July 24, 2014 Print

In anticipation of the Euro coming to Lithuania, some government leaders are pushing a new increase in what is called the minimum monthly wage (MMW) out of fear the new currency will lead to higher prices. Atlas Network partner Lithuanian Free Market Institute’s president, Zilvinas Selinas, pushed back on this rationale explaining that minimum wage increases would actually contribute to price increases, not alleviate them. “If the Euro will increase prices, it will be due to the increased MMW and not the private sector ‘abusing’ the introduction of the Euro,” he said. Citing a recent 25 percent increase in the MMW from 800 litas to 1,000, Silenas also warned that the economic consequences of current policies have not yet been evaluated. Alternatively, Silenas calls on government leaders to make the labor code more flexible to further drive productivity and wage growth.