LITHUANIA VILNIUS

Social policy is one of the key guarantees of safety and stability for society. Its role in the life of the country isparticularly important and is continuously gaining more significance. It is related to almost all groups ofindividuals with various and sometimes very different interests, therefore, the professional employees of thesocial security prepare, improve and substantiate the decisions of social policy according to the systemicconception. This publication describes and analyses the activities of the Ministry of Social Security andLabour in 1998 in developing social policy in Lithuania. The information provided might be useful foreverybody willing to more comprehensively familiarise themselves with the shaping of the social policy, alsowith the introduced and envisaged changes.

This Social Report is the second publication of this type, prepared by the specialists of the Ministry. The firstpublication, aimed at professionals, as well as at the general society, was evaluated positively. Critical remarkswere also made. However, they were not numerous and they were taken into consideration when preparingthis publication. The purpose of the Social Report is not only to inform the politicians, scientists and repre-sentatives of non-governmental organisations more comprehensively on different issues of social policy, butalso to more actively involve them in open discussions in evaluating the current condition of the socialsecurity system and considering the variants of future decisions. This is an important means of ensuring thetransparency of social policy and creating the civil society.

Upon the improvement of the country�s economic situation, in 1998 the actual wages, as well as the actualpension, continued to grow. However, we can�t forget to note, that the increase of unemployment in 1998 is amatter of great concern. Combating the unemployment and increasing the employment were and are thepriority trends of the activity of the Ministry of Social Security and Labour, and the importance of these issuesis continuously being emphasised not only by the Government of the Republic of Lithuania, but also by theinternational organisations � the European Union, the European Council, the International Labour Organi-sation. Last year a lot of attention was paid to the improvement of the social insurance system, developmentof the infrastructure of social services and reduction of poverty. The poverty survey was finalised, on the basisof which the program on poverty reduction will be prepared.

The Ministry of Social Security and Labour is ready for detailed and reasonable discussions on the issues ofsocial policy. Therefore, the comments and proposals made will facilitate the improvement of the socialsecurity system, as well as the preparation of the third Social Report and contribute toward a better qualitynext year.

Minister of Social Security and Labour Irena Degutienë

4SOCIAL REPORT

THE FOLLOWING PERSONS CONTRIBUTED TO THIS REPORT

Working groupof the Ministry of Social Security and Labour:

Vytautas Þiûkas,

Doctor of Social Science, head of group

Vita Safjan

Doctor of Social Science

Rita Þemaitytë

Gintarë Buþinskaitë

Vladimiras Graþulis

Graþina Jalinskienë

Reda Jakuèionytë

Ramutë Joèytë

Irma Juknelytë

Vaidotas Kalinauskas

Vida Leonienë

Vytautas Levickis

Rita Mackonytë

Ingrida Maèernytë-Panomariovienë

Audra Mikalauskaitë

Violeta Murauskaitë

Asta Petravièiûtë

Jolanta Ðliuþienë

Ramunë Tarasevièiûtë

Audronë Vareikytë

Irena Vasiliûnienë

Daiva Zabarauskienë

Experts:

Chris de Neubourg

Franziska Gassmann

Editor:

Leonilija Perminienë (Lithuanian version)

Doctor of Social Science

Barbara Bilsky (English version)

Lay out, cover page design:

Virginija Martinkënaitë-Stankevièienë

Officials of the Ministry of Social Security and Labour are thankful to the groupof authors of this Report for their sincere work, also to the Government of theNetherlands and to the United Nations Development Program for the financialsupport, as well as to the experts of Maastricht University for their methodicalassistance.

5 SOCIAL REPORT

CONTENT

1. SUMMARY

2. KEY ACTIVITY TRENDS AND PRINCIPLES OF THE MINISTRY

3. ECONOMIC AND SOCIAL CONDITIONS SPECIFIC TO THELITHUANIAN ECONOMY IN 1998

4. LABOUR POLICY

5. SOCIAL INSURANCE

6. SOCIAL ASSISTANCE

7. EUROINTEGRATION AND INTERNATIONAL CO-OPERATION.

8. MONITORING AND EVALUATION OF SOCIAL POLICY

ANNEX 1. MANAGEMENT STRUCTURE OF THE MINISTRY

ANNEX 2. STATISTICS

ANNEX 3. ACTING INTERNATIONAL AGREEMENTS RATIFIED ILO CONVENTIONS

7

21

25

32

68

82

119

139

168

170

183

6SOCIAL REPORT

7 SOCIAL REPORT

1. SUMMARY

In 1998, as in previous years, the gross domesticproduct (GDP) was on the increase. According topreliminary data, the increase in the GDP in 1998accounted for 5.1 per cent. In 1998, inflation wasfurther on the decrease. During 1998, the increasein prices for consumer goods and services accountedfor only 2.4 per cent and was the lowest of the Bal-tic States (2.8 per cent in Latvia and 6.5 per cent inEstonia). The volume of retail trade increased byalmost 13 per cent. The flow of foreign direct in-vestments, as well as construction work, has in-creased significantly. The balance of the country�scurrent account deficit during nine months of 1998,compared to the corresponding period of 1997, in-creased due to the rise in foreign trade deficit andaccounted for 13 per cent of the gross domesticproduct (8.3 per cent during nine months of 1997).

The financial and economic crisis that started inRussia in August 1998, produced a negative effecton the Lithuanian economy. Due to the devalua-tion of the Russian Rouble and a sharp leap in in-flation, the demand for Russian home market de-creased, which, in turn, decreased Lithuania�s ex-port to Russia by 35 per cent. Complications in set-tling accounts with Russia led to a reduced activityof some economies. Supply of foodstuffs and goodsof light industry in the Lithuanian home marketincreased as a result of the decrease in their exportto Russia. The increased supply, and with a limitedpurchasing power of the population, had an effecton the decrease in prices in the country. Due todecreased production in the country, unemployment

ECONOMIC AND SOCIAL CONDITION OF THE LITHUANIAN ECONOMY IN 1998

in the country increased. During 1998, the unem-ployment level increased from 6.7 to 6.9 per cent.Income of the State Social Insurance Fund budgetequalled 4159,4 million LTL in 1998 and the ex-penditure calculated amounted to 4164 million LTL.The number of different social benefits paid to fami-lies during 1998 amounted to 3.5 million. Theamount allocated totalled 502.2 million LTL.

According to preliminary data, expenditure on so-cial security and care in the national budgetamounted to 10.0 per cent in 1998. The said expen-diture in the state budget accounted for 8.0 per centand in the municipal budgets for 11.9 per cent ofthe whole budget.

During 1998, the real average monthly wages in-creased by 14.3 per cent, minimum monthly wageincreased by 4.9 per cent and the average old agepension of non-working pensioner increased by 10.0per cent, and the minimum subsistence level - by1.7 per cent.

According to the Statistics Department data col-lected as a result of a household budget survey con-ducted by the Department of Statistics the real dis-posable income of households increased by 9 percent while the real cash income increased by 12.3per cent. In 1998, as compared to 1997, the shareof expenditure on food decreased and accountedfor 48.1 percent of total expenditure and 41.4 percent of the cash expenditure (52.2 and 44.5 per centrespectively in 1997).

Situation in the Labour MarketPositive changes in the labour market of the coun-try were observed in 1998. Not only the number ofthe employed increased but also that of economi-cally active (labour forces). This determined the in-crease in the level of the activity of the populationby 0.4 per cent during that period.

EmploymentMovement of labour force from the state into theprivate sector continued. If in 1997 67.7 per cent of

EMPLOYMENT AND UNEMPLOYMENT

the employed worked in the private sector, in 1998this figure was 68.8 per cent of the total workingpopulation. In 1998, persons of the retirement ageand older constituted a large portion of the em-ployed population. In November, 16 per cent of fe-males older than 55 years of age and 19 per cent ofmales older than 60 years of age did one or anotherkind of paid work or were engaged in work fromwhich they derived income.

The number of employed males was greater (51 per

8SOCIAL REPORT

cent) than that of females (49 per cent). Employ-ment of the population in the spheres of economicactivity changed - the number of the employed de-creased in agriculture but increased in the sphereof rendering services, especially educational ser-vices, health care and social work.

Partial employmentAccording to the data of the Department of Statis-tics, the average annual reduction of the number ofemployees of the country is 9.7 per cent, whereasthe average rate of growth of the number of part-time employees was 30 per cent. The part-timeemployees account for 7 per cent of all employed.A certain influence on the country�s labour marketwas exerted by the financial crisis in Russia. Enter-prises exporting their production to the CIS coun-tries began to reduce their production volumes andtheir number of employees. The majority of theemployees worked part-time, about one quarter ofthe employees worked with idle time periods andabout 15 per cent of the employees were on leavewithout pay.

UnemploymentThe official labour market distinguished itself byincreased dynamics. With the privatisation processand restructuring of the country�s economy goingon, two tendencies revealed themselves: on the onehand, the number of vacancies places increased (in1998 the Lithuanian Labour Exchange registeredthe greatest number of vacancies within the wholeperiod of its activity), and on the other hand � theunemployment rate increased. This can be ac-counted for by the fact that the number of low-qual-ity labour force or individuals without any profes-sional training increased in the labour exchange,whereas the demand for highly qualified labourforce increased.

The unemployment level grew from 5.9 per cent in1997 to 6.4 per cent in 1998. The unemploymentrate in regions (especially in rural regions) grewfaster than in urban areas.

The level of youth unemployment was higher thanthe average unemployment level in the country(8.0% and 6.9% respectively). Great fluctuationsin territorial unemployment remained. In some re-gions the unemployment level exceeded the aver-

age unemployment level in the country severaltimes, whereas differences in unemployment levelsbetween separate territories exceeded the abovelevel 5 times.

Labour Market Policy ShapingThe labour market policy underwent implementa-tion through active and passive measures. The pas-sive measure of the labour market is unemploymentbenefit, the aim of which is temporary material as-sistance to people who have lost their jobs. The tasksof the active labour market policy is to provide theunemployed with possibilities of temporary employ-ment, create conditions to acquire necessary workexperience, to help individuals maintain presentqualification, upgrade their qualification or acquirenew requisite skills that would meet the marketdemands. The final objective of the active labourmarket policy is the integration of the unemployedinto the labour market. By the objectives of inte-grating young people into the labour market andreducing territorial differences in the unemploy-ment level, it was sought to increase the volume andefficiency of the measures of the active labour mar-ket policy. The following active labour marketprogrammes were implemented:m Labour Market Vocational Training;m Support of Employment (public works, settingone�s own business, creation of new work places, sup-ported works programmes);m Prevention of Unemployment and Matching ofLabour Supply and Search (group search for job (JobClubs), self-search of job vacancies, work offer in an-other place, preventive vocational training and guid-ance, psychological counselling, etc.).

With the situation and its priorities in the labourmarket of the country changing, laws and other le-gal acts regulating the labour market were improvedby adapting them to new needs of the employmentpolicy.

In February 1998, the Government of the Republicof Lithuania, following Article 20 of the Law onSupport to the Unemployed of the Republic ofLithuania, approved the new procedure for per-forming public works. With a view toward solvingthe youth�s problems, the Government of the Re-public of Lithuania by Resolution No.10 of 8 Janu-

1. SUMMARY

9 SOCIAL REPORT

ary 1998, approved the plan of measures for voca-tional guidance and integration of young pe-opleinto the labour market which provides for severalmeasures � ranging from the education of youngpeople and programmes of employment to the es-tablishment of specific institutions. The procedurefor dismissing a group of employees and preven-tion regulating the dismissal of a group of employ-ees and application of preventive measures to miti-gate its consequences in the cases specified in Ar-ticle 10 of the Law on the Support to the Unem-ployed was approved. The Ministry of Educationand Science together with the Ministry of SocialSecurity and Labour, while implementing Point 2of Article 34 of the Law on Vocational Educationof the Republic of Lithuania, in its order No.1607/188 of 29 December 1998, approved of the excep-tional conditions of admittance of persons under18 without basic skills into labour market institu-tions of vocational education.

