Analytics, Financial Services, Legislation, Lithuania, Wages

Borja Gracia, head of the IMF European Department's mission that completed its work in Vilnius on Monday, noted that Lithuania's minimum wage had been rising at a fast rate in recent years.

"Minimum wages have been increasing rapidly since 2013 until 2016. For example, if you look at minimum wages relative to average wages, they were around 40% more than ten years before 2013 and then in a few years they increased to 50%. In our assessment, we do not see the increase to 50% as providing enough gains to justify such a high level relative to the average wage," he said at a news conference.

Gracia underlined that the IMF did not propose that Lithuania cut the minimum wage. "We are not proposing to reduce the minimum wage, but we are proposing to gradually get the ratio of the minimum wage to the average wage closer to what used to be level in Lithuania prior to 2013," the IMF expert said.

"We don't see any negative overall impact (on the economy), but we think that for particular groups, in rural areas, where wages are lower because productivity is lower (...), the impact can be negative and that's our concern," he added.

It has been proposed to raise the minimum wage by 20 euros to 420 euros, but the Tripartite Council, which brings together the government, employers and trade unions, has not yet made its decision on this.  

The minimum wage was last year raised by 20 euros to 400 euros.

The average gross monthly salary in Lithuania's economy, excluding sole proprietorships, stood at 884.8 euros in the fourth quarter of 2017, according to figures from the country's statistics office.