Sustainable growth and inclusive labour market – what is the role of the social partners?

From 4 to 6 July 2018 took place in Vilnius / Lithuania a seminar about „Sustainable growth and inclusive labour market – what is the role of the social partners?“, organized by LPS „Solidarumas“ (Lietuvos Profesinė Sąjunga „Solidarumas“) with the support of EZA and of the European Union. The seminar was part of the EZA project co-ordination about „Quality of work“. Representatives of workers‘ organizations from Belgium, Portugal, Spain, Poland, Estonia, Latvia and Lithuania participated in the seminar.

The opening speeches by Ms. Kristina Krupavičienė, President of the Lithuanian Trade Union SOLIDARUMAS, and Ms. Janina Švedienė, Vice-President of EZA were followed by a welcoming word from Mr. Lukas Savickas, advisor to the Lithuanian Prime Minister. Mr.Savickas extended the greetings from Prime Minister Mr.Saulius Skvernelis to the conference participants on the occasion of the international conference. He also made it clear that the current Government devotes more attention to the promotion of social dialogue in Lithuania compared to the previous Governments. According to Mr.Savickas, sufficient proof of the Government‘s contribution to and involvement in promoting the social dialogue in the country is the conclusion of the National Agreement on "reforms necessary for the country‘s progress" signed between the Government and social partners and sectoral collective agreements, signed for the first time in Lithuania.

Mr. Jonas Rasimas, Economic Governance Officer of the European Commission Representation in Lithuania, highlighted the fact that the European Commission had repeatedly notified the Lithuanian authorities that the social exclusion in Lithuania is much too high and resource/funding allocations in the public sector, that is, in health care, pension schemes, education and the like, are much too low compared to the other European union member states. Furthermore, the European Commission has recently once again given a warning that, unless urgent measures are taken to improve the situation, Lithuania might be facing a looming demographic disaster. Mr.Rasimas shed light on the European Pillar of Social Rights in the European Semester. The European Commission is taking all necessary measures to improve the social situation across Europe. In pursuing this goal, the European Commission experts provide country specific recommendations. Lithuania, specifically, is given the following recommendations: Lithuania faces challenges with regard to a number of indicators of the Social Scoreboard supporting the European Pillar of Social Rights.

Lithuania's employment rate (almost equal for men and women) and growth rate of gross disposable household income are high. However, income inequality and poverty remain high. This could partially be explained by a low effectiveness of social transfers on reducing poverty. At the same time, health outcomes remain poor, partly due to low spending on healthcare. There is room for improvement in terms of efficiency and quality of education and training. The Lithuanian government and the social partners have taken some steps to improve the social dialogue.

In response to Ms.Kristina Krupavičienė‘s question as to the possible actions taken by the European Commission in case of the failure of the Lithuania Government to comply with the EC recommendations, Mr.Rasimas said that no actions would be taken. The European Commission can only impose sanctions against Lithuania if it violates the provisions of the law on financial discipline. In other cases, the proposals of the European Commission are of a purely indicative nature and the European Union member states have the right to refrain from complying with the said recommendations.

Mr. Ričardas Garuolis, an economist of the Lithuanian Trade Union Solidarumas, presented to the conference participants the LTU Solidarumas standpoint on the European Pillar of Social Rights. LTU Solidarumas called upon the Lithuanian Government to develop adequate measures for the implementation of PILLAR. Europe was created after the Second World War following the principles of social dialogue and solidarity. After the revolutions and civic wars, which took a devastating toll on the European countries, it was understood that a far better option was to seek disagreement resolution through social dialogue. In addition, it became apparent that the stronger members of the society should help their weaker members by preventing them from becoming poverty-stricken. This paved the way to the emergence and development of European social welfare states in Europe, with a priority on higher taxes, greater social security and a greater role for the state in the country's economy. It differed from the so-called American state model, characterised by low taxes and a low level of social security provided by the state. After the collapse of the communist system in Europe, repeated attempts were taken to impose on Europe the American path of development, that had already begun to emerge in post-communist countries. Such a model is openly considered by the European trade unions to be "modern slavery", which threatens to destroy the decades of welfare state development. The problem is that Western companies with high social labor standards cannot compete with the "modern slavery" companies from the countries where taxes and wages are lower than in the single market. As a result, trade unions have been resolute in rejecting any European Union development scenario which does not include the provisions of a "social pillar“.

It was finally in November of 2017, that under the pressure applied by the European trade unions, the provisions of the "social pillar" were approved at the Göteborg Summit of the highest European Union leaders and EU heads of state. https://www.consilium.europa.eu/lt/press/press-releases/2017/11/17/european-pillar-of-social-rights-proclamation-and-signing/

Although at first glance the social pillar does not contain any new provisions, Mr.Ričardas Garuolis pointed out the still little-used "social pillar" provision in Lithuania to the effect that the restructuring of enterprises should be carried out in the light of CONSULTATIONS with trade unions. In addition, the company‘s management is obliged to carry out restructuring in conjunction with trade unions, instead of merely providing information to trade unions about the decisions already approved by the management. Strengthening the "social pillar" in the legislative process is of utmost importance as it will be imperative for the European institutions and states to take on board these new guidelines. It gives hope that in the EU member states, including Lithuania, the European social welfare model will ultimately prevail, ousting the American "modern slavery" model.

