Youth unemployment and the decent work deficit MAKING INDUSTRIAL RELATIONS WORK FOR DECENT WORK BRIEFING ON THE SITUATION IN LITHUANIA 44

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1 Youth unemployment and the decent work deficit MAKING INDUSTRIAL RELATIONS WORK FOR DECENT WORK BRIEFING ON THE SITUATION IN LITHUANIA 44

2 02 Introduction Unemployment and precarious employment Changes in labour relations and the introduction of the flexicurity model in Lithuania have worsened labour conditions and altered employers attitude towards employees. Young persons, the least educated in workers rights and the least represented by trade unions and works councils, were affected the most by these changes. According to those interviewed by LLES, young workers are usually paid less because of their limited work experience and working skills, yet they have a higher work load and are hired on short term contracts. This leads to a lack of stability in their personal and professional lives. Youth unemployment in Lithuania grew rapidly during the crisis. In the third quarter of 2011, according to Eurostat, Lithuania had one of the highest unemployment rates in the EU for the under-25-year-olds (after Spain, Greece and Slovakia), reaching 31.1 per cent 1. The high level of youth unemployment is due also to the country s overall economic situation, unemployment and employment levels, retraction of services and industry sectors, inability to cope with technological changes, low investment and standards of living. Further, educational programmes do not take into account the needs of the labour market. Each year, university graduates and thousands of new specialists hit the labour market, and many of them turn to the Employment offices for help to find a job. Overview Rising youth unemployment and poor working conditions The statistics illustrate the difficulties facing Lithuanian youth. There is some confusion when it comes to evaluating the real unemployment level however. Three sources provide data on unemployment, Eurostat, the State Employment Office and the Department of Statistics. 1 explained/index.php/unemployment_ statistics The unemployment rate given by the State Employment Office is usually the lowest, as it shows the number of people of employment age registered at the territorial employment offices. Such data collection omits many unemployed persons who are not willing to register at the office. The Department of Statistics collects data by using surveys of the active working population, usually resulting in a higher unemployment rate than that of the Employment Office (Lithuanian Labour Exchange). According to the Department of Statistics of Lithuania Youth (aged 15 to 24) the unemployment rate in the third quarter of 2011 stood at 31.7 per cent. In comparison, the Employment Office (Lithuanian Labour Exchange) recorded a 7.1 per cent unemployment rate among young persons (aged 16-24) in October Before 2009 the difference between the two unemployment rates, from the Department of Statistics and from the Employment Office (Lithuanian Labour Exchange), was even greater. Since 2009, the government has imposed mandatory health insurance and only people who are unemployed and registered at the Employment Office (Lithuanian Labour Exchange) have the right to health insurance coverage paid by the State, while

3 03 those who are not registered have to pay it on their own (72 Lithuanian Litas (LTL) per months.1 Euro = LTL). As a consequence, in order to avoid the expense of health insurance, young people apply to the Employment Office (Lithuanian Labour Exchange) after graduation, increasing the number of registered unemployed and leading to seasonal fluctuations in the unemployment rate. Industry restructuring and bankruptcies limit job opportunities, especially in the less developed regions. Jobs have declined also in the services and tourism sector. Higher fees for commercial activities patents (business licenses) and the introduction of cash registers forced many independent retailers, vendors and market workers to quit their businesses. As registered unemployed persons they get a huge discount in obtaining annual business licenses. Such individual business activities are highly promoted in order to keep the unemployment rate as low as possible. Unemployment, Q3 Thousand Per cent ,9 37, ,5 32,4 34,1 33,6 31, ,4 297,2 292, ,9 277, ,1 18,3 17,0 17,1 17,2 255,6 239, ,6 14, ,5 8,7 8,0 8,0 6,1 7,4 7, ,1 51,3 54,9 51,7 48,0 46,3 44, The unemployed, thousand The unemployed aged 15-24, thousand Source: Department of Statistics of Lithuania, Youth (aged 15-24) unemployment rate, per cent unemployment rate, per cent Long-term unemployment rate, per cent Job opportunities for young people declined during the crisis. In 2007 Eurostat calculated that the unemployment rate for young persons (15-24 year old) was equal to 8.2 per cent, progressively increasing in 2008 to 13.4 per cent, in 2009 to 29.2 per cent, and in 2010 to 35.1 per cent 3. This age group has a higher unemployment rate than all other age groups, with higher unemployment among men than among women, due principally to the crisis in construction and industry. Industry restructuring and bankruptcies limit job opportunities, especially in the less developed regions. Jobs have declined also in the services and tourism sector. Higher fees for commercial activities patents (business licenses) and the introduction of cash registers forced many independent retailers, vendors and market workers to quit their businesses. As registered unemployed persons they get a huge discount in obtaining annual business licenses. Such individual business activities are highly promoted in order to keep the unemployment rate as low as possible. Young people in employment interviewed by the LLES confirmed these trends, highlighting a worsening of working conditions, increasing workloads, temporary contracts, insecurity and low/decreasing wages, sometimes unpaid wages and unclear wage calculations. According to Grazina, 24 years old, It is hard to find a decent job when you have no work experience. After graduating university I had no job offers. Finally I got a job at the supermarket as cashier. I get the minimum monthly salary and my work duties besides the cashier s job sometimes include cleaning, take care of products on the shelves, slicing and packing cheese for no additional pay. Young people are often obliged to sign temporary contracts as there are not many other alternatives offered by employers, who do not propose long-term employment to young people. These short-term contracts give employers the flexibility to fire employees without a formal reason. This also creates a situation where banks are not willing to explained/index.php/unemployment_ statistics

