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Eurostat announces that in January 2021, the Bulgarian population received the lowest monthly minimum wage (MMA) with € 332 and the highest in Luxembourg, with a MMA of € 2,202.
Lithuania was ranked 12th among all European Union (EU) countries with a MMA of 642 euros. If we compare the wages of all the Baltic countries, we will see that the minimum wage in Lithuania is the highest. The minimum wage in Estonia is 584 euros and in Latvia, 500 euros.
Still, the data presented shows salaries on paper and salaries are useful differently. In fact, in the Baltic States, Estonians receive the most MMA and Latvians the least.
Economists have argued that such a presentation of wages is misleading. In Lithuania, after the 2019 tax reform, the paper salary combined the taxes of the employees and the employers. In other countries this is not the case, so wages appear to be lower or higher.
Estonians are unnecessarily jealous
Then Povilauskas, an economist at SEB Bank, recalled that without delving into Eurostat data, Estonians were once very outraged that our minimum wage was higher than theirs.
“However, in reality, all employer costs are included in the Lithuanian MMA, and in other countries this is not the case. If we compare wages by hand, we will see that Estonians get more. In general, it would be best to compare the salaries of all countries not on paper, but those that employees receive in their hands.
However, not everyone blindly follows the statistics provided. For example, foreign companies that want to start operating in Lithuania look not only at MMA, but also at other market indicators, ”said the economist.
Sigismund Mauricas, chief economist at Luminor Bank, also said it would be more appropriate to compare the salaries employees receive in their hands than on paper.
“Countries have different tax systems, so the statistics published by Eurostat do not say much. It would be more appropriate to compare the percentage of the minimum wage to the median wage.
We could also follow the example of other countries and have not only a common MMA, but also certain salary ranges in all sectors, which would help job seekers to find their way into the job market. People would know how much they can expect to earn in an area, “said the economist.
Higher MMA encourages job search
According to Ž. Maurico, foreign companies rarely compare MMA.
“They don’t care about the size of the MMA, foreign companies usually pay more than the minimum wage, so the flexibility of the labor market and the qualifications of the employees, the level of taxes are more important to them. However, MMAs may be more relevant to trucking companies as they tend to pay a minimum wage and a daily allowance. Then they can really pay attention to the minimum wage in the countries, “said the economist.
However, Ž. Maurice said that a higher salary on paper also has advantages.
“Employees can now see how much their workplace costs. So they are no longer so angry at low-paying employers. It also becomes an incentive for employees to demand quality public services as they see that they pay hefty fees for it.
And for the future, despite the coronavirus pandemic, the pressure to increase MMA will be high. The growth of MMA is one of the key tools to help reduce social exclusion. The higher the minimum wage, the more motivated people will be to step out of the shadows and work legally.
But we also raise the minimum, the more we receive immigrants from third countries. They will want to earn more than they can in their own countries.
It is difficult for Lithuanians to live with a minimum
Inga Ruginienė, president of the Lithuanian Trade Union Confederation, also pointed out that the minimum wage on paper and in their hands misleads both Lithuanians and foreigners.
“Whenever international events are held, we have to explain that the Lithuanian real minimum wage that people receive is lower than in most countries. Although, according to statistics, we are ahead of Estonians, their minimum wage, that people receive in their hands, is higher. Therefore, we must compare the minimum wage that people receive in their hands, not on paper, “said the workers’ representative.
According to her, the Lithuanian minimum wage is very low and it is difficult for people to earn a living from it. And every year, increasing it, at least a few tens of euros, is a long time to discuss with employers.
“But the minimum wage is a very important indicator, when it increases, so does the average wage. The employer does not want a person with a higher education to suddenly start working for minimum wage, so the average wage increases as it increases.
So it is likely that if we didn’t have MMA in Lithuania, wages here would not increase at all, because not all employers are motivated to raise it. We would like the formula for calculating the minimum wage to be followed in the tripartite council. And in the future, we must aim for the minimum wage to reach 50%. average salary in the country “, – commented I. Ruginienė.
According to her, various ways are being sought to guarantee the normal remuneration of employees.
“We set out to follow the example of the Scandinavian countries, where each sector has a minimum wage and a half. However, this idea did not take root in Lithuania. We are left with MMA, which has to fight employers every year to increase.
And for the moment, it will be especially difficult to negotiate an increase in MMA, as some companies will take advantage of the pandemic situation and say there is no money. However, we heard the same from everyone during the economic rebound and during crises, ”said I. Ruginienė.
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