As the pre-election marathon campaign is accelerating in Lithuania, politicians are giving more and more generous promises, delfi.lt writes. It looks like all that are trying to become the nation’s elected, are promising to increase the income of the population. And they are going to do it drastically once they come to power. Some promise the minimum monthly wage of 1,500 LTL next year, others are talking of an average monthly income of 3,500 LTL in 2016.
However, the adviser to the president of the SEB Bank dr. Gitanas Nausėda calls to use caution when evaluating such promises.
Talking to Žinių Radijas (News Radio) on Monday on the program The Question of the Day, he said that the minimum monthly wage of 1,500 LTL in 2013 is possible. But only if we come to terms with the fact that in this case the unemployment rate in the country could reach 20-25 percent because a lot of businesses simply could not afford to pay such high wages.
According to the economist, increasing the minimum wage to 1,500 LTL per month over a four year term is a bit more realistic but even in that case it must be assumed that the country’s economy grows at least 5 percent annually and the labor market is liberalized with labor taxes reduced.
‘Of course, it is possible to implement (to raise the minimum wage to 1.500 LTL a month. /Editor’s note/) but the level of unemployment would reach 20-25 percent. We could try to force the introduction of such minimum wages, but a lot of employers would not be able to afford to pay such wages and would lay employees off. In fact, they would have no choice, because the employee would be too expensive. <…>
If we are talking about raising the minimum wage to 1,500 LTL a month per Parliament’s term of office of four years, I would not say that this is mission impossible. If you succeed in achieving that growth in Lithuania’s economy is about 5 percent per year, if they relax many restrictions on the labor market, the labor taxes are reduced, it is possible that such an ambitious goal could be achieved ‘, said the economist while talking to Žinių radijas.
Since this August, the minimum monthly wage in Lithuania is 850 LTL.
Translated by Arūnas Raudys
Do nothing and your salary will double! Woohoo! Magiconomics!