Lithuania's new government boosts minimum wage

By bne IntelliNews December 20, 2012

bne -

Acting swiftly on campaign promises, Lithuania's new government has pushed through a 17.6% increase in the minimum wage. The hike is the second for the subsistence level in the last 12 months, as the harsh austerity of the last few years is eased.

Starting in January, the minimum wage will rise from LTL850 to LTL1,000 (€289), the new government announced in a statement, according to Bloomberg. "We're starting to implement the pledges given to voters," Prime Minister Algirdas Butkevicius, who took office last week with his four-party cabinet, said in the statement.

The last hike, from LTL800, was implemented in July by the former right-wing government in a bid to ease the electorate's weariness over the tough austerity followed since 2009. However, that could not save it from defeat at the October ballot, with voters plumping for the looser purse strings promised by the Social Democrats. However, the new PM has said the government will remain committed to continued fiscal consolidation, and is seen as having limited space to relax fiscal consolidation efforts.

The change in the minimum wage will improve living standards for about 200,000 workers, including about 50,000 public sector employees, the government said. A working group, including industry representatives, will report by the end of January on its study of suggestions that a lower minimum-wage requirement could be applied to small and mid-sized companies so that they aren't tempted to fire workers or pay wages illegally, the government statement said.

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