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Lithuania

2 February 2018

Lithuania: first experiences with the revised labour code

Shortly before the summer of 2017, the Seimas (the country’s parliament) passed the much-disputed revision of the Labour Code, which came into force on 1 July 2017. This was only one part of the planned reforms. The social partners also concluded with the government a national agreement on the encouragement of bargaining. The trade union movement has now made an assessment of its first experiences with the changed industrial relations framework.

The first of these very controversial labour market policy reforms focussed on the restructuring of the regulation of labour relations, which led to a revised labour code. The code entered into force in July 2017. An earlier version of the Bill was vetoed by the presidency. After the government and the trade unions agreed to improve the code, the parliament decided to override the president's earlier veto and created the time for the social partners to agree on the regulation of the most controversial provisions. But this was only one aspect of the planned reforms that were announced in the country’s National Reform Programme of 2017 (as formulated in April/May 2017). Other reforms led to systemic changes in pension pay and unemployment benefits. The pension part of the structural reform package aimed to strengthen a rules-based pension indexation system that enacted increases based on labour market trends.

The social partners have been very occupied with the reform agenda. In the late autumn of 2017 they signed an agreement with the government on tax reforms and the encouragement of collective bargaining. Currently, matters concerning the transformation of the education and higher learning system are becoming more important. The country’s ability to create an effective education system will largely determine the course it will take in the foreseeable future. One of the challenges will be to strengthen investment in human capital and address skills shortages, by improving vocational training and education, raising the quality of teaching and pursuing more active labour market policies and adult learning.

In an interview, the president of the Lithuanian Trade Union Confederation (LPSK) assessed the experience so far with the new code. The LPSK was closely involved in the drafting of the final code. Nevertheless, there have still been difficulties in interpreting and implementing the introduced changes. The autumn agreement provided more space for employees and employers to negotiate many specific details. With this increased autonomy, management and labour can settle many disputes via territorial, sectoral and branch-level collective bargaining agreements. But ironically, many employers still prefer to lobby politicians instead of directly negotiating with the trade unions. One of the priorities for 2018 is a collective bargaining agreement for the education sector.

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