Finger agrees that renegotiated employment contracts may reduce employee benefits from Nausėda offers

“You can only reduce benefits by rewriting contracts, but this requires the consent of both parties,” he said in an interview with Delfi.

During the conversation, the head of the presidency’s economic and social policy group emphasized that the package presented in Kaunas on Friday is balanced and would work very quickly.

– The first question is technical: will you propose to change the coefficient of the NPD formula? (Currently = 350 – 0.17 x (salary – MMA) – aut.)

– We will propose increasing the size of the NPD from 350 to 400. This is basically provided for in the law, which will take effect on January 1 of next year. We want to advance the entry into force in 1 year. Due to the formula, there are already technical things.

– I have calculated that the most beneficial proposals presented today to change the PIT would be those with relatively solid incomes. Was this the main reason why, unlike the benefits for families and children, their agreement could not be found with the representatives of Seimas?

– We, together with local and foreign experts such as Nobel Prize winner Robert Shiller, have taken this aspect very closely. Those benefits are truly proportional. We propose a temporary reduction in the tax, which applies equally to everyone. It is only because of our tax details that low-income people pay less.

In response, we did three things. First, we propose an increase in NPD, which would affect low-income people the most. Second, we offer a temporary rate of 20 percent. up to 15 percent. reduce the tax only for those income that are less than 3 average wages (VMU). Those who earn a lot for the full surplus through 3 VMUs would pay a standard 20 percent. tariff. Progressive 32 percent goes even higher. tariff.

The third aspect is that our package includes a lump sum for families raising children. They also include low-income people. They, especially low-income families, would receive an additional benefit of € 200 per child.

All this balance is weighed very carefully. It is important that our package reaches a wide range of contract workers, over 1 million. people. It encourages low-income workers and the middle class, who pay taxes transparently.

– The objective of the measures is to stimulate the economy. But nothing will prevent a resident from putting those additional 100 euros in a savings bank. Perhaps there was some way to encourage consumption? For example, delivering checks with an expiration date?

– A very important advantage of our measures is that they do not compete, but rather complement other measures. It has to be very simple and it has to work fast. The change in the standard rate from July 1 is an example of this. It works and quickly reaches the pockets of the population.

Various coupon programs are one way to promote, but this would require resources for administrative preparation, certification, etc. This would not be a quick element of economic stimulus.

– Another possible downside that I see is that the employee will receive the same, and the employer will take the full raise. The business is struggling these days, and employees agree to sign modified employment contracts at lower wages. Have you thought about that?

– This risk exists, but is managed by the fact that it is not a subsidy for a company or an employer. It’s a change to the standard rate that, when nothing else happens, automatically increases people’s incomes.

Those benefits could only be reduced by rewriting contracts, but this requires the consent of both parties.

From the point of view of companies, there will certainly be sectors (hotels, travel) that will inevitably have to reduce the number of employees. But seeing the taxes temporarily cut, they may not cut that number as much as they planned.

Here there is a mutual benefit, both on the part of employees in those companies where activities go according to plan, and assistance to those companies and employees where the situation is not enviable.

– The President said today that these proposals could become a basis for debate. Debate before the elections? Are you trying to filter out parties that contribute to the vision of a welfare state?

– The President had in mind that he will make legislative proposals by decree. It is necessary that the laws be adopted by the Seimas. We look forward to a constructive, open and transparent debate at Seimas. That is what the President wanted to say.

– Are you not afraid that stimulated consumption will increase inflation?

– Certainly not. Elementary economic logic says that at a time when the economy is falling (we have estimates that in an optimistic scenario, the economy will fall by 6-10%), the problem is not inflation, not price increases, but deflation, i. and. prices down.

This accelerated, all-inclusive package is one way to avoid the downward spiral of falling prices and the economic downturn. We need to make sure that our economy recovers as quickly as possible next year and that rising public debt begins to decline.