2004 Annual Review for Lithuania

This record reviews the main industrial relations developments in Lithuania during 2004.

Political developments

2004 was an extremely active year in Lithuanian politics: the President was removed after the application of impeachment proceedings, following which extraordinary presidential elections were held; European Parliament (EP) members were elected for the first time in Lithuania; and at the end of the year national parliamentary elections were held.

On 6 April, Rolandas Paksas was removed from his post as President on grounds of violations of the Constitution and oath breaking. On 13 June , new extraordinary presidential elections were held. Five presidential contenders took part in the first round, two of which proceeded to the second: Valdas Adamkus (30.2% of the vote) and Kazimira Danute Prunskiene (20.6% of the vote). The second electoral round was held on 27 June and was won by Mr Adamkus (with 51.9% of the vote), who was elected as the President of the Republic of Lithuania (Ms Prunskiene obtained 46.7% of the vote). The President is elected for a period of five years.

Elections to the EP were held concurrently with early presidential elections on 13 June 2004. A total of 13 politicians elected from party lists will represent Lithuania , broken down as follows: five from the Labour Party (Darbo partija); two each from the Social-Democratic Party (Lietuvos socialdemokratu partija, LSDP), Homeland Union (Tevynes sajunga, TS) and Liberal and Centre Union (Liberalu ir centro sajunga, LiCS); and one each from the Union of Peasant and New Democratic Parties (Valstieciu ir naujosios demokratijos partiju sajunga, VNDS) and the Liberal-Democratic Party (Liberalu demokratu partija, LDP).

Ordinary elections to the Lithuanian parliament are held on the second Sunday of October of the year in which powers of the LRS members expire. In 2004, elections were held on 10 October. In total, 141 members were elected: 71 in single-seat constituencies and 70 by proportional representation. The parliament is elected for a four-year term of office. The largest number of seats were won by the Labour Party, which holds 39 seats. The coalition of Social Democrats and Social Liberals has 31 representatives, the Homeland Union won 25 seats, the Liberal and Centre Union 18 seats and Rolandas Paksas’ coalition 'For Order and Justice' 11 seats. In addition, 10 candidates from the Union of Peasant and New Democratic Parties were elected. The Election Action of Lithuania’s Poles will be represented by two members, who were elected in single-seat constituencies. Five self-nominated candidates also won mandates in single-seat constituencies.

As a result, Algirdas Brazauskas remained Prime Minister, leading a new coalition government of his own Social-Democratic Party , the Labour Party and smaller parties

Collective bargaining

The task of registering national, sectoral and territorial collective agreements in Lithuania is assigned to the Ministry of Social Security and Labour (Socialinės apsaugos ir darbo ministerija, SADM), while enterprise-level collective agreements are not registered. Currently, no agreements at either national collective or sectoral/territorial level have actually been signed. The exact number of company-level agreements is not known, but according to various estimates by the secretariat of the Tripartite Council of the Republic of Lithuania (Lietuvos Respublikos Trišalė taryba, LRTT) and trade union representatives, there might be from 1,000 to 1,500 valid company-level collective agreements.

Pay

A range of pay issues were a subject of tripartite consultations at national level in 2004. The social partners discussed the issue of the level of statutory national minimum wage at the LRTT several times during 2004. The monthly minimum wage was increased from LTL 450 (EUR 130) to LTL 500 (EUR 145) from 1 May 2004 and further possible increases were discussed by social partners during September to December 2004 (LT0410101N and LT0501101N).

At the request of the social partners on the LRTT, the labour and social security ministry carried out in 2004 a research project aimed at preparing a model methodology for the evaluation of jobs and functions that could be used in companies and organisations, or at sectoral level, in the conclusion of pay-related collective agreements. Representatives of all major employers' organisations (LT0410102F) and trade unions (LT0412102F) took an active part in drawing up the methodology. The methodology was then distributed to all relevant social partner institutions.

Working time

In 2004, the social partners within LRTT debated a range of issues related to working time, such as ways to make the organisation of total working time for flexible, a more liberal regulation of part-time work, and the duration of working time in cases where employees have several employment contracts.

However, a more liberalised regulation of part-time work was the only issue where action was taken. Accordingly, on 22 June 2004, amendments to Article 146 of the Labour Code (Darbo kodeksas, DK) were adopted and came into force. These liberalised the regulation of part-time work, allowing deviations from the legal framework in terms of the length of part-time work. Thus, more freedom is given to the social partners to negotiate a more favourable organisation of working time as well as to better reconcile professional and family life. This new provision of the DK should also encourage the development of the social dialogue. After taking into consideration these amendments of the DK, on 29 November 2004 the government passed Resolution No. 1508 'On the approval of the description of conditions related to the procedure of setting part-time work and the length thereof'. This Resolution complements and adds to detail to the condition stipulated in Article 146.