Labour RelationsFactors Influencing Labour RelationsIn providing for concrete work conditions for theemployee, the employer must take into account re-quirements established by corresponding legal acts.The stability of labour relations in enterprises areburdened by the ongoing modifications of the legalframework, since the employers are often forced tocarefully follow amendments introduced into legalacts, and changes in the minimum wages and sala-ries, in particular, in order to be able to ensure atimely settlement with the employees.

Change in Actual WagesThe change in actual wages shows the change inthe purchasing capacity of wages. According to thedata of the Department of Statistics, the actual wagein January 1998 was by 8.7% lower than the actualwage in December 1997; however, the actual wagein January 1999 was 12.2% higher than in January1998.

Change in Minimum WagesIn 1998, the minimum wage was increased only once.According to the data of the Department of Statis-tics, in January-May 1998 the minimum monthlywage was 400 LTL. In May the minimum monthlywage amounted to 40.2% of the average gross

monthly wage of employees in the Lithuanianeconomy, and already in June the minimum monthlywage was 430 LTL or 41.6% of the average grossmonthly wage of employees in the Lithuanianeconomy.

Changes in Payment for Work to Employeesof Budgetary OrganisationsIn 1998, salaries were raised for staff working atresearch and educational institutions, cultural andart institutions, and social workers.

Activity of the Fund to Meet the Work-RelatedDemands of Workers in Enterprises Undergoingor Having Experienced BankruptcyWith the increasing number of companies declar-ing bankruptcy under the terms of the LithuanianLaw on the Bankruptcy of Enterprises, and havingfinancial difficulties in paying their workers, an ur-gent decree of the Government, passed on 1 Sep-tember 1997, temporarily established a Fund tomeet the work-related demands of the workers ofenterprises currently undergoing or having experi-enced bankruptcy. During the year 1998, the totalof 31.7 million LTL of repayable financial assistancewas granted to 21 enterprises.

Situation of Labour Relations in EnterprisesAssessment of the actual situation of labour rela-tions in enterprises is possible after inspecting theenterprises and revealing violations. In 1998, theState Labour Inspectorate inspected 14204 (9.9 percent) enterprises employing 898208 employees. In1998, the labour inspectors found 92264 violationsof labour relations in the said enterprises (cf. 91900in 1997); the majority of these were organisationalviolations (38.56%), labour law violations (26.17%),technical violations (20.85%) and labour hygieneviolations (14.42%). The liability of employers inthe implementation of legal provisions is madestricter in order to prevent the violation of legalacts. However, frequently changing legal norms thathelp to control and detect violations does not al-ways prove to be effective. The technical and staffcapacity available at present at the State LabourInspectorate allows conducting repeated inspectionsof the same enterprise within 8-10 years only.

Accidents at WorkDuring 1998, the State Labour Inspection registered

1. SUMMARY

10SOCIAL REPORT

166 reports on lethal labour accidents or cases ofdeath, and 173 heavy and 2,989 mild labour acci-dents. In order to ensure safe and sound workingconditions in the enterprise, the hygienic assessmentof work places must be conducted. Employers werenot satisfied with the procedure of hygienic assess-ment of work places. This caused a slow and insuf-ficient process of hygienic assessment of workplacesin 1998. To speed up this process in enterprises, in1998 the new Regulations for Hygienic Assessmentof Work Places were drafted and approved.

Morbidity from Occupational DiseasesIn 1998, 618 cases of occupational diseases in 427persons were registered in the Register of Occupa-tional Diseases. In order to protect the health ofemployees during working hours, the magnitude ofworking environment factors are assessed againstthe Hygienic Classification of Working EnvironmentFactors. These concepts are new, as well as theircontents, and up until now there is no agreementas to what uniform working environment indicatorsshould be used.

Social Guarantees in Relation to LabourAccidents or Occupational DiseasesProvisional law of the Republic of Lithuania on theCompensation of Damage Incurred as a Result ofLabour Accident or Occupational Disease regulatesthe compensation of damage that appears both priorand after the enforcement of the said law, until thelaw of the Republic of Lithuania on MandatoryLabour Accident Insurance comes into effect. Thelatter law will regulate compensation of damage thatis incurred by the insured persons only after en-forcement of the law.

Control of Illegal EmploymentWhen carrying out the function of control over theenforcement of the labour laws, officials of the StateLabour Inspectorate detected a significant part ofviolations related to illegal employment (7.82 percent). There were 1,294 employers prosecuted inaccordance with the administrative procedure; 113fines were imposed for illegal employment. Offi-cials of the State Labour Inspectorate meet certainproblems when investigating cases of illegal employ-ment. One of them is the complexity of exposingillegal activity, which is due to the insufficient legis-

lative basis (not all the labour relation cases or pe-culiarities thereof are regulated by the law). Oftenthe employers appeal the court if the fines are im-posed by the labour inspectors for illegal employ-ment; as a rule, these cases are usually lost in courtdue to insufficient evidence, which is difficult toobtain without the assistance of the police.

Gender Equality in Labour PolicyEqual treatment of the rights of women and men inthe labour market is the indicator of social justice.The principle of gender equality is established inmany principal labour laws of the country. Accord-ing to statistical data, the rate of unemployment ofwomen was still higher than that that of men. How-ever, the number of women included in the activepolicy programs of the labour market significantlyexceeded the number of men.

As in many European countries, in Lithuania theaverage monthly wages of women comprise only acertain portion of the average wages of men. Thedifference between the level of wages and salariespaid to men and women are conditioned by manyfactors, the main of which are of social and eco-nomic nature: the distribution of men and womenaccording to economic activities, levels of qualifi-cation, etc.

The Government of the Republic of Lithuania, witha view to ensuring equal rights and opportunitiesfor women to participate in political, social, eco-nomic and cultural life, in November 1996 approvedof the Women�s Progress Programme. This prog-ramme was worked out by joint efforts of govern-mental and non-governmental organisations. Theprogramme covers 10 critical areas: protection ofhuman rights of women, socio-economic situationof women, women and environmental protection,health of women, family planning, women and edu-cation, women in politics and government, force andviolence against women and girls, women and massmedia, and system of statistics and gender differ-ences. On 21 January 1998, the action plan for theimplementation of this programme during 1998-2000 was approved.

With a view to ensuring equal rights of men andwomen and implementing the Women�s ProgressProgramme, the Law on Equal Opportunities of the

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11 SOCIAL REPORT

Republic of Lithuania was passed on 1 December1998 (enforced as of 1 March 1999). In the imple-mentation of equal opportunities for men andwomen, this Law establishes the duties of statemanagement and administration bodies, educa-tional and science institutions and employers. Thelaw provides for the violations of rights of men andwomen, control and supervision of the implemen-tation of the law, as well as the acceptance and in-vestigation of complaints. The supervision of theimplementation of the Law on Equal Opportuni-ties shall be carried out by the ombudsman for equalopportunities. Seeking to assure the quality of workof the ombudsman, the independent OmbudsmanService has been established.

Certain provisions and stereotypes concerning wo-men preclude them from active participation in thelabour market. Often it is more difficult for womento find a job or remain in a job due to their dutieswith regard to their family, maternity, age, etc.

With a view to ensuring equal opportunities on thelabour market, it is necessary to co-ordinate all le-gal acts, so as to eliminate the legal basis for thediscrimination of one or another gender; preparelegal acts, regulate flexible forms of work; assureconditions to upgrade the qualification of parentsthat raise children at the same time as combiningworking time with family duties.

Social Partnership and Related ProblemsDevelopment of Social PartnershipToday in Lithuania there are 4 major centres oftrade unions: the Union of Lithuanian Workers, theLithuanian Centre of Trade Unions, the TradeUnion Unification and Lithuanian Labour Federa-tion. The main purpose of these centres is to pro-tect the members of trade unions and other em-ployees of enterprises, where trade unions are func-tioning. However, only 6-10% of all employees inLithuania join trade unions; often trade unions ofenterprises do not represent the interests of all orat least the majority of employees.

In 1998, there were 3 employers� organisations inLithuania, i.e., the Confederation of Industrialistsof Lithuania, the Confederation of LithuanianEmployers-Entrepreneurs, and the National Con-

federation of Entrepreneurs.

Activity of the Tripartite Council of the Republicof LithuaniaIn order to achieve more efficient co-ordination ofinterests in the process of solving social, economicand labour problems, as well as in order to improveharmony in society, on 5 May 1995 the Governmentof the Republic of Lithuania and organisations oftrade unions and employers executed a tripartitepartnership agreement. On the basis of the agree-ment, the Tripartite Council of the Republic ofLithuania was established. In 1998, the Secretariatof the Tripartite Council was established at theMinistry of Social Security and Labour (hereinaf-ter referred to as �the Secretariat�); the main pur-pose of the Secretariat was to provide both orga-nisational and technical assistance to the TripartiteCouncil of the Republic of Lithuania in conveningits sittings.

Activity of the Lithuanian Safetyat Work CommissionIn the process of development and implementationof the policy on safety at work, in 1994 the Lit-huanian Safety at Work Commission was establishedto co-ordinate the interests of employers, employ-ees and the state, as well as to co-ordinate the rela-tions between the three parties. The Commission,together with the Ministry of Social Security andLabour takes part in the process of developmentand implementation of the state safety at work po-licy that would meet the interests of the three par-ties; it also provides proposals to the Minister ofSocial Security and Labour regarding the draft lawsand other normative legislation on the safety at workissues, amendments and supplements thereof; dis-cusses annual activity report provided by the StateLabour Inspectorate at the Ministry of Social Se-curity and Labour; and assesses the process of en-forcement of the laws on labour and safety at workand normative legislation.

1. SUMMARY

12SOCIAL REPORT

Today�s state social insurance system has an autono-mous budget. Social insurance contributions are notaccumulated, but are used to pay pensions and ben-efits. According to the current state social pensioninsurance system there are three types of pensions:old age pension, disability pension and survivors�and orphans� pension.

In 1998, there were 648 thousand old age pension-ers or 63 per cent of the total number of pensionersin Lithuania. That year the average old age pen-sion was 286.15 LTL. In 1998, there were 158.8 thou-sand disability pensioners who accounted for 15 percent of the total number of pensioners in Lithuania.That year the average disability pension was 260.9LTL. In 1998, there were 173 thousand people re-ceiving survivors� and orphans� pensions, which is17 per cent of the total number of pensioners. Thatyear the average amount of survivors� and orphans�pension was 58.10 LTL. The total number of recipi-ents of social insurance pensions is increasing. Withthe increasing number of pension recipients, thenumber of individuals covered by the state socialinsurance is decreasing.

Since 1995, the State Social Insurance Fund hasbeen facing a problem of deficit. In the beginningof 1998, the State Social Insurance Fund had a bud-get deficit of 40 million LTL. The deficit was causedby the following major factors: assumed obligationsof the former soviet social care system, reducednumber of the insured, �double� accounting usedby companies and insufficient collection of the bud-geted state social insurance funds. Since some ofthe above reasons have a long-term impact uponthe budget of the State Social Insurance Fund, itmay be impossible to balance the budget for sometime to come.