4 It is very hard to survive on my salary. Rent and the cost of heating leaves me with little money for food and transport, I cannot afford anything. 04 I receive just above the minimum wage. My girlfriend is still studying, so we both have to work additionally on weekends provide financial loans to people in temporary employment. The young people interviewed said they found having a temporary contract had a huge impact on their borrowing ability. Moreover, when employers need to cut the workforce, young people are the first to be fired, since because they have worked for a shorter time their redundancy payments will be lower. What is unacceptable for young people is the extremely low minimum wage of 800 Litas (232 Euros) which has remained unchanged since January The discussion on increasing minimum wages from 800 Litas to 900/1,000 Litas (by January 2012) was raised by trade union representatives at the National Tripartite Council many times in A preliminary agreement to raise the minimum wage was reached and hearings took place in the national Parliament. However, the worsening economic situation and the promise to repay the pensioners previously penalised by public cuts resulted in the government to offering an increase to only 850 Litas by July of 2012 or later. Many youngsters interviewed by the LLES said their income from only one job was insufficient. According to Vidas, it is very hard to survive on my salary. Rent and the cost of heating leaves me with little money for food and transport, I cannot afford anything. Lina, 24, earns additional money by selling used books and schoolbooks. Mindaugas, 23 years old says I receive just above the minimum wage. My girlfriend is still studying, so we both have to work additionally on weekends. Some of them are forced to live at home with their parents in order to save on rent, some of them try to continue their studies. As most of those interviewed do not see better opportunities in improving their living and working conditions in Lithuania, they soon choose to migrate to other EU countries. The legal framework When Lithuania regained its independence, the Law on Employment of the Population was drafted, and passed on 13 December Since 15 June 2006, this law has been titled the Law on Support for Employment. In the summer of 2010, the Law was amended by adding youth under 29 years of age to the group of persons to be supported in the labour market. The law gives the Lithuanian Labour Exchange under the Ministry of Social Security and Labour and its local offices a key role in implementing the employment support policy. To support youth employment, the Lithuanian Labour Exchange has established branches called Youth Employment Centres. The main task of these centres is to promote young people s integration into the labour market, to assist them in gaining a better understanding of the social environment and the labour market. Its services are free of charge, and registration is optional. In brief, Youth Centres operating throughout Lithuania: provide information and counselling for young job seekers; organise informative events and practical training assist in preparation for job interviews, how to be motivated in searching for a job promote entrepreneurship provide professional orientation tests provide information about admission to higher education institutions