Job security

A 'Soviet-style' and 'old fashioned' attitude towards job security arguably persists in Lithuania; many employers still believe that investment in the job security of employees is too expensive and brings no direct results. This approach is, it seems, being replaced by a different, 'more modern' attitude, with an increasing number of employers perceiving that better employment conditions facilitate more productive work, increase efficiency of work and employee loyalty. Therefore, attention paid by employers to job security as well as funds assigned for this purpose is increasing.

Equal opportunities

Significant differences exist between the wages paid to men and women. In order to implement the principle of equality, a methodology for the evaluation of jobs and functions was developed in 2004 at the initiation of the social partners (see above). One of the key goals of the methodology is to guarantee equal pay for jobs that require equal levels of skill and qualification.

Training and skills development

The role of training and adult education is increasing in Lithuania, as a lack of suitably qualified workers has been increasingly felt in the manufacturing sector, particularly over the past few years. In collective agreements, increasing numbers of employers make a commitment to pay the cost of training employees, while bigger organisations and companies regularly hold refresher courses for their employees. In addition, employers are increasingly developing relations with universities, colleges and vocational training schools, employ students on probation and are present on the boards of examiners, thus contributing to the improvement of the qualifications of future employees.

Other issues

At the end of 2003, the government passed a resolution providing for between one and five additional days of holidays for those with long service within the same organisation or for those working in special conditions. However, in 2004 it became clear that some companies (eg Danisco Sugar) had already provided for up to five additional days of leave by collective agreement. If these companies observed the resolution, up to 10 additional days off would be granted. Accordingly, the collective agreements of these companies were reviewed to ensure that total length of additional holiday does not exceed five working days.

Legislative developments

In addition to laws on employee participation (see below) and amendments to the Labour Code detailed in other sections, the following legislative developments took place in 2004:

• amendments to Article 5 of the Labour Code, covering the fields of application of labour law. The amendment provides that foreign workers posted to Lithuania will be subject to Lithuania’s labour laws; and

• amendments to Article 180 of the Labour Code, which states that mothers (or adoptive mothers), fathers (or adoptive fathers), grandmothers, grandfathers or other relatives bringing up a child as well as employees appointed as guardian of a child shall be awarded childcare leave until the child reaches the age of three. However, this Article did not define time limits within which employees must notify their employer of taking or cancelling the leave. It was therefore amended to state that employees must give written notice of at least 14 days of their intention to take childcare leave or return to work from childcare leave. Collective agreements may set a longer notice period. It is thought that this amendment will make it easier for the employer to plan staff fluctuations and other related issues, and will contribute to more flexible employment relations.

The organisation and role of the social partners

2004 saw two main trends in terms of the organisation and role of the social partners; there was an increase in their activity; and there was more coordination of their activities.

Both employers' associations and trade unions increased their education measures, in the form of seminars, conferences and trainings. In addition there was more public information in the mass media (television, radio and the press) on social partnership and the activities of the social partners. The government also paid more attention to the social partners. Over the year, the cooperation of individual ministries with the social partners was encouraged in particular by the development of the country’s National Action Plan for employment; in 2005 it is planned to increase the participation of the social partners in drawing up and implementing employment policy.

With regard to greater coordination of the activities of the social partners, on 29 June 2004 the rules of the LRTT were amended in order to include a paragraph on the coordination of the positions of the social partners. This paragraph recommends that only those issues should be raised at an LRTT sitting that have been agreed by the social partners.

Although no specific steps were taken in 2004, opportunities for greater consolidation (from company level to branch level and from branch level to sectoral level) were discussed within trade unions.

On 21 September 2004, two main employers’ organisations - the Lithuanian Confederation of Industrialists (Lietuvos Pramonininkų konfederacija, LPK), which traditionally represents larger businesses, and the Lithuanian Business Employers' Confederation (Lietuvos verslo darbdavių konfederacija, LVDK), which covers SMEs, signed a memorandum and agreement to foster greater cooperation. The memorandum sets out the aspiration of LPK and LVDK to consolidate the Lithuanian business community, improve mutual understanding and cooperation, exchange opinions and deliberate their position on the most urgent issues. The LPK and LVDK agreement commits both parties to deliberate and coordinate their actions in: submitting proposals and offering opinions on the issues that are of interest to both parties; and representing and protecting the interests of both parties in the EU institutions and in public and international organisations (LT0410102F).

Industrial action

No strikes were held in Lithuania in 2004. However, a number of disputes took place. For example, the Lithuanian Trade Union of Healthcare Employees (Lietuvos sveikatos apsaugos darbuotojų profesinė sąjunga, LSADPS), the Lithuanian Trade Union of Education Employees (Lietuvos švietimo darbuotojų profesinė sąjunga, LSDPS) and the National Trade Union of the Lithuanian System of the Interior (Lietuvos vidaus reikalų sistemos respublikinė profesinė sąjunga, LVRSPS) organised industrial action in the form of meetings. The main reason for all three disputes was dissatisfaction with pay. During these actions LSADPS and LSDPS submitted their demands to representatives of the relevant ministries. LVRSPS brought its demands to the Constitutional Court of the Republic of Lithuania and at the end of 2004 the Court took a decision in favour of the union.