In 1998, when the social insurance policy was de-signed the main emphasis was put on expanding thenumber of categories of the insured, determiningthe ceiling of earnings from which social insurancecontributions are deducted, defining additional so-cial guarantees and improving the collection of so-cial insurance contributions.

In order to balance the budget of the State Social

SOCIAL INSURANCE

Insurance Fund suggestions were made to followthe experience of Western countries and redistrib-ute the tariff of social insurance contributions byincreasing the part of the contribution paid by theinsured person and reducing social insurance con-tributions made by the insurer.

In 1998, attempts were made to improve the collec-tion of state social insurance contributions. Appro-priate amendments to the existing laws and Gov-ernment resolutions were prepared and measuresimproving the work of the State Social InsuranceBoard were introduced. Personal responsibility ofheads of territorial branch offices for the collectionof funds into the budget of the State Social Insur-ance Fund was expanded. Preparations were madeto shift to the production of monthly data and in-formation on contributions. Territorial social insur-ance councils that should influence the quality ofwork of the territorial branch offices and better in-form the population are being developed. A com-parative analysis of the data bases of the State TaxInspectorate and the Board of the State Social In-surance Fund was initiated in order to better iden-tify tax payers, improve the interaction of the StateTax Inspectorate and the Board of the State SocialInsurance Fund in administrating the collection oftaxes and social insurance contributions.

These measures enabled us to improve the collec-tion of state social insurance contributions regard-less of the financial problems that the State SocialInsurance Fund encountered at the end of the yeardue to the crisis in Russia. Additional measures(loans and credit lines) had to be deployed to beable to pay pensions in time.

In 1998, the actual revenue to the budget of theState Social Insurance Fund was 4, 159, 362 thou-sand LTL which was 74, 368 thousand LTL morethan planned. The budget revenue of the State So-cial Insurance Fund increased by 14 per cent com-pared to 1997. However, the actual expenditure ofthe State Social Insurance Fund was 4, 164, 023thousand LTL that exceeded the planned expendi-ture by 131, 343 thousand LTL. In 1998, the expen-diture of the State Social Insurance Fund increased

1. SUMMARY

13 SOCIAL REPORT

by 15 per cent compared to the expenditure of 1997.That is why the budget of the State Social Insur-ance Fund was not balanced.

In order to ensure mandatory social insurance guar-antees to people who were not covered by the so-cial insurance and to increase the relatively smallsocial insurance pensions, proposals were made toexpand the number of categories of the insured, i.e.to include self-employed people (patent holders,members of general and limited partnerships, law-yers and their assistants and notaries) into the so-cial insurance system.

In order to improve the collection of contributions,it might be necessary to more flexibly impose sanc-tions for the delayed payment of contributions, withregard to the particular situation. It would be worthpreparing an amendment to the Law on the StateSocial Insurance, providing for the right of the State

Social Insurance Fund Council not only to postpone,but also, after having assessed the reasons of in-debtedness and other circumstances, to exempt en-terprises from the calculated late charges. Such aprovision would create a real possibility for themajority of the insurers to settle accounts with thebudget of the State Social Insurance Fund. Suchinsurers would avoid bankruptcy proceedings, more-over, the working places would be preserved.

Today Lithuania is facing a new phase of pensioninsurance formation. The legal basis for it will bethe Law on Pension Funds currently discussed bythe Parliament. The goal of insurance based on theprinciple of voluntary participation and cumulativeformation of the insurance funds is to expand theexisting state social insurance system and enable itto provide better pensions in the future.

Social assistance is comprised of social assistance incash and social services. The system of social assis-tance is based on a perception that it is not aimed atensuring long-term economic and social security for aperson; it just helps a person to integrate into societyand survive under extreme conditions. It is aimed atmeeting basic social needs of individuals and helpingthem to integrate into society. The objective of socialassistance is to direct the assistance towards those whoare in the greatest need for it and organise it so as toenhan-ce the activity and individual responsibility ofpeople and to meet the interests of various socialgroups. The successful accomplishment of the saidobjective depends on whether persons, for whom thestate support is indispensable, are covered by the so-cial assistance system, or not entitled to such a sup-port.

Benefits in CashThe laws of the Republic of Lithuania and the Gov-ernment resolutions provide for social assistance toindividuals whose earned income, social insurancebenefits and other income is insufficient for rea-sons beyond their control and thus prevents themfrom taking care of themselfs. Benefits are given tofamilies on the basis of two principles: means-tes-

SOCIAL ASSISTANCE

ting and non-means-resting.

Families live in different conditions and unforeseencircumstances may arise causing families or indi-viduals to be in a difficult situation. It is not pos-sible to cover all cases of the provision of social careby the laws and resolutions. Therefore, in additionto statutory support, municipalities are given re-sponsibility for the provision of assistance to resi-dents of their territories, taking account of theirindividual needs and specific reasons for the diffi-culties that they experience. Organisation of socialassistance greatly depends on the financial capa-bilities of municipalities.

As of 1999, benefits provided for by the Law on theState Benefits for the Families Bringing up Chil-dren are paid from the special-purpose funds allot-ted for municipalities at the time of calculation oftheir financial status. A child-care benefit is paidout of the special-purpose funds allotted for mu-nicipalities from the state budget.

Social benefits and one-time grants are paid frommunicipal funds.

At the end of 1997, a new type of benefit for fami-lies raising three and more children was introduced.

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14SOCIAL REPORT

A benefit for families with three children is means-tested. If a family has four and more children, inthis case irrespective of the family�s income, a ben-efit is paid.

As in 1998, increased benefits in cash from the statewas provided independently from the families� in-come and priority was given to assisting childrenthat have lost parental care.

When planning further trends of development ofbenefits in cash to families, a sociological survey ofeconomic efficiency and justification of social sup-port to families raising children must be conducted.Such a survey is planned for 1999. Thus, with lim-ited state financing the aim is to target social assis-tance towards those individuals who mostly need itand to ensure minimum subsistence level to them.

Assistance to Victimsand Social Risk GroupsIn 1998, state support to victims and people fallingunder risk groups was increased. Legal acts provid-ing for the improvement of social assistance to in-dividual groups of victims were drafted in 1998.Payment of grants to volunteers who participatedin the armed resistance and were injured was pro-vided for by legal acts. Payment of compensationsto people who suffered during the consequences ofthe accident at Chernobyl nuclear power station andfor the worsening of their health status will con-tinue. The size of the state pension paid to personswho suffered from aggression on 11-13 January 1991and further events was doubled.

In rendering social assistance for victims and socialrisk groups, social programmes have been drafted.

The Ministry of Social Security and Labour imple-ments the governmental strategy for the support torehabilitated political prisoners and deportees andtheir families returning to Lithuania.

In 1998, the concept of differentiation of state pen-sions paid to victims was prepared based on theconditions and length of imprisonment and exile ofpolitical prisoners and deportees.

In 1998, a draft Programme for Social Adaptationof Persons Returning from Prisons and Other Pe-nal Institutions and Social/Psychological Rehabili-

tation Establishments (1999-2003) was completed.The National Programme on Drug Control and Pre-vention of Drug Addiction was drafted in 1999-2003.

Programmes on the social integration of refugeeswere implemented. Social integration of refugeesis a process during which attempts are made to pro-vide them with the possibilities of integrating intoLithuanian society and start living on their own.Social integration of refugees is being regulated bythe Procedure of Social Integration of Refugeesapproved by Resolution No. 239 of 26 February 1998of the Government of the Republic of Lithuania.

Social Support to the DisabledIn 1998, the Law on the Amendment of the Law onSocial Integration of the Disabled and the amend-ments to the laws regulating the granting of pen-sions were adopted. These provisions filled certaingaps in the system of granting pensions to the dis-abled; payment of a nursing benefit for persons withtotal disability was established. In the new Law onSocial Integration of the Disabled, two new notionshave been defined, namely, that one of �a disabledperson� and of �a disabled person with total dis-ability�. The main criteria have been established onthe basis of which the total disability is recognisedfor the disabled of Group I and disabled childrenunder 16. Upon the confirmation of the status offull disability, a nursing benefit amounting to thestate social insurance basic pension will be grantedto the disabled person. The nursing benefit due tobe paid to a person with total disability who hasbeen recognised incapable will be granted and paidto the person�s guardian. Nursing benefits will begranted and paid from the state budget irrespectiveof other income received by the disabled or hisguardian. The above-mentioned law legalised theprovision concerning the insurance of persons whonurse the disabled with total disability. Such a per-son or a guardian of the disabled (who has been re-cognised incapable in accordance with the estab-lished procedure) will carry state social insurancein order to receive the basic pension.

The Law on the Amendment to the Law on StateSocial Insurance Pensions adopted simultaneouslywith the Law on Social Integration of the Disabledsettled the issue of additional payment for care

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15 SOCIAL REPORT

(amounting to half of the base pension) payable tothe working disabled of Group I. This additionalpayment has been included in the main part of thepension paid to this category of the disabled. Ac-cording to the provisions of the amended law, thesize of this pension will be 1.5 of the state socialinsurance base pension.

A number of concepts were elaborated for the Na-tional Rehabilitation Programme for the Disabled(2002-2007). The Concept of Disability was workedout and the first related action plan was imple-mented. The first stage of this reform involved theidentification of persons with total disability amongthe disabled of Group I and disabled children un-der 16 years of age, the definition of this categoryof people, and setting the size of a nursing benefit.A Concept of Providing Residents with Rehabilita-tion Equipment was worked out. The concepts ofimproving employment of the disabled, adaptationof the environment and transport are currently un-der preparation.

The adoption of the Law on Social Integration ofthe Disabled created favourable conditions for thesetting up and functioning of public organisationsof the disabled. Their programmes receive partialfinancing from the state budget and municipal bud-gets. At present there are about 30 national publicorganisations of the disabled. Thus, disabled peoplehave been provided with an opportunity to solvetheir problems themselves, to take part in the for-mulation of social policies and nationalprogrammes.

Social ServicesSocial services are rendered to different groups ofindividuals: old-age people, families facing socialproblems, disabled persons, children, children de-prived of parental care, orphans, individuals fallingunder social risk groups (persons returning fromprisons, alcohol and drug addicts, homeless people,etc.).

In 1998, the principal direction of the developmentof the system of social services was the decen-tralisation of social services, provision of commu-nity social services and improvement of the qualityof the services rendered.

Currently, the system of social services is in the stageof rapid development: drafting and implementationof social service programmes, establishment of newtype social care institutions with municipalities istaking place. Documents regulating the system ofsocial services provide for the liability of separatemanagement levels in the functioning of the systemof social services. An important role in the provi-sion of social services lies with city (regional) mu-nicipalities. When planning social services, the de-mand for such services is analysed and socialprogrammes for communities are drafted and imple-mented.

With a view to developing the provision of socialservices, the existing institutional care institutionshave been re-organised by changing their subordi-nation and reducing the number of individualsplaced in them. In 1998, the provision of social ser-vices at home was approved to be a priority type ofsocial services, since such services are one of themost efficient types of assistance that best meetsthe needs of people. The principle, that a person isto be sent to a institutional care institution onlywhen the social services rendered at home are inef-fective and do not ensure adequate degree of inde-pendence for the person, is followed when provid-ing social services to elderly people.

The system of social services is developed by impro-ving the quality of the services rendered and draft-ing documents regulating the activities of care in-stitutions. The effectiveness of the system of so-cial services depends upon many factors: expedientutilisation of funds, professional qualification ofemployees, work methods applied, co-operationwith non-governmental organisations and other in-stitutions.

