The government on Wednesday agreed to increase the minimum monthly wage by 10 percent, to 924 euros, from 2024.
The minimum hourly pay will rise from 5.15 euros to 5.65, before tax.
Moreover, the government also decided to raise the tax-exempt income threshold (NPD) by 20 percent. As a result, according to Social Security and Labour Minister Monika Navickienė, minimum wage earners will see their after-tax incomes rise by 76 euros a month.
“With this bill, we will increase the incomes of the lowest earners in Lithuania, and the other good news is that we had an agreement among social partners on this issue for the first time in five years,” Navickienė said at the government meeting.
The minimum wage raise will cost the government around 31.4 million euros next year, according to the ministry’s estimates.
In May, the Tripartite Council representing employer organisations, trade unions and the government, agreed for the first time in five years to raise the minimum wage.
Raimondas Tamošauskas, head of the Lithuanian Food Workers’ Trade Union, says that eventually the minimum wage and the tax-exempt income threshold should be equal – and minimum wage earners should be entirely exempt from the income tax.
“We think [the current agreement] is a step forward. We are slowly moving towards the implementation of this principle and in the future we hope that the minimum wage will be tax-free, as it is normally the case all over the world, at least in most of it,” Tamošauskas told LRT RADIO.
Meanwhile, Andrius Romanovskis, president of the Lithuanian Business Confederation, says that employers feel “a bit cheated” by the government’s tax reform proposals.
“What we are seeing now is that along with the 20-percent increase in the level of tax-exempt income, taxes are also being raised. The argument is that taxes need to be raised in order to have the higher tax-free thresehold, which we do not think is very fair,” Romanovskis told LRT RADIO.
According to the Ministry of Social Security and Labour, there were around 108,700 employees in the country making the minimum wage or less in March. Around 13,700 were employed in government institutions.
The current monthly minimum wage stands at 840 euros, or 633 euros after tax.
Overall wage growth is expected to be 9.1 percent this year.
Newsletter
Every Friday morning.
