Lithuanian economists doubt benefits of lifting minimum wage

DELFI / Šarūnas Mažeika

A range of economists and employers have criticised the decision of Lithuania‘s government to raise the minimum wage again in July saying it has a limited effect on improving the lives of low income groups and could slow the fall in unemployment in Lithuania.

Employers say raising tax free income levels would be more effective in improving the conditions of Lithuania‘s lowest paid workers and with economists pointing to the fact that productivity is not growing as fast as wages, some are saying that the country may face serious competitiveness problems in future.

Employers and economists point out that to deal with the higher minimum wage of businesses may simply reduce the number of working hours, and in that way avoid an overall increase in the salaries of employees.

Lithuania‘s Central Bank, the International Monetary Fund and other international organizations have repeatedly stressed that Lithuania’s labour productivity is growing much more slowly than wages, which could eventually harm small businesses in particular in the region.


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