Employee participation

A Law on European Companies was adopted in April 2004, implementing the European Company Statute. A draft Law on Participation of Employees in Decision Making in European Companies has been drawn up, implementing the Directive on worker involvement in the European Company (2001/86/EC). The draft has been submitted to all stakeholders for agreement.

The basic provisions of Directive 2002/14/EC on the information and consultation of workers are implemented through the Labour Code and the Law on Works Councils (Lietuvos Respublikos darbo tarybų įstatymas), adopted on 26 October 2004 (LT0411101N).

EU Directive 94/45/EC on the establishment of a European Works Council (EWC) or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees was implemented in Lithuania by the Law on European Works Councils (Lietuvos Respublikos Europos darbo tarybų įstatymas), adopted on 19 February 2004 (LT0409103F).

Absence from work

The issue of absence from work is not identified as a problem in Lithuania - there has been no debate on the issue and there are no collective agreements or social partner initiatives aimed at reducing absence from work.

Lithuanian legislation allows an employee to be absent from work for 120 days consecutively or 140 days per year on grounds of health. As yet, there is no statutory framework defining the procedure for dismissing employees who have exceeded the statutory limits on absence from work. In 2004, the social partners agreed at national level (in the LRTT) to apply between two and four months’ notice to such employees (subject to the nature and causes of sickness) and to pay severance pay.

Psychological harassment

In general, the problem of psychological harassment (bullying, mobbing, moral harassment) at the workplace is little known and analysed in Lithuania. It is often mixed up with or overtaken by problems relating to stress at work.

In 2004, the SADM elaborated a programme 'on the prevention of occupational health damage and improvement of safety at work' as well as measures to implement this programme. In the process of implementation, between July and September 2004 research was carried out 'on the impact of illegal work, violations of regulations governing employment relations, employers’ threats or other psychological affect on employees’ work results, safety at work and health'. To some extent this research also covered the problem of psychological harassment. The research found that representatives of employers and employees as well as experts of the National Labour Inspection (Valstybinė darbo inspekcija, VDI) were aware of the relevance of the problem of psychological harassment. According to employers’ representatives, about 49% of employees suffer from psychological harassment at the workplace, while employees’ representatives believe this figure could be as high as 60% in Lithuania, and experts from the VDI think it to be about 46% (the respondents were asked the question: 'What is the proportion of employees suffering from psychological harassment at workplace?'). Most of the respondents named employers as constituting the basic source of psychological harassment.

New forms of work

In 2004, the proportion of part-time employees in the Lithuanian workforce decreased. This may be related to the increased demand for labour in Lithuania due to overall Lithuanian economic growth and increased migration of employees to EU countries from 1 May 2004.

The functioning of temporary employment agencies was widely discussed in Lithuania in 2004 and SADM started work on legal provisions to regulate such agencies. The operation of temporary agencies has so far not been legally regulated or restricted. The draft of this legislation is likely to be prepared in the near future. Employers are in general positive about the emergence of agency work in Lithuania. However, trade union representatives insist on the strict regulation of agency work, believing that there is an increasing tendency for agency workers to replace permanent or seasonal workers.

Outlook

The role and influence of the social dialogue on social and economic development in Lithuania is expected to keep growing during 2005. The competence of the Lithuanian social partners is steadily increasing, and the institutional framework and contacts with foreign partners are strengthening. Lithuania’s accession to the EU significantly accelerated the involvement of the social partners in the formation and implementation of employment and social policy. Further, the rapid economic development and legal environment of the EU will facilitate further cooperation of the social partners in order to ensure balanced economic growth and the development of human resources.

In the near future, efforts will be made to tackle a number of social and economic issues by means of social dialogue at national level. In 2005, the social partners will make decisions on increasing the minimum monthly wage, the legislative regulation of temporary employment agencies and the practical application of the methodology for the evaluation of jobs and functions that was drawn up in 2004. The social partners will be involved to a significant extent in the preparation and implementation of the NAP for employment (LT0411103F) during 2005. In addition, issues surrounding corporate social responsibility are being addressed to an ever greater extent in Lithuania - the development of such responsibility depends to a large extent on the efficiency of social dialogue at all levels.

Following the adoption of the Law on Works Councils at the end of 2004 (LT0411101N), the process of setting up works councils and strengthening their role will begin in 2005. It is at present difficult to forecast the development of this process, its influence on the improvement of social dialogue and the development of cooperation between works councils and trade unions. However, it is clear that this will be new experience for social partnership in Lithuania. It is probable that setting up works councils will contribute to increasing the number of collective agreements; it is also probable that sectoral and/or national collective agreements will be concluded in the near future.

In summary, it can be said that all the preconditions for a more active role of the social partners now exist in Lithuania. These include rapid economic growth, free movement of labour and improvement of regulations governing employment relations, which all create grounds for closer cooperation of the social partners in attaining common goals. (Inga Blaziene and Boguslavas Gruzevskis, Institute of Labour and Social Research)