Protection of Children�s RightsThe legal framework for the system of children�srights protection was developed during the recentyears. In 1998 the issue of foster care of abundonedchildren has been brought as top priority of theGovernment policy on children. In 1998, the Par-liament of the Republic of Lithuania passed the Lawon Child Guardianship on the basis of which thebylaws on children guardianship were adopted. Inadopting the above legislation and implementing

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16SOCIAL REPORT

the provisions of the United Nations Conventionon Children�s Rights, attempts were made to pro-mote guardianship of children in families and at thesame time reduce institutional guardianship of chil-dren deprived of parental care. The implementa-tion of the above law proved that the time has cometo revise and re-allocate the administrative respon-sibility for the protection of children�s rights and

for the care of children among individual munici-pal units (social assistance, education, children�srights protection services).

Efficient solving of the issues on the care of chil-dren is closely related to the increase in the effi-ciency of assistance to families.

International EventsDuring 1998, the main topics for discussions at in-ternational events were the labour market policy,development of social dialogue, enforcement ofequal opportunities, demographic problems (age-ing of the society), financing of social security,youth-related matters, etc. Special attention wasattached to the problems of poverty and social ex-clusion. Among the most significant events of theyear was the 7th Conference of Ministers of SocialSecurity of the Council of Europe with the topic�Social Insurance on the Way to the 21st Century�held in Malta, the 26th General Assembly of the In-ternational Social Insurance Association held inMorocco, the 86th Session of the InternationalLabour Conference held in Geneva.

Preparation of Lithuaniafor the Membership in the European UnionFollowing the programmes of the Government ofthe Republic of Lithuania, in 1998, the Ministry ofSocial Security and Labour continued the prepara-tions for negotiations and membership in the Eu-ropean Union within the sphere of competenceentrusted to the Ministry. When defining the in-struments of social policy in the National AcquisAdoption Programme (NAAP), the Ministry of So-cial Security and Labour took into considerationthe priorities and the short-term tasks specified inthe Accession Partnership document.

The Ministry of Social Security and Labour togetherwith the Ministry of Education and Science and theMinistry of Culture participates in the work of the5th sub-committee � implementation institution ofthe European (Association) Agreement - that dealswith the issues of human resources, science, tech-

EUROINTEGRATION AND INTERNATIONAL CO-OPERATION

nology development and social policy. The firstmeeting of the sub-committee took place in Brus-sels on 6th October 1998. The European Commis-sion made no essential remarks regarding the imple-mentation of the provisions of the social part of theAgreement.

The Ministry of Social Security and Labour, justlike other public institutions, participated in mul-tilateral meetings on legal screening organised bythe European Commission in Brussels that dealtwith the following issues: free movement of goods;environment protection; promotion of small andmedium-size enterprises; regional policy; issues ofeducation, professional training and the youth; em-ployment and social policy; free movement of per-sons. Experts of the European Commission pro-vided general information on Acquiscommunautaire, also familiarised with the EU legaldocuments regulating the above fields. Members ofour delegation made a brief presentation of theexisting state of matters in Lithuania in each of thespheres. The most important problems that will beencountered in the process of accession or duringthe negotiations were identified.

On the basis of strategic directions of employmentpolicy specified by the EU Summit Meeting inAmsterdam in November 1997, Lithuania hasadopted the following strategic directions of labourmarket policy: activation of labour market policy,employment support, expanding of employmentpossibilities, reform of the labour market manage-ment system. The instruments for their implemen-tation were provided for, too.

The report on the progress of Lithuania in the pre-paration for the membership in the European Union

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was presented to the European Commission inBrussels in June 1998. The part of the Report pre-pared by the Ministry contained information on thecountry�s social development, the existing state offree movement of persons, the efforts to ensureequal opportunities and the management of em-ployment and social issues in the country. In Novem-ber 1998, the European Commission presented itsannual report and formulated the opinion on theprogress made by Lithuania. The main remarks con-tained in the opinion were made regarding the stateof social and labour affairs. The Ministry has analy-sed the remarks of the Commission and has elabo-rated the measures to eliminate the shortcomings.

Co-ordination of Social SecuritySocial security of migrating workers is guaranteedby bilateral and multilateral agreements as well asby international agreements and conventions. In theinternational law the process is referred to as theco-ordination of social security systems. In 1998,Lithuania carried out this task by means of the fol-lowing social security co-ordination instruments:bilateral agreements, Interim Agreements of theCouncil of Europe, EU Regulation 1408/71.

The Republic of Lithuania has bilateral social se-curity agreements with Estonia, Latvia, Belarus, theUkraine. The agreements with Russia and the CzechRepublic are signed. Negotiations with Poland andFinland have been started; the agreement is beingprepared with Kazakhstan.

Interim Agreements of the Council of Europe, thatprovide for the elimination of discrimination onthe basis of citizenship, are of great importance tothe social security co-ordination. Having ratified theabove agreements in 1999, Lithuanian citizens liv-ing in 18 countries of Europe and the native resi-dents of these countries shall enjoy equal rights inthe field of social security.

The co-ordination of the social security system inthe European Union is performed by implement-ing the multilateral agreement - Regulation 1408/71. The Regulation shall become mandatory toLithuania after the country joins the EuropeanUnion. Lithuania has already initiated technicaladaptation activities related to 18 annexes to theRegulation. When preparing for the application of

the Regulations it is necessary to further perfectthe efficiency of administrative institutions and toimprove the qualification of their employees. Themajor role here is played by the State Social Insu-rance Fund Board and the State Patients� Fund.

Adoption of International Labour StandardsAs for today, Lithuania has ratified 34 conventionsof ILO. On 30th June 1998 the Parliament of theRepublic of Lithuania denounced the ConventionNo. 11 on the night labour of women because theConvention was no longer in line with the modernrequirements. In 1998, Lithuania presented 18 re-ports on the application of ratified conventions and2 reports on the non-ratified conventions. It is im-portant to note that Lithuania always presents thenecessary reports on time. In 1998, Lithuania fi-nally eliminated the shortcoming related to the pre-sentation to the country�s law-making institutionsof the documents adopted at ILO conferences andthe Parliament received the documents that havebeen adopted at ILO conferences 80 to 85 along-side with the brief comments and proposals regard-ing the possible action towards the enforcement oftheir provisions.

Social CharterThe year 1998 witnessed the active preparation forthe ratification of the Social Charter of the Councilof Europe. Lithuania joined the European SocialCharter in 1997. The Charter proclaims the basiceconomic, social and cultural human rights. TheSocial Charter facilitates the promotion of the de-velopment and protection of economic, social andcultural rights for the whole population or groupsof individuals and hired employees. The system ofthe Charter provides for the possibility to assumeobligations on different levels.

International AssistanceInternational assistance has an important role inthe creation of modern social security system, de-velopment of institutional capacities, improvementof labour organisation. These initiatives are sup-ported by technical assistance. Lithuania receivesforeign technical assistance under EC Phare, Con-sensus, United Nations, World Bank, and Interna-tional Labour Organisation, Council of Europe So-cial Development Fund and other programmes of

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18SOCIAL REPORT

bilateral co-operation with Denmark, Sweden andthe Netherlands, etc. In 1998, within the context ofspecific area projects, especially active was the as-sistance for institutional development: improvement

of social insurance system, development of modernlabour market system, improvement of labour laws,development of social service infrastructure.

Assessment of the Quality, Structure andDynamics of the Lithuanian Social PolicyOne of the indices to assess the social security effec-tiveness is the opinion of individuals about the exis-ting system of social security and about its constitu-ents.

In 1998, the Free Market Institute of Lithuania car-ried out a survey �Assessment of the quality, structureand dynamics of the social policy of Lithuania�. Themain purpose of the described survey was to assessthe social policy in terms of all residents of Lithuania,by separately identifying the groups of people who re-ceive social benefits and of individuals who imple-ment social policy, the opinion of social partners, aswell as to prepare recommendations for the improve-ment of social policy.

The opinion of individuals was analysed also takinginto account publications in press. Attempts were madeto find out the most important social security prob-lems that are most frequently referred to in press andin the letters of individuals.

After having summarised the results of the survey ofthe opinion of individuals and having taken into ac-count the results of the current social security condi-tion analysis, the principal social problems were for-mulated. The results received during the previous sur-veys were updated, i.e.the structure of social security,the specified priorities, tasks.

In autumn 1998, the sociological opinion survey onsocial security was carried out by the Lithuanian-Brit-ish joint venture �Baltijos Tyrimai�, which is engagedin market and public opinion surveys. The results ofthis sociological survey are presented in chapter 8.2.

Poverty and Social Policy SurveyDuring the World Conference on the Social Devel-opment held in 1995 in Copenhagen, the Govern-ment of the Republic of Lithuania obliged itself todevelop the national strategy on the reduction of

MONITORING AND ASSESSMENT OF SOCIAL POLICY

poverty. To this end, the survey of poverty was car-ried out in Lithuania in 1997, which was initiatedand supported by the United Nations DevelopmentProgram.

In the course of the survey attempts were made todefine the level of poverty (the scale of poverty)and its duration, the depth of poverty (the phase ofpoverty), the categories of individuals in Lithuaniathat are mostly impoverished, the main reasons ofpoverty, assessment of poverty by individuals as wellas the evaluation of their own possibilities to im-prove their living conditions.

When analysing the results of the survey it becameclear, that the following households are most likelyto remain below the poverty line:m the households in which the number of depen-dants exceeds the average number in the country;m the households in which the largest portion of in-come comprises the agricultural income of non-hiredlabour;m households, in which the main source of subsis-tence is pensions and miscellaneous benefits, unem-ployment or family benefits, in particular, rather thanincome from work.

The performed analysis of the poverty level develop-ment tendencies during the period of 1997-1998allows to conclude, that the social policy aimed atthe reduction of poverty, was successful andachieved its goal. During the period of two yearsthe level of poverty, assessed using the relative pov-erty margin (50 per cent of the average consump-tion expenses of 1996, according to the index of theindexed prices) was LTL 258,9 for the equivalentconsumer, i.e., it decreased by 4,8 percentage points.In other words, the subsistence level of 179 thou-sands of individuals went up above the poverty lineduring 1997-1998.

Social Development of Rural AreasAccording to the data of the Department of Statis-

1. SUMMARY

19 SOCIAL REPORT

tics, as of 1 January 1999 almost 32 per cent of allresidents of Lithuania (1178,8 thousands) lived inrural areas. The process of ageing is very distinct inrural areas � individuals aged 60 and older ac-counted for more than 23 per cent of rural popula-tion, whereas the relevant number of individuals ofthe said age living in urban areas was 15 per cent.Pensioners living in rural areas account for 33 percent of adult residents.

The results of the household budget survey per-formed by the Department of Statistics show thatthe subsistence level of people living in rural areasis lower than that one of urban dwellers. In 1998,the income urban residents stood at LTL 463 perone family member per month, and that one ofpeople living in rural areas was LTL 336, or 27 percent less. Expenses on food of urban populationmade up 45 per cent of all consumption expenses,and of the rural population � 60 per cent. The worstmaterial status among rural population is of theusers of 2-3 hectares of land plots, who receive in-come only from this land.

According to the results of the labour force survey,carried out in November of 1998 by the Depart-ment of Statistics, 476.3 thousands of individualsworked in the country. More than half of them (55.7per cent) were employed in agriculture, 11.3 percent � in industry, 6.6 per cent � in trade, 7.8 percent � in the sphere of education, 4.5 per cent � inhealth care system and social work, and 2.3 per cent� in construction. Those employed in agriculturecreate around 10-11 per cent of the gross domesticproduct of the country. In 1998, the average annualrate of unemployment in the country was 8 per cent.