5 05 In November 2011, 31,900, or 15 per cent of all unemployed persons registered with the Lithuanian Labour Exchange, received unemployment insurance benefits 4. The problem is that only about 1 in 10 young people receive unemployment benefit as they don t meet the requirement of long-term employment (at least 18 month of employment within the last 36 months). According to the Lithuanian Labour Exchange, as of 1 January, 2012 only 54 percent of the young unemployed haven t previously worked 5. Additionally, those that qualify for the benefit receive lower amounts than before. The government decreased unemployment benefits from 1,041 Litas to 650 Litas per month. Moreover, due to strict Employment office rules, young people often lose their unemployment status, if they do not return calls, show up for appointments, or when they refuse to work for a minimum salary, travel too far to work, or accept unskilled dirty jobs. According to the Minister for Social Security and Labour, D. Jankauskas, many government programmes have been created to increase youth employment opportunities. In 2010 about 2,000 young persons were employed thanks to subsidies paid to the employers. Others were employed through subsidies under the first job programme, which covered some of the employers expenses through active employment support programmes. What is important to outline here is that unstable economic conditions and little support from the State force many young people to migrate. The main target countries are the United Kingdom, Ireland, Spain, Norway and Germany. The emigration rate from Lithuania is the highest in EU. Lithuanian emigrants and population by age group, 2010 Age Emigrants Population % 15 % % 15 % % 14 % % 14 % % 15 % % 11 % % 16 % Source: Department of Statistics of Lithuania 6 Even though most of the young Lithuanians working abroad have low skill jobs, as their local language skills and job finding abilities are low, the wages received in the foreign countries are sufficient to survive. According to a Grafton Recruitment survey, a stunning 95.5 per cent of Lithuanians surveyed in 2011 (76.1 per cent in 2010) would be willing to work abroad. 7 4 Economic and Social Development in Lithuania November Puslapiai/bed_portretas.aspx 6 International migration of the Lithuanian Population Publication ISSN saveselections.asp?maintable=m & PLanguage=0&TableStyle=&Buttons=&PX SId=7371&IQY=&TC=&ST=ST&rvar0=&rvar1 =&rvar2=&rvar3=&rvar4=&rvar5=&rvar6= &rvar7=&rvar8=&rvar9=&rvar10=&rvar11= &rvar12=&rvar13=&rvar14= 7 GlobalSkillsMobilityLR.pdf

6 According to many social partners interviewed there should be a multi-faceted approach (by boosting the economy, increasing wages, monitoring labour market needs, establishing new work places, ensuring good working conditions and decent pay) to create a more secure and stable economic and working environment to show the State cares about young persons and to create trust in young people. The suggestions discussed by the social partners regarding governments position usually are only guidelines and recommendations and have little impact in the current situation 06 Industrial relations The need to strengthen social dialogue and organise young workers Given the lack of decent work for young people in Lithuania, is there a role for industrial relations to play in improving their working conditions, if any, and promoting quality jobs? First of all, social partners could improve labour legislation and therefore employment conditions through discussions and decisions at the Tripartite Councils, on different levels. The Tripartite Council is a body advising parliament and the government on socio-economic and labour matters 8. It was set up in May 1995 following an agreement on tripartite partnership between the government, trade unions and employers' organisations to resolve social, economic and labour problems and promote social harmony. From January 2003, social dialogue and social partnership in Lithuania have been regulated by the Labour Code. However, at the moment, no branch collective agreements (which are described in the Labour Code) are signed between the partners, as collective agreements are signed only at the company level. The following issues are those addressed in most company-level collective agreements in force in Lithuania 9 : terms and conditions for entering into, amending or terminating employment contracts; working and rest time; pay; social issues; health and safety at work; guarantees of trade union activities. Within this context, the low level of trade union membership, about 13 per cent, makes it difficult to bargain with the employers. The youth structures of Lithuanian national trade union centres believe that working conditions can be improved by better worker representation and recognition of workers rights, but the reality is that young people s presence in the trade unions is even lower than the average. Moreover, the national agreement signed in 2009 to tackle the economic crisis was later denounced by trade unions as the government failed fulfil its promises to boost the economy, create jobs and reduce unemployment. Trade unions were refused permission twice by the authorities to organise demonstrations in This created distrust among the social partners and stalled the discussion on the minimum monthly wage country/lithuania_4.htm The current government agenda is unfortunately more oriented to benefitting business and making savings at the workers expense. Wages have declined during the economic crisis and haven t returned to pre-crisis levels. According to many social partners interviewed there should be a multi-faceted approach (by boosting the economy, increasing wages, monitoring labour market needs, establishing new work places, ensuring good working conditions and decent pay) to create a more secure and stable economic and working environment to show the State cares about young persons and to create trust in young people. The suggestions discussed by the social partners regarding governments position usually are only guidelines and recommendations and have little impact in the current situation.