During the discussions, Mr.Justas Mundeikis, the economist, revealed that the new tax reform is likely to increase social inequality in Lithuania. It is estimated to reduce the Lithuanian budget by almost 2 billion. The tax cut will only be only beneficial to those receiving the highest revenues.

Prof. Romas Lazutka delivered a presentation on the Importance of Employee Social Security to Sustainable Growth. Even though Lithuania generates more GDP per capita than Portugal and all post-communist countries, with the exception of Slovenia and the Czech Republic, the average salary in Lithuania is higher than in Bulgaria and Romania. Lithuanian authorities make considerably less funding allocations in education, health and social protection compared to other post-Communist countries. As a result, social exclusion in Lithuania is the largest in Europe. Furthermore, the most number of people die in Lithuania from preventable diseases! Prof. Romas Lazutka warned that privatization of public services would result in higher prices, even though the quality of such services would not necessarily always be better. He revealed that the greatest challenges and concerns in Lithuania, such as social inequality and emigration to Europe as well as the ways to solve them, have long been mentioned in the detailed country specific recommendations of the European Commission, the International Monetary Fund and other international organizations, addressed to Lithuania. Trade unions need to be familiar with the above recommendations and use them as a reference point when dealing with social partners.

Speaker: Ms.Irina Janukevičienė from the State Labour Inspectourate made a presentation on Monitoring the implementation of the Labuor Code. The Impact of the new Labour Code on Employee Guarantees.

 In Lithuania, the implementation of the new Labour Code, adopted in July of 2017, is currently underway. The adoption of the new Labour Code has resulted in the emergence of new forms of emloyment and easier dismissal of people from work. We are extremely concerned with the fact that the grounds for dismissal of employee representatives after the adoption of the new Labour Code have become very loose, These individuals, in particular, must be protected by law and international conventions. Last year, the Labor Inspectorate gave the permission to dismiss 26 employee representatives.

Mr.Pedro Estevao, EZA project leader, shared with the participants the experience gained during the reform carried out in the field of education in Portugal. Of particular importance to Lithuania is Portugal's experience of social partnership in dealing with the challenge of upgrading staff qualifications. It was social partnership, joint projects and an overarching policy that contributed to the success of the reform, helping the Portuguese employees seek education and become a skilled and qualified workforce.

Ms.Rūta Skyrienė, Executive Director of the Association Investors‘ Forum, started her presentation with some good news, stating that Lithuania is on the right path of development, with business investment increasing and a recently adopted comprehensive tax reform underway. However, the speaker expressed her concern with the inadequate Lithuanian employee training and therefore called for a more courageous reform of the education system.

Mr.Milan Toth, Vicepresident of the Independent Christian Trade Union of Slovakia, familiarized the audience with the experience of Slovakia and the progress of social dialogue in the KIA MOTORS Slovakia company. The production of machinery is one of the largest sectors in Slovakia, employing about 80 thousand employees. Mr.Milan shared the experience of how the negotiations are held between trade unions and employers at the company.

Mr.Dirk Uyttenhove, President of Belgian trade unions and the European Forum VZW, shared the experience about the situation in Belgium. He gave the participants a better understanding of the wage indexation system, functioning in Belgium since postwar times. Such a system means that a rise in inflation rate is automatically followed by an increase not only of salaries but of all social benefits as well. Such a mechanism makes it possible for the Belgian companies to successfully compete and attract foreign invrestment.

Ms.Jolanta Bielskienė, Doctor of Social Sciences, explained to the audience that the Western world is threatened by repeated and continuous neoliberalist attempts to destroy social welfare states. Having penetrated international organizations, neoliberalists operate under the disguise of these organizations and exert an influence on the authorities of national states, persuading them to act in the interests of large capitalists. More specifically, they lobby a large scale privatization, including education, health care, social protection, etc. This notwithstanding, the speaker provided encouragement to the conference participants giving an analogy of uneducated and sparsely populated indigenous Indian tribes which nevertheless succeeded in opposing international corporations gaining billions of profit.

Ms.Rita Pfeifere, a representative of the Latvian trade unions, made a presentation about the development of social dialogue in her country. She shared personal experience and involvement in promoting social dialogue in the textile sector. Ms.Pfeifere also talked about the process of consultations in the Latvian textile sector.

Mr.Tadeusz Majchrowicz, Vicepresident of the Polish NSZZ Solidarność, introduced the Polish experience and talked about the development of social dialogue on the national scale. Mr.Majchrowicz also touched upon the achievements in developing the social dialogue during the recent years.

In the final session of the conference, the audience was addressed by the European Parlamentarians Ms.Vilija Blinkevičiūte and Mr.Viktoras Uspaskich.

In her speech, Ms.Vilija Blinkevičiute focused on the recent decisions adopted by the European Parliament regarding posted workers. These issues are of particular relevance to us as HGV (Heavy Goods Vehicle) Drivers‘ trade union is one the unions within the structure of the LTU Solidarumas.

Mr.Viktoras Uspaskich highlighted the importance of the minimum wage and the possibilities of raising it. According to the speaker, such a rise in minium wage can only be achieved if fair competition rules are established and all companies comply with them. Mr.Uspaskich regretted that in Lithuania, shadow economy still flourishes, with minimum wage regulation disregarded. As a result, a dumping effect is created vis-a-vis official remuneration.

Towards the end of the conference, relevant proposals for improving the situation were made, based on the experience of conference participants and speakers. The proposals were approved by the LTU Solidarumas Congress.