According to the Law on the State Social Insurance,farmers and adult members of their families em-ployed in households must insure themselves to getthe base social insurance pension by paying contri-butions in the amount of 50 per cent of the basestate social insurance pension. At the end of 1998the social insurance contributions were paid by 1662farmers, around 24,5 thousand of them enjoyed theright of deferred payment of contributions and didnot pay them.

Families with low income in rural areas are pro-vided with social support: they receive social ben-

efits, as well as compensations for the heating ofthe living premises and hot water expenses. For thefamilies in possession of the land plot of 2 to 3.5hectares, additional privileges are granted. Childrenof such families receive support and are provide withfree food in secondary schools. Rendering of socialservices is of great importance for the rural popula-tion.

Model of the Social BudgetA successful social policy may be pursued only whenthe short- and long-term financial consequencesresulting from the adopted (or proposed for ap-proval) social decisions are clearly known. There-fore, it is particularly important to have reliable in-struments, the use of which would allow to evaluatefinancial consequences of social decisions. In otherwords, we must know how to qualitatively plan andforecast the social budget, covering social incomeand expenses of the Government, local govern-ments, other institutions and (on a lower level) ofthe private sector.

The Financial, Actuarial and Statistical Unit of theInternational Labour Organisation (ILO) and thegroup of this organisation for the Central and East-ern Europe, which works in Budapest, have createdthe so-called family of the ILO models. One of thelargest models of this family is the Model of theSocial Budget. In 1998, this model, with the help ofthe ILO experts, was also implemented in Lithuania.

The Model of the Social Budget consists of the lowerlevel sub-models, which may also be used separately.The Model of the Social Budget is aimed at fore-casting the period not exceeding 20 years. Practi-cally this is a model, which by means of direct de-termined equations calculates, drafts and imitatesincome and expenses of different social securitysystems. The Model of the Social Budget imple-mented in Lithuania consists of the following sub-models:

1. Demographic sub-model. This sub-model includesthe forecast of the number of population by age andgender for 1999-2015;2. Labour force sub-model. This sub-model forecaststhe number of labour force, the employed and theunemployed by age and sex for 1999-2015;3. Economic sub-model. Within this model the fore-

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20SOCIAL REPORT

cast of the main economic indicators, such as GDP,inflation, wages and salaries, base payments, etc. areforecast;4. Employment fund sub-model. It contains the fore-cast of income and expenses of the employment fund;5. Pension sub-model. In this sub-model the fore-cast of social insurance pensions and State SocialInsurance Fund income and expenses is carried out;6. Social assistance sub-model. The forecast of ben-

efits paid from the State and municipal budgets is car-ried out in the social assistance sub-model;7. Budget sub-model. This sub-model includes theforecast of State Budget, municipal budget, HealthInsurance Fund, State Social Insurance Fund andEmployment Fund income and expenses forecast for1999-2015. This model also comprises the forecast ofincome by separate social risks.

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21 SOCIAL REPORT

Chapter 2

2. KEY ACTIVITY TRENDS AND PRINCIPLES OF THE MINISTRY

When implementing the Government Program in 1998,the efforts of the political management and staff of theMinistry of Social Security and Labour were aimed atincreasing the efficiency of social and labour policy,while improving its analysis, as well as at organisingthe implementation and supervision. To this end, at-tempts were made to define the tasks of social policyand its intended development more clearly by takinginto account the current situation, qualification of thestaff raised, necessary changes were introduced intothe managerial structure, and the administrative workwas improved. The increasing definitiveness of the di-rections of the development of social policy facilitatedco-operation with the institutions setting headlines ofthe social policy (the President�s Office, the Parliament,

committees thereof, the Government), as well as withthose implementing it (SODRA, Labour Exchange,other institutions of MSSL, counties, municipalities),and improved relations with the beneficiaries and part-ners of the Ministry. Administration of the network ofsocial security institutions was reorganised so as toensure the rapid and qualified solving of all main so-cial problems of individuals at their place of residence.The servicing of beneficiaries with the institutionsimplementing the social policy was improved, and thenumber of complaints and applications of individu-als on social matters filed with the Ministry of SocialSecurity and Labour as well as with other public au-thorities was reduced.

In 1998, the society was continually being informedabout the current developments of social policy aswell as about the growing problems and decisionsto be adopted. More and more members of the Par-liament of the Republic of Lithuania and Govern-ment officials recognise, that shaping of the socialpolicy as well as its implementation is improving,and social partners as well as the beneficiaries aremore favourably disposed towards co-operation withthe Ministry and identify themselves with the de-velopment of the social security system. The surveyof the opinion of individuals carried out by the FreeMarket Institute revealed, that the opinion of resi-dents of Lithuania about the Ministry of Social Se-curity and Labour is improving.

The key document in planning different activitiesof the social policy and co-ordinating their imple-mentation was the strategic plan of the Ministry,which was worked out with the active involvementof the political management and staff of the Minis-try. The specialists were asked to share their opin-ion when analysing the strengths and weaknessesof the activities, the existing possibilities and pos-sible threats, selecting and updating the strategies,as well as when establishing the goals, priorities,

etc. It is also planned to use the strategic plan inthe future as the main co-ordinating document. Itfacilitates the harmonisation of the rational andapplied strategies, promotes the initiative of divi-sions and employees in proposing innovations tothe contents of work and its implementation proce-dures, helps to evaluate the resources that are mostlyneeded for the implementation of the tasks set inthe strategic plan and control the implementationof the said tasks, the reasons that prevent timelyand qualitative implementation of the tasks set inthe strategic plan. The effective implementation ofthe strategic plan sometimes may be precluded bythe lack of human and material resources. There-fore, in distributing the limited resources the pri-orities set out in the strategic plan are observed.

During the previous year, the development of thestrategic partnership of the Ministry of Social Se-curity and Labour with the subordinate institutionsand municipalities was pursued, which provides forthe idea that the Ministry will approve of the stra-tegic plans of subordinate institutions (politicaltrends and distribution of resources), increase thepromotion of their operative independence and willreach an agreement with the municipalities and (or)

22SOCIAL REPORT

counties on strategic plans. These are the first at-tempts, which are to become the principal part ofthe activity of the Ministry in the future. Furtherdevelopment of the strategic plan requires the con-tinuous training of staff, which would allow to pre-pare specialists to work under conditions of the func-tioning strategic plan and to improve the efficiencyof the strategic plan itself and of the strategic part-nership. The strategic plan should facilitate solvingthe main tasks of the social and labour policy thatare faced by us now or will be faced in future.

Since the declaration of independence many re-forms have been introduced in the social and labourmarket policies. Irrespective of the forecasting andcontrol of social costs, the real amount of numer-ous benefits was on the decrease for a period ofseveral years due to inflation and inadequate com-pensation. Subsequently, after having stabilised theinflation and real reduction of the amount of ben-efits, the National Budget, the Social InsuranceFund budget and the Employment Fund budgetfaced the problem of deficit. Upon the strengthen-ing of the national economy and improvement ofthe financial condition, in 1998 care was taken forthe improvement of material conditions for the mostsensitive groups of individuals, simultaneously try-ing to reduce the deficit of the social budget. Thebasis for a successful implementation of these tasksis the development of Lithuanian economy observ-ing the priority trend of economic development andmaking use of the possibilities provided by Euro-pean integration, increasing employment of theable-bodied population, and narrowing the sphereof the hidden economy.

Keeping Social Guarantees in BalanceThe directions of social security and labour marketpolicy are determined by the need for the increaseof employment, strengthening of social guaranteesand ensuring their balance. This is achievable byimplementing the labour market policy, increasingthe flexibility and soundness of the social system,improving social guarantees and mutual confidencewith the stake holders, tax and contribution payers,strengthening the insurance principles, harmonisingthe adopted decisions in line with the EU require-ments, and improving the system administration.

Implementation of the Labour Market PolicyFirstly, the implementation of the labour marketpolicy was oriented towards the integration of youthinto the labour market, directing it towards activesearch for jobs and professional qualification com-patible with the needs of the labour market. Theprograms of vocational training and employment foryoung people in the regions with the highest rate ofunemployment were under preparation. With a viewto mitigating social consequences of the dismissalof employees in cases of bankruptcy of enterprisesor reorganisation of production, the legal frameworkregulating the collective dismissal of employees wasbeing improved and preventive measures in casesof collective dismissals were implemented. Anotherimportant trend of the labour market was the re-duction of territorial differences in the rate of un-employment. Much attention was paid to the im-provement of labour market management system.The interaction of labour market institutions wasimproved with the view to achieving higher politi-cal efficiency of the labour market institutions. Thework commenced in the sphere of shaping the em-ployment policy with regard to the trends of theEuropean Union employment policy. Implementa-tion of the Co-operation Program with the Ministryof Labour of the Kingdom of Denmark commencedwith the aim to improving the labour market man-agement system, to ensure its higher flexibility andrapid response to the developments within thelabour market.

Increase in the Flexibility and Soundness ofthe Social Security SystemThis task is aimed at a more precise direction ofbenefits towards those who mostly need them, alsoat a better analysis and forecasting of the fiscal andsocial consequences of new proposals. In the courseof the year the provision was strictly observed, whichrequires that all legal acts submitted by the Minis-try of Social Security and Labour to the Govern-ment and the Parliament shall be supplemented withannexes summarising the qualitative and quantita-tive fiscal and social consequences of the proposeddecisions. However, this practice needs considerableimprovement, and a better attraction of scientificpotential should be considered as a reserve for thisimprovement, upon the evaluation of the economic

Chapter 2

23 SOCIAL REPORT

and social consequences of these new decisions byusing modern scientific achievements, modellingand, in particular, forecasting.

Improvement of the Systemof Social GuaranteesIn 1998, the review and analysis of the integrity ofsocial guarantees was carried out with a view toimproving the Law on the Principles of Social Ser-vices, the Law on the Guaranteed Income, and otherbasic laws of the social security system. Attemptswere made to increase the universality of the sys-tem, and improve the provisions for income index-ation. The application of these principles improvedthe social guarantees provided to the individuals.Amendments introduced to the laws, first of all,were subjected to systemic assessment and only thenwere implemented.

Development of Mutual ConfidenceThis is a relatively new, but very important field ofthe activity of the Ministry of Social Security andLabour. It is based on the involvement of socialpartners and non-government organisations in thegroups of law-makers, and participation of societyin deliberations of the proposed amendments. Theincrease of flexibility and soundness of the socialsecurity schemes, strengthening of social guaran-tees, as well as the improvement of law enforce-ment supervision and communication with the popu-lation and public authorities increased mutual con-fidence. A very important issue in this sphere is theincrease of confidence of tax and contribution pay-ers in the existing system of social security as wellas in the interest to pay taxes. The main effectivemeans in implementing this principle was the in-crease of the transparency of the system. The uni-form and honest participation of tax and contribu-tion payers in the financing of the social securitysystem may be achieved only by involving their rep-resentatives in the expenditure planning, consider-ation and approval of the statements on the use ofexpenses and the analysis of the possibilities to re-duce their cost. In practice, attempts were made toachieve all of this by using the assistance of the triplecouncils formed by the Ministry and organisationssubordinate to it.

