Lithuanian firms fear EU plans of equaling wages for posted workers

Under the current EU rules, employees sent to other countries should be paid the minimum salary of the receiving country. Meanwhile, Western countries propose stricter rules for posted workers to get equal pay and have the same working conditions with the locals.

“It is no secret that our advantage over the old countries is lower wages. We do not compete today with our visibility and availability of the world’s best products – we can do things in a cheaper and more flexible way because of the smaller burden of taxes and wages,” Virginijus Ramanauskas, CEO of Lithuania’s energy construction group Enerstenos Grupe ( Enerstena Group), told BNS.

His company currently has contracts in Latvia, Poland, Finland, France and Denmark. The businessman thinks the new rules may pull down the number of contracts.

“Bigger costs, bigger cost price and everyone is going towards cutting costs and prices to be able to sell more. Bigger costs mean lower profits or a bigger price. If the price is bigger, you get fewer contracts,” said Ramanauskas.

Mitnija, Lithuania’s leading construction company that is part of MG Baltic group, said it understands the temporary character of the advantage caused by lower wages, therefore, is actively preparing for a “more severe but more interesting competition.”

“The revision of the European Commission’s directives int eh short run would, for course, reduce our competition in more developed and wealthier countries of the European Union, as the price for the labor force is one of the ingredients of competition. Nevertheless, it is not the only thing that is important,” said Julius Gendvilis, CEO of the company that has operations in Great Britain and Latvia.

The Western initiatives are most opposed by Poland. Lithuania’s administration also sees threats involved, however, is more reserved and publicly accentuates it needs to find a proper balance between business interests and employee protection. A few officials told BNS that the Lithuanian government tempered its stance after accession of the new ruling majority.

One of the government’s key objectives now is to make sure the new EU rules are not applied for Lithuanian carriers, with a focus on the items included in the concept of salary, for instance, the accounting of daily allowance.

“We are in support of revising the directive of posted employees within the EU, with a balance between a competitive and a socially responsible market. We also believe that the posting restrictions and other market restrictions should not be applied on the transport sector. We do not support unilateral initiatives that would fragment the single market in the sector that is important for our country,” Prime Minister Saulius Skvernelis told a news conference in Poland last week.

Member-states usually have different positions of individual ministries, with economy ministries seeing more threats for businesses, while ministers of social security and labor taking a positive stance on better protection of employees. Officials of Lithuanian institutions are currently polishing a common national stance. Relevant institutions held the last working meeting on the matter last Thursday, however, no public comments were made.

The tense talks on the new scheme should continue all the way until the EU summit scheduled for October.