7 07 Good Practice Start-up loans and job opportunities for youth On 30 December 2009 the Ministry of Social Security and Labour (MSSL), Ministry of Finance (MF) and the UAB Investicijų ir verslo garantijos (INVEGA) - a business organisation - signed the trilateral Agreement on the Establishment of the Entrepreneurship Promotion Fund. The purpose of this measure was to create appropriate conditions for micro/small enterprises and natural persons to start their own business and for social enterprises to develop their business using financial engineering instruments, promoting entrepreneurship and self-employment and creating new jobs. The implementation of this measure (loan granting and (or) subsidies) is combined with training and consulting as well as assistance in preparing and implementing business plans for business start-ups. These business loans are available in amounts of up to 86,000 litas and with an interest rate of 5.5 to 9.5 per cent. Statistics show that 40 per cent of those taking up the business loans were young persons under 29 years of age. Further, the recent National Youth Policy Development Programme for should assist in preparing competent specialists to work with youth. According to the Youth Affairs Department (JRD) director Mindaugas Kuliavas, the programme will increase job opportunities for young people, giving them more experience and improving their skills. 10 Conclusions Too much flexibility, too few jobs Despite some of the programmes created the situation of youth employment remains difficult. The government s strategy is in transition from providing jobs or creating a good environment for jobs to the requirement that young people find the job themselves. The government s (flexicurity) strategy is to motivate young people to look for jobs without providing them the necessary infrastructures, and to create self-employment opportunities instead of creating quality jobs. Authorities make young people responsible for finding a job with limited government assistance in terms of information and counselling services. Employers tend to sign temporary contracts with young employees in order to have the flexibility to fire them if needed. Job offers are only available in part time, temporary and agency related jobs or via internships. The amount of free choice youngsters exercise when signing this kind of labour contract is therefore questionable. Supply and demand of labour have changed in a qualitative way and the political promotion of flexibility has stimulated this process. As a consequence youngsters end up with a curriculum vitae that looks like a chain of flexi-contracts, creating uncertainties and difficulties for young people and young families to plan their life (e.g. limiting their ability to apply for bank loans) Ministerija.imasi.spresti.jaunimo.uzimtumo. ir.migracijos.problema= _10-22/ Youth job centres that are limited to only the bigger cities and towns provide counselling and information, but in fact they can help very little in finding a real job or are able to suggest only low quality employment. Further, the government s position towards young people creates a negative view of role of the state and the activities of state institutions among young people. Last but not least, the limited and declining number of workplaces in Lithuania, the lack of alternatives and business opportunities is a big factor in the relatively high rate of emigration among young people compared to other age groups.

8 08 About the project Making Industrial Relations work for Decent Work is a one-year project which looks to intensify the cooperation and mutual learning of relevant actors - employers, unions, NGOs, think tanks and workers to identify the role as well as the tools and models needed for effective industrial relations, with the ultimate aim of combating precarious employ - ment and realising decent working conditions and quality jobs for all. This briefing, coordinated by SOLIDAR, was produced by SOLIDAR member Lithuanian Labour Education Society (LLES) All Making Industrial Relations work for Decent Work pilot studies are available on SOLIDAR is a European network of 56 NGOs active in over 90 countries working to advance social justice in Europe and worldwide. SOLIDAR voices the concerns of its member organisations to the EU and inter - national institutions across the policy sectors social affairs, international cooperation and lifelong learning. Recommendations To national governments Adjust active labour market policy to encourage youth employment by subsidising retraining and securing potential job placements or encouraging employers to provide more training at their enterprises, and match vocational education programmes with the needs of the labour market. The priorities should be annually reviewed and monitored. Provide youth counselling in Labour Exchange Offices in all 60 municipalities (not only 11) to increase youth participation in the decision making process, taking into account their needs and proposals for improving their working conditions. To social partners Improve the basis for collective bargaining and relax the requirements for taking strike action. The state authorities should promote social dialogue and social responsibility by encouraging trade unions and especially employers to start the bargaining process. Enterprises with collective agreements could get additional support or enterprises with no social dialogue could be given more restricted access to bidding for public procurement. Involve social partners and experts in developing training programmes, whereby employers organisations make projections on what type of employees they need in the future, and then closely participate in the education and training process. Nevertheless, workers rights and workers representation issues should also be addressed in vocational education programmes. Author: Kestutis Salavejus (LLES) Responsible editor: Conny Reuter Editor: Sara Hammerton Project Coordinators: Adeline Otto and Francesco Zoia Bolzonello Publication Coordinator: Abigail Goundry Printed on recycled paper SOLIDAR March 2012 This publication has been produced with the assistance of the European Union. The content of this publication is the sole responsibility of SOLIDAR and can in no way be taken to reflect the views of the European Union. Supported by DG Employment, Social Affairs and Inclusion. decent work decent life