Strengthening of the Principles of InsuranceThe essence of the insurance principles comprisesrelative social payments and the contributions paidby an individual as well as the amount thereof. Thiswas widely propagated already during the first yearsof pension reform. Provisions of the pension reformare based on this principle and ensure the adequatepayment of pensions by extending the limit of thepension age, increasing the incentives to earn forone�s subsistence and old age, and relating theamounts of benefits and contributions more closely.In 1998, attempts were made to strengthen the in-surance principles by analysing, forecasting andwidely discussing the social as well as fiscal conse-quences of the existing and proposed insuranceschemes. Proposals were deliberated concerning thechange of the ratio of the parts of state social insur-ance contributions tariff paid by the employer andthe employee and the possibilities of mandatorysocial insurance for the self-employed persons wereextended. Review of the kinds of state social insur-ance in terms of compatibility between the amountsof benefits and the related contributions, as well asfurther strengthening of the preparation, implemen-tation and accountability control of the State So-cial Security Fund budget with a view to ensuringtheir compliance with the European standards andfurther transparency contributed to the strength-ening of the insurance principles.

Harmonisation of the Legal FrameworkThis task was aimed at carrying out preparatorywork for the co-ordination of social security systems,by harmonising the laws in the field of work safetywith the EU legislation. Further development of thelegal framework of social insurance proceeded (ofnon-governmental pension funds, supplementarypension insurance of the employees of certain pro-fessions, insurance against accidents, insuranceagainst unemployment, mandatory civil insurance),together with the development of supervisory sys-tems.

Improvement of the Administrationof Social SystemImprovement of the administration of the systemwas carried out by seeking an adequate division ofresponsibility for the implementation of social se-

2. KEY ACTIVITY TRENDS AND PRINCIPLES OF THE MINISTRY

24SOCIAL REPORT

curity between the Ministry and its subsidiaryorganisations as well as counties and municipali-ties. The basis for that was the wide application ofdecentralisation principles, by increasing the re-sponsibility of agencies and organisations for thesettlement of issues delegated to them. This mostlyconcerned the system of social security, and in par-ticular, the rendering of social services. In the courseof the year much attention was paid to the improve-

Chapter 2

ment of the labour market management system. Theinteraction of labour market institutes was im-proved, seeking to better co-ordinate the active andpassive measures and achieve the best effect ofemployment. The institutional basis of the safetyat work was strengthened, with a view to implement-ing major requirements established by the Euro-integration.

25 SOCIAL REPORT

Chapter 3

3. ECONOMIC AND SOCIAL CONDITIONS SPECIFIC TO THELITHUANIAN ECONOMY IN 1998

In 1998, as in previous years, the gross domestic prod-uct was on the increase. Prices of consumer goodsand services increased by 2.4 per cent per year onlyand that was the lowest change in prices in the BalticStates (in Latvia - 2.8 per cent, in Estonia - 6.5 percent). The volume of retail trade increased by almost13 per cent. The flow of foreign direct investments, aswell as construction work, has increased significantly.During 1998, the real gross average monthly earning,as compared to December of 1997, increased by 14.3per cent. However, the balance of the country�s cur-rent account deficit during 1998, as compared to 1997,increased due to the rise in foreign trade deficit andaccounted for 12.1 per cent of the gross domestic prod-uct.

The financial and economic crisis in Russia thatstarted in August 1998 had a negative effect on theLithuanian economy. Due to devaluation of the Rus-sian Rouble and a sharp leap in inflation, the demandfor Russian home market decreased, which, in turn,decreased Lithuania�s export to Russia by 35 per cent.Complications in settling accounts with Russia led toreduced activity of some economies. Supply of food-stuffs and goods of light industry in the Lithuanianhome market increased as a result of the decrease intheir export to Russia. The increased supply with alimited purchasing power of the population had aneffect on the decrease in prices in the country. As aresult of the decreased production in the country, un-employment in the country rose.

Gross Domestic Product (GDP)According to preliminary data, the increase in realGDP in 1998 accounted for 5.1 per cent. The larg-est growth was reached in construction, where thevolumes increased by 21.9 per cent, in real estateand rent, as well as in other kinds of business by 15per cent and in trade by 14.5 per cent.

Mining and Guarrying IndustryAccording to preliminary data, in 1998 the share ofmining and quarrying industry and manufactureaccounted for 19.9 per cent of the gross value added(GVA). Comparing the gross value added of themining and quarrying industry during the severalpast years, one should note that it is constantly onthe decrease. This constant decline is determinedby structural changes in the mining and quarryingindustry and, insufficient compatibility of the manu-factured production in home and foreign markets,outdated production technologies, low productiv-ity of work, etc.

3.1 MAIN ECONOMIC INDICATORS

AgricultureThe number of private farms registered with theregister of private farms as of 1 July 1998 amountedto 67.5 thousand. They held 798.4 thousand hect-ares of land, the average size of a farm being 11.8hectares.

According to preliminary data, in 1998, as comparedto 1997, the volume of agricultural production de-creased by 3 per cent. The share of production pro-duced on the farmers� and other people�s farms inthe total production accounted for 76 per cent ofgrain, 99.3 per cent of potatoes, 57 per cent of sugarbeet; 59 per cent of livestock and poultry, 87 percent of milk.

Foreign TradeDuring 1998, the turnover of foreign trade ac-counted for 38016.7 million LTL (export - 14842.4,import - 23174.3 million LTL). The total foreigntrade balance was negative and accounted for 8331.9million LTL.

In 1998, the Russian Federation (export - 16.5 per

26SOCIAL REPORT

cent of the total export of Lithuania, import - 21.1per cent), Germany (13.1 and 18.2 per cent), Latvia(11.1 and 1.8 per cent), Belarus (8.8 and 2.2 percent), the Ukraine (7.8 and 1.9 per cent) were mainpartners of the Republic of Lithuania in foreigntrade.

Retail TradeDuring 1998, the volume of production of Lit-huanian industrial enterprises sold in the homemarket remained almost at the level of the year 1997(99 per cent). As compared to the previous year,however, the amount of sugar sold was less (36.7per cent), chocolate and confectionery (91.7 percent), fodder (49 per cent), vodka and products ofliqueur and vodka (65.2 per cent), manufacture oftextiles and manufacture of knitwear (91.4 per cent),fur and articles thereof (91.5 per cent), manufac-ture of leather and leather products (98.1 per cent),washing and scouring preparations (90.6 per cent),fertilisers (71.3 per cent), petroleum products (78.5per cent), etc.

The volume of imported goods declared for homeuse (calculating in value expression) during 1998increased by 888 million LTL, or 5 per cent.

InformaticsThe integrated system of state registers, cadastersand classifiers has been under developement inLithuania. There must be created the possibility ofmany-faceted control of the issues of economic ac-tivity and management in different information sys-tems of the country. The total number of registersin the country amounts to 50.

In 1998, the total number of computers in Lithuaniaamounted to about 190-200 thousand. This means5.2 computers per one hundred of population (ineconomically developed countries - about 25). Thereare about three Internet websites per ten thousandof population (according to this indicator we areone of the last in Europe). Only 2 per cent of theLithuanian population uses the Internet and elec-tronic mail.

Small and Medium-size BusinessIn 1998, the Government of the Republic of Lithu-ania allocated approximately 19 million LTL for theformation of Small and Medium-size Business De-

velopment Fund.

The Business Development Agency analysed 57applications from business organisations, counties,self-governments, enterprises and allocated partialfinancing to draw up and implement 46 projects.

Procedure of Enterprise BankruptcyAs of the beginning of 1993 till the end of 1998, 345enterprises were declared bankrupt. At present 276enterprises are under bankruptcy. Bankruptcy pro-cedures have been completed for 69 enterprises (53enterprises have been liquidated, 3 enterprises -reorganised, 3 rehabilitated, for other enterprisesbankruptcy procedures are terminated or peaceagreements concluded).

During 1988, bankruptcy procedures were startedwith regard to 89 enterprises, and with regard to 2of these enterprises bankruptcy procedure has al-ready been completed.

On the day bankruptcy was declared, 305 000 peoplewere employed at the enterprises. On 31 Decem-ber 1998, the number of employees at those enter-prises was 5000, with 25 500 employees being dis-missed. A general debt to them accounted to 53.2million LTL; remuneration for the work doneamounted to over 50 per cent and the other part ofthe debt was extra charges not related to the manu-facture (late charges for delayed payments relatedto labour relations, compensation for idle time, etc.).Indebtedness with regard to employees is on theincrease at many enterprises, which decreases thepossibility of other creditors having their debts paidback. Financial assistance is provided by the Fundof Bankrupt Enterprises or Enterprises under Bank-ruptcy to settle accounts with employees, to satisfytheir claims related to labour relations. During 1998,financial assistance from that Fund provided to 21bankrupt enterprises and enterprises under bank-ruptcy totalled 31.7 million LTL.

PrivatisationIn 1998, privatisation of state-owned property be-came more intensive. 345 structures at 2.33 millionLTL were privatised. The amount of state-ownedproperty privatised in 1998 was seventeen timeshigher then those privatised in 1996 and 1997 takentogether. This can be accounted for by the start of

Chapter 3

27 SOCIAL REPORT

privatisation of large infrastructure facilities, as wellas the establishment of the State Property Fund.Strategic investors paid 2.4 billion LTL to the stateduring 1998 and obligated themselves to invest an-other 0.9 billion LTL within the coming two years.

Agreements signed by 31 December 1998 whenprivatising large structures through public tendersprovide for social guarantees to the employees ofenterprises, i.e they provide for the preservation ofwork places following privatisation (about 20 000work places) and direct investments of 1.4 billionLTL to reconstruct and extend enterprises (in ac-cordance with agreements concluded for five years).

InvestmentsIn 1998, the amount invested within the territory ofthe country totalled 6442.7 billion LTL. The largestpart of investments went to the transport sector (23per cent), to manufacturing industry (16 per cent),construction of apartment houses (7 per cent).Though the amount of total investment in 1998 ascompared to 1997 increased by 16.8 per cent, in-vestments in the construction of apartment housesdecreased by 8.5 per cent. In 1998, (basing on pre-liminary data) foreign investments in Lithuania to-talled 3500 million LTL. Investors from 105 coun-tries in the world had invested their capital into theeconomy of Lithuania by 1 January 1999. The big-gest investments came from the countries of theEuropean Union - 61.1 per cent of the total capital.Investors from Denmark, the USA, the UnitedKingdom, Germany, Sweden and Norway came first.Profit derived from direct foreign investments andreinvested in Lithuania increased almost twofoldduring 1998. The increase in foreign capital revenueshows the investors� confidence in the prospects ofthe development of the country�s economy.

Execution of the State Budget6439.6 million LTL was paid to the state budget in1998, with 272.4 million LTL or 4.1 per cent of fore-cast revenue being unpaid.

During 1998, the amount of allocations made toofficials and local-governments from the state bud-get totalled 7123.8 million LTL, or 96.2 per cent ofthe planned funds. As a result of failure to executethe income plan it was impossible to finance all ofthe expenditure planned. In 1998, the state budget

deficit was 10.8 LTL smaller than planned.

The State DebtAs of 1 January 1999, the state debt amounted to9613.6 million LTL (during one year it increased by1536.2 million LTL) and, according to preliminarycalculations, it accounted for about 22.4 per cent ofthe Gross Domestic Product of 1998. This debt didnot exceed the limit of 24 per cent established bythe regulations of the state�s medium-length bor-rowing policy.

At the end of 1998, Lithuania owed to governingbodies of foreign countries 1522 million LTL, thedebt to the International Monetary Fund was about1012 million LTL, to international developmentorganisations (the World Bank and the EuropeanBank for Reconstruction and Development) - about1002 million LTL.

