Whenever discussions begin in Lithuania about increasing the minimum monthly wage (MMW), the same arguments inevitably resurface: it will be too difficult for businesses, especially in the regions; labour costs will rise; competitiveness will suffer.
These concerns are understandable. Businesses are rightly paying attention to increasing costs. However, the key question today is not how much a higher minimum wage costs, but whether we have compelling reasons to abandon the direction Lithuania chose almost a decade ago.
In 2017, the Government, employers’ organisations and trade unions reached an agreement in the Tripartite Council that the minimum monthly wage should gradually increase to 45–50% of the average wage. This approach was later reflected in the European Union Directive on adequate minimum wages, which encourages Member States to ensure adequate minimum wages while promoting collective bargaining.
The discussion today, therefore, should not focus on developing a new minimum wage strategy, but on whether there is any real justification for abandoning the one that has already been adopted.
Is the current approach no longer working?
If gradual increases in the minimum wage have become a problem for Lithuania’s economy, this should be visible in the country’s economic indicators. So far, however, no such evidence exists.
In recent years, wages have risen, employment has increased, unemployment has remained among the lowest in the European Union, and Lithuania’s economy has repeatedly demonstrated resilience despite challenging international circumstances. While these achievements cannot be attributed solely to increases in the minimum wage, there is likewise no evidence that the gradual growth of the minimum wage has become an obstacle to economic development.
International data also suggest that Lithuania has not gone too far. According to the Economic and Social Research Institute (WSI) of Germany’s Hans Böckler Foundation, Lithuania has still not reached the European Union’s recommended benchmarks for the ratio between the minimum wage and average earnings. In other words, we are not talking about an exceptionally high minimum wage, but about steadily moving closer to European standards.
Regions need people, not lower wages
The most common argument is that businesses in the regions need a lower minimum wage.
But is the real problem in Lithuania’s regions that wages are too high?
If lower wages were the key to regional success, Lithuania’s regions would already be leading the country’s economic growth. Unfortunately, the opposite is true. The regions with the lowest wages are also those experiencing the fastest population decline, the greatest labour shortages and the greatest difficulties in attracting investment.
Introducing a lower regional minimum wage would therefore not only contradict the very purpose of the minimum wage but would also encourage even more people to seek better-paid jobs elsewhere. Regional competitiveness begins not with lower wages but with the ability to attract and retain people.
Moreover, a higher minimum wage does not simply mean higher labour costs for businesses. It also leads to stronger consumer spending, higher revenues for local businesses, increased tax income for the state and municipalities, and reduced demand for social assistance. It is an investment not only in workers but also in the country’s economy.
In June this year, after lengthy negotiations, trade unions and employers’ organisations reached a joint agreement in the Tripartite Council on the minimum monthly wage for 2027.
The most important outcome of this agreement was not the specific figure itself. It demonstrated that social dialogue in Lithuania works and that agreements reached between workers and employers can be both economically responsible and focused on long-term benefits.
For this reason, the compromise achieved by the social partners should not be viewed as merely one opinion among many. It should serve as an important point of reference for the Government when making decisions on social and economic policy.
Where should we focus our attention?
Debating the level of the minimum wage is entirely legitimate. But before changing direction, we should first answer a simple question: what evidence is there that the current approach is not working?
So far, there is none.
Rather than looking for reasons to abandon the path chosen nearly a decade ago, we should continue pursuing it consistently—encouraging investment, improving labour productivity, strengthening collective bargaining and reinforcing social dialogue.
Our focus should not be on competing through cheaper labour, but on attracting investment, building a higher value-added economy and ensuring that the benefits of economic growth are shared by both businesses and working people, regardless of whether they live in a major city or in the regions. That is how a country’s competitiveness is truly strengthened.
Dalia Jakutavičė
Acting Chair, Lithuanian Trade Union Confederation (LPSK), President of the Lithuanian Industry Trade Union Federation
