differentiation of MMA in order to help the weakest regions of Lithuania.
2024-07-27 04:04:59