Balance of PaymentIn 1998, the current account deficit amounted to 5.2billion LTL. As compared to 1997, the current ac-count deficit increased by 1.3 billion LTL, or 32 percent. The increase in the current account deficit wasdetermined by different factors. A fast developmentof the country�s economy and insufficient saving ofhome resources increased a general home demandas well as import of goods. Due to the increase inimport customs tariffs imposed by Russia, the com-petitiveness of goods exported from Lithuania toRussia worsened. As a result of the Russian crisis,the demand for general import decreased and thesettling of accounts has become complicated,rezulting in a decrease of the total export of goodsand services to the countries of CIS decreased.

InflationIn 1998, inflation continued to be on the decrease. Ifduring 1997 inflation accounted for 8.4 per cent (ascompared to December of 1997 and December of 1996),during 1998 it constituted 2.4 per cent and was lowerthan that of Latvia (2.8 per cent) and Estonia (6.5 percent). In December 1998, as compared to December1997, food prices decreased by 3.7 per cent. As in theprevious year prices of fruit, vegetables and potatoeswere affected by seasonal availability. Decrease in pricesof many of these goods was determined by the increasein their supply in the home market influenced by thedecrease in the export to Russia.

3. ECONOMIC AND SOCIAL CONDITIONS SPECIFIC TO THE LITHUANIAN ECONOMY IN 1998

28SOCIAL REPORT

Average monthly gross wage in the

country�s economy 1152,2 14,3

Minimum monthly wage 430,0 4,9

Base wage 105,0 2,5

Average old age state

social insurance

pension of an unemployed pensioner 300,35 10,28

Minimum subsistence level (MSL) 125,0 1,7

3.2 SOCIAL CONDITIONS

Indicators presented in Table 3.2-1 show that thebiggest change in value in the country�s economy in1998 was the change in the average monthly wageand the average old age pension paid to an unem-ployed pensioner.

UnemploymentIn 1998, the number of people registered with ter-ritorial labour exchange totalled 204.3 thousand,which is 10.8 thousand more than in 1997. The num-ber of qualified people looking for jobs and regis-tered with labour exchange was on the increasethough persons unprepared for the labour marketstill formed the greatest part of the unemployed.The number of female unemployed accounted for2 per cent points less than that of male unemployedas of 31 December 1998.

During the year the unemployment level increased

from 6.7 to 6.9 per cent, the highest level reaching7.5 per cent in the first quarter. Territorial unem-ployment differentiation with a downward tendencyremained. As of 1 January 1999, the highest rate ofunemployment was in Lazdijai (15.5 per cent),Akmenë (15 per cent), and the lowest rate of un-employment was in Prienai (3.3 per cent)andKëdainiai (4.3 per cent). As for large cities, the high-est rate of unemployment was in Ðiauliai - 10.6 percent and the lowest - in Kaunas - 4.4 per cent.

Social Insurance and PensionsIn 1998, revenue of the State Social Insurance Fundbudget equalled 4159.4 billion LTL and the expen-diture calculated amounted to 4164.0 billion LTL.The budgetary revenue plan has been executed by101.8 per cent. Pension payments accounted for 72per cent of the expenditure of the State Social In-surance Fund.

Table 3.2-1Data of the Social Policy and Forecast Departmentof the Ministry of Social Security and Labour.

Main Social Indicators

December 1998,

in LTL

Real change in value

comparing December

1998 to December 1997, in %

Chapter 3

29 SOCIAL REPORT

100,0 100,0 100,0 100,0 100,0

Including:

Sickness 5,4 - - 6,3 99,98

Disability 13,7 23,3 0,9 13,6 -

Old age 54,7 46,7 16,5 61,4 -

Widowhood 5,0 0,3 6,5 5,8 -

Family (children) 8,6 11,2 38,0 4,5 -

Unemployment 2,8 - - 3,7 0,02

Housing 3,0 15,0 9,0 - -

Other 3,0 2,8 27,3 - -

3,8 0,7 1,8 4,7 -

Table 3.2-2Social Security in Lithuania in 1997. Collection of Statistics. - Vilnius, 1998, p.62

Total

Structure of the Social Security Expenditure in 1997 (in %)

Total Statebudget

Municipalbudgets

State socialinsurancefund budget

Employers

Administrationexpenditure

Social BenefitsThe number of different social benefits (includingthe state social insurance maternity (parental) ben-efits) paid to families during 1998 amounted to 3.5billion. The amount allocated totalled 502.2 millionLTL. The average number of families who were paidbenefits amounted to 198.4 thousand. On average,32.1 thousand families, or 99.0 thousand persons(about 2.7 per cent of the total Lithuanian popula-tion) received social benefits that are paid to lowincome families.

Expenditure on Social SecurityIn 1998, expenditure on social security and care in thenational budget amounted to 10.0 per cent. The saidexpenditure in the state budget accounted for 8.0 percent and in the municipal budgets to 11.9 per cent.

With Lithuania integrating into the EuropeanUnion, it is important to compare indicators ofsocial insurance income and expenditure withthose of other European countries. In 1996, so-cial security income and expenditure weregrouped on the basis of ESSPROS methodologyfor the first time within certain limits. Accordingto the ESSPROS grouping, expenditure on so-cial security accounted for 10.6 per cent of thegross domestic product in 1997, whereas socialsecurity expenditure per person was 1097 LTL(in 1996 - 892 LTL).

Tables 3.2-2 and 3.2-3 present the structure ofsocial security expenditure by basic expenditurecategories and sources of financing. Expenditurefor social protection in the old age accounted for

3. ECONOMIC AND SOCIAL CONDITIONS SPECIFIC TO THE LITHUANIAN ECONOMY IN 1998

30SOCIAL REPORT

the major part of expenditure of the state budgetand the State Social Insurance Fund budget.

Expenditure on old age pensions made the great-est part of the State Social Insurance Fund budget

expenditure and the state budget expenditure onsocial security. In municipal budgets the expendi-ture on families (children) accounted for the basicpart of the expenditure.

Sickness 100,0 - - 87,2 12,8

Disability 100,0 23,8 0,7 75,5 -

Old age 100,0 11,9 2,9 85,2 -

Widowhood 100,0 0,7 12,3 87,0 -

Family (children) 100,0 18,2 41,9 39,9 -

Unemployment 100,0 - - 99,996 0,004

Housing 100,0 71,1 28,9 - -

Other 100,0 13,1 86,9 - -

Statebudget

Municipalbudgets

State SocialInsurance Fundbudget

EmployersTotal

Structure of Social Security Expenditure by the Sourcesof Financing in 1997 (in %)

Table 3.2-3Social Security in Lithuania in 1997. Collection of Statistics. - Vilnius, 1998, p.63

Household IncomeAccording to the data of the household budget sur-vey conducted by the Department of Statistics atthe Government of the Republic of Lithuania thedisposable income of households calculated perhousehold member was 422.5 LTL (in 1997 - 368.9LTL), with cash income accounting to 350.4 LTL,or 82.9 per cent of all disposable income (in 1997 -80.5 per cent). In 1998, the disposable income perhousehold member, compared to that in 1997, in-creased by 14.5 per cent. The actual disposable in-come increased by 9.0 per cent and the actual cashincome increased by 12.3 per cent. The structure ofthe disposable income in 1998 was as follows: cashincome - 82.9 per cent and income in kind - 17.1

3.3 HOUSEHOLD INCOME AND EXPENDITURE IN 1998

per cent. In 1997 � it was 80.5 and 19.5, respec-tively.

Disposable income per one urban household mem-ber was 1.38 times, while cash income was 1.82 timeshigher than that one per one rural household mem-ber. Rural and urban income structures differ aswell: income in cash accounted for 88.4 per cent ofdisposable income for the urban population, and67.0 per cent of disposable income for rural popu-lation.

Employment income, wages and income from self-employment, is the main source of disposable in-come. Employment income comprised 68 per centof all disposable income, 21 per cent to pensions

Chapter 3

31 SOCIAL REPORT

and benefits, and other income, 11 per cent of alldisposable income. The economic situation and thecomposition of the population by age determine thegreat difference in income sources for urban andrural locations.

Household ExpenditureIn 1998, consumer expenditure calculated per house-hold member accounted for 426.8 LTL per month(in 1997 - 382.6 LTL). The comparison of consumerexpenditure and disposable income shows that theexpenditure was 1.1 per cent higher (in 1997 - 3.7per cent) than the disposable income.

The proportion of expenditure on food indicates thestandard of living of a household: the smaller theshare of expenditure on food within the total ex-

penditure of a household, the higher the standardof living. In 1998, as compared to 1997, the shareof expenditure on food decreased and accountedfor 48.1 percent of total expenditure, and 41.4 percent of cash expenditure (in 1997 the expenditurewas 52.2 and 44.5 per cent respectively).

The purchasing power of the population indicateswhat quantity of one or another kind of goods ispossible to purchase for the average cash income.Data presented in Table 3.3-1 shows the increase inthe purchasing power during the last three years.For the average monthly disposable cash income in1998, as compared to 1996, it was possible to pur-chase 19 per cent more of sausage, 24 per cent moreof milk and 48 per cent more of sugar.

Boiled sausage 21 21 25

Beef (I category), kg 25 29 34

Butter, kg 19 22 27

Milk (2.5 % fat), litre 159 166 197

Granulated sugar, kg 75 88 111

Rye or wheat bread, kg 137 133 149

Two part suit for men, 1 item 0,6 0,6 0,7

Pair of warm boots for ladies 1,3 1,4 1,4

Colour TV

set (37 cm diagonal), 1 item. 0,26 0,29 0,35

Electric energy, kWh 1488 1563 1752

Table 3.3-1

Purchasing Power of Monthly Disposable Cash Income

Standard of Living of Households and Poverty.Household survey results. - Vilnius, 1999, p. 3

Name of goods, in measure units 1996 1997 1998

3. ECONOMIC AND SOCIAL CONDITIONS SPECIFIC TO THE LITHUANIAN ECONOMY IN 1998

32SOCIAL REPORT

Chapter 4

EmploymentPositive changes in the labour market of the coun-try were observed in 1998. According to the resultsof the Labour Force Survey the number of residentsof Lithuania over the age of 14 registered in No-vember 1998 totalled 2987.2 thousand. The num-ber of the employed 1 (see Table 4.1.1-1) during thesix months of 1998 increased by 39 thousand, or 2.5per cent, and the number of unemployed decreasedby about 11 per cent during the same period. Notonly the number of the employed increased but alsothat of economically active population (labourforce) 2. Their number increased from 1820 thousandin September 1997 to 1840 thousand in November1998. This determined the increase in the level ofthe activity of the population by 0.4 percentagepoints 3 during that period.

In 1998 persons over the retiring age constituted alarge portion of the employed population. In No-vember, 83 thousand (16 per cent) of females olderthan 55 years of age and 46 thousand (19 per cent)of males older than 60 years of age did one or an-other kind of paid work or work from which theyderived income. The number of employed males wasgreater (51 per cent) than that of females (49 percent). Employment of the population in the spheresof economic activity changed. As can be seen fromTable 4.1.1-2, in November 1998, as compared toMay 1998, the number of the employed decreased

4.1. EMPLOYMENT AND UNEMPLOYMENT

4. LABOUR POLICY

4.1.1 Situation in the Labour Market

in agriculture (-4.5 per cent) but increased in thesphere of rendering services, especially educationalservices, (+8.4 per cent), health care and social work(+17.1 per cent). This was determined by the eco-nomic condition of the country - the sphere of ren-dering services is insufficiently developed inLithuania and has good prospects.

