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“Generally speaking, minimum wages can contribute little to improving the situation of workers. The size of wages is determined by labour productivity. If productivity is achieved, this creates possibilities for businesses to increase wages,” Christoph Klingen told the paper.
“It is important to see if minimum wages are not too close to average earnings in the country. In Lithuania, minimum wages account for nearly 50 percent of these earnings. In other countries, this ratio normally is 30-40 percent. Thus, from this viewpoint, we do not see much room for increasing it,” the IMF mission chief said.
A too sudden or a too large increase in minimum wages can push some businesses back into the shadow economy, he said.
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