The government has recently greenlit raising the minimum monthly wage to 924 euros. According to the economist Justas Mundeikis, that is not enough.
On 28 June, following negotiations with employer representatives and trade unions, the government agreed to increase the minimum wage from 840 to 924 euros a month (before tax) from 2024.
“Already last year we calculated that the minimum wage should be 885 euros, not 840 euros, but unfortunately, due to economic uncertainty, the war, a decision was made not to set a specific target,” Mundeikis told LRT RADIO on Monday.
“As of today, according to preliminary calculations, next year’s minimum wage should reach between 970 and 990 euros, and not 924 as now agreed,” he added.
According to the economist, the decision affects more than just people who are paid the minimum wage. Lower minimum wage has the biggest impact on people making up to 1,500 euros a month, he says, and can hamper economic recovery.
“The impact is felt most by those who make the minimum wage or a salary close to the minimum wage, although the gradually weakening effect persists all the way to the median-income earners,” said Mundeikis. “In Lithuania, the median wage was around 1,500 euros last November.”
“A lower minimum wage also affects the higher earners, reduces both the purchasing power and the creditworthiness of the population, their real purchasing power will be significantly lower than it should be, and this will certainly not contribute to the economic recovery,” the economist said.
The Social Insurance Fund SoDra said last week that the average wage in Lithuania was 1,980 euros a month (before tax) in the second quarter and topped 2,000 in June.
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