Movement of labour force from the state into theprivate sector continued. If in 1997 only 67.7 percent of the employed worked in the private sector,in 1998 this figure was 68.8 per cent of the totalworking population. In November 1998, an addi-tional 97 thousand, or 6 per cent of all of the em-ployed had work4. In rural areas the number ofpeople doing extra work accounted for 56 thousand,or 58 per cent of the total population additionallyemployed.

Partial Employment

1 The employed people are people of both genders 14 years of age and older who performed any kind of work during the week of the

survey for over one hour for which they received remuneration either in cash or in kind (food or other products) or received profit(income). These are all the persons who have employment status: employers, owners, hired workers, family members working in afamily enterprise who receive or do not receive earnings, persons working for themselves.2 Labour force means residents of 14 years of age and older who were either employed or unemployed during the survey week.

3 Labour force, employment and unemployment, IV quarter, Department of Statistics, Vilnius, 1999, p.14

4 Extra work is work which a person performs after his main work, i.e. his activity is related not only to his main work but also to

deriving additional income for extra work performed.

During the recent years the following tendency wasobserved: the number of part-time employees in-creased, while the average number of employeesdecreased.

The data provided in Table 4.1.1-3 show, that from1995 the average annual reduction in the numberof employees of the country was 5 per cent, whereasthe average rate of growth of the number of part-time employees was 30 per cent. Having analysedthe ratio of part time employees hired in 1995-1997

33 SOCIAL REPORT

Table 4.1.1-1Labour Force and Unemployment (QIV 1998): Department of Statistics. � Vilnius 1999, p. 13.

Development Trends in the Employment of Individuals in 1997-1998

September 1997 May 1998 November 1998

In thousands of people

Employment of Individuals in Economic Activities in 1998

1998 (thousands ofpeople)

Increase, +Decrease, -(in %)

November May

Table 4.1.1-2Labour Force and Unemployment (QIV 1998): Department of Statistics. � Vilnius 1999, p. 15.

4. LABOUR POLICY

Individuals over 14 years of age 2973,1 2987,2 2987,2Labour force 1819,8 1830,8 1839,8Employed 1563,9 1568,7 1607,3Unemployed 255,9 262,1 232,4Registered with labour exchanges 99,1 110,2 114,5Non-active individuals 1153,3 1156,4 1147,4

In %

Activity rate 61.2 61.3 61.6Employment rate 52.6 52.5 53.8Unemployment rate:data of the labour force survey 14.1 14.3 12.6labour exchange data 5.6 6.2 6.5

Total number of employed 1607,3 1568,7 +2.5

In agriculture, hunting,forestry and fishery 288,7 302,2 -4.5

In industry (including supply ofelectricity, gas and water) 353,5 354,4 -0.3

In construction 103,9 108,2 -4.0

In trade 237,9 230,1 +3.4

In other services 623,3 537,8 +8.6

Including:

in educational institutions 155,3 143,3 +8.4

in health care and social work 115,5 98,6 +17.1

34SOCIAL REPORT

Chapter 4

Chart 4.1.1-1

Distribution of Part-time Employees by Sectors in 1995-1997

According to the data of the Department of Statistics

Years

Num

ber

of e

mpl

oyed

In the country�seconomy

In public sector

In private sector

1995 1291546 58774 4,6 34947 6,0 23827 3,4

1996 1255684 76955 6,1 36594 6,4 40361 5,9

1997 1252222 98858 7,9 38810 7,3 60048 8,3

1998 1198850

Development Trends in Hired Full- and Part - Time Employeesin the Country�s Economy in 1995-1998

YearAveragenumber ofemployees inthe country�seconomy1

Share of part-time employees as compared to the totalnumber of employees

Total in the country�seconomy Public sector Private sector

Table 4.1.1-3Note: employees that have worked for agricultural companiesare relatively considered full-time employees

According to the data of the Department of Statistics.

numbernumber per cent number per cent per cent

35 SOCIAL REPORT

to the total number of employees, we can see, thatin 1995 the number of part-time employees in thetotal number of employees stood at 4.6 per cent,and in 1996 and 1997 the said ratio was equal to 6.1per cent and 7.9 per cent respectively. Therefore,from 1995 to 1997 this number grew by 3.3 percent-age points. This is particularly distinct in the pri-vate sector (see Table 4.4.1-1), in which the annualgrowth is observed in their relative as well as abso-lute amount: in 1995, as compared to 1996, the num-ber of employees grew by 2.5 percentage points, andin 1996, as compared to 1997, by 2.4 percentagepoints.

A certain influence on the country�s labour marketwas exerted by the financial crisis in Russia. Enter-prises exporting their production to the CIS coun-tries began to reduce the production volumes andthe number of employees. Some of the employeeswere partially employed, i.e., they were forced towork part time or worked with idle time periods, orwere on leave without pay. As the analysis of thepart-time employment structure (see Chart 4.1.1-2) showed, in September 1998, 44 per cent of em-ployees were part-time employees, 43 per cent of

the employees were on leave without pay, and 13per cent of the employees worked with idle timeperiods. In December of the same year the numberof people on leave without pay decreased up to 20.4per cent, whereas the number of employees work-ing with idle time periods increased to 29.5 per cent.The number of part-time employees accounted for50.1 per cent.

One can judge from the presented Charts 4.1.1-1and 4.1.1-2 as well as from the data given in Table4.1.1-3, that the employers are trying to organisethe work in such a way so as to make the use of thelabour force as rational as possible. Upon hiringthe employees, the type of work that requires part-time employees, employers try to legalise certainemployment agreements. On these grounds theemployers reduce the expenses on wages and sala-ries and avoid high taxes. Irrespective of the factthat the State Labour Inspectorate fails to estab-lish it, the number of cases is growing while theemployees work longer hours than required underthe agreement and due to that the payment ofamounts not recorded in the accounting documentsis growing, or, on the contrary, for extra hours the

4. LABOUR POLICY

Structure of Partial Employment in 1998 (in per cent)

Chart 4.1.1-2Chart prepared on the basis of the results of the survey carried out by the LithuanianLabour Exchange

per cent

Leave without pay

Idle time

Part-time work

September October November December

36SOCIAL REPORT

said employees are paid lower appraisal tariffs.

UnemploymentThe number of the unemployed as of 1 January 1999was 122.8 thousand (see Chart 4.1.1-3). It can beseen that female unemployed constituted 61.2 thou-sand (49.8 per cent), young people 1- 23.1 thousand(18.8 per cent), long-term unemployed - 15.2 thou-sand (12.4 per cent). Comparing the situation atthe beginning of 1998 to that of 1999, the share ofyoung people (18.8 per cent) remained unchanged,the female share decreased (-1.7 per cent) and theshare of long-term unemployed decreased, (-0.2 percent).

According to the results of labour force surveys, inNovember 1998, the number of unemployed inLithuania was 232 thousand, and the rate of unem-ployment equalled 12.6 per cent. The rate of un-employment among men was 13.8 per cent, and thatof women was 11.4 per cent. Unemployment ratesin urban and rural areas were practically the sameand accounted for 12.7 per cent and 12.4 per centrespectively. According to the data of the LabourExchange of Lithuania at the end of November 1998it was 6.5 per cent, and the number of registeredunemployed was 114 thousand.

The data of the labour force surveys carried out bythe Department of Statistics, as well as the data ofthe Labour Exchange of Lithuania concerning thenumber of unemployed and the rate of unemploy-ment differ considerably, because these institutionsuse different methods which supplement each other.According to the labour force survey method, theunemployed are individuals who are not workingand are ready to start working in the nearest futureand who are actively trying to find work in differentways (they apply to labour exchanges, employers,acquaintances, relatives, mass media, etc). Such acollection of information is expensive and is car-ried out only several times a year. The persons whoare officially registered with the labour exchangesare considered unemployed, if they are non-work-ing able-bodied persons of working age and do not

study at the day-time educational institutions andare registered with the state labour exchange ac-cording to their place of residence as job-seekersand ready for vocational training 2. Such informa-tion is obtained continuously through the informa-tional network of the labour exchange.

Many individuals were placed into jobs in 1998. Ascan be seen from Chart 4.1.1-4, the number of per-sons placed into jobs in 1998 amounted to 87 thou-sand (or 42.6 of the total number of the unem-ployed), including 18 thousand (20.7 per cent) ofyoung people (the number of individuals and youngpeople employed in 1997 was 73.5 thousand or 38.0per cent, and 14 thousand or 19.0 per cent, respec-tively).

The official labour market distinguished itself byincreased dynamics. With the privatisation processand restructuring of the country�s economy continu-ing, two tendencies revealed themselves: on the onehand, the number of vacancies increased (in 1998,the Lithuanian Labour Exchange registered thegreatest number of vacancies within the whole pe-riod of its activity - 74 thousand), and on the otherhand the number of the unemployed and unemploy-ment rate increased (the average annual numberof the unemployed in 1997 was 104.5 thousand, andin 1998 � 113.7 thousand). This can be accountedfor by the fact that the number of low-skilled labourforce or individuals without any professional train-ing increased in the labour market, whereas thedemand for highly qualified labour force increased.According to the Lithuanian Labour ExchangeAnnual Report data, a larger portion or 44.2 thou-sand of the work places were registered for work-ers in the servicing sphere and highly-qualified in-dividuals, the demand for low-quality workers wason the decrease in 1998. However, almost half ofall of the unemployed registered with the labourexchange (43.5 per cent) had no professional train-ing and 88.4 per cent were persons absolutely un-prepared for the labour market.

Chapter 4

1 Young people are individual under 25 years of age.

2 Labour force, employment and unemployment (Q IV 1998): Department of Statistics. � Vilnius, 1999, p. 13

37 SOCIAL REPORT

Registered Number of Unemployed in 1997- beginning of 1999 (in thousands of people)

Chart 4.1.1-3Chart prepared according to the data derived from the annual reports for the year1997 and 1998 of the Lithuanian Labour Exchange

Number of Unemployed Registered and Re-employed in 1997-1998 (in thousands of people)

Chart 4.1.1-4Chart prepared on the basis of the data derived from the annual reports for 1997-1998of the Lithuanian Labour Exchange

Thousands of people

4. LABOUR POLICY

Thousands of people

Registered employeesIncluding: young peopleWomenLong-term unemployed

RegisteredRe-employedIncluding: young people

38SOCIAL REPORT

Chapter 4

Dynamics of the Unemployment Rate in 1997-1998 (in per cent)

Chart 4.1.1- 5Chart prepared on the basis of the data derived from the annual reports for 1997-1998of the Lithuanian Labour Exchange

Year

Year

Increase in Number of Unemployed and in the Unemployment Rate in 1993-1998

Chart 4.1.1-6Chart prepared on the basis of the data derived from the annual reports for 1997-1998of the Lithuanian Labour Exchange

Number of unemployed(thousands)

Unemploymentrate (per cent)

39 SOCIAL REPORT

In 1998, an upward tendency in the unemploymentrate intensified. The unemployment rate in regionsgrew faster than that in urban areas. The unem-ployment level grew from 7.4 per cent in January1998 to 7.5 per cent in March (see Chart 4.1.1-5).During April through August, the unemploymentlevel fell to 5.4 per cent. At the end of the year theunemployment level reached 6.9 per cent. In 1998,the average annual unemployment level, as com-pared to 1997, grew from 5.9 per cent to 6.4 percent. The increase in the unemployment level dur-ing the cold season (October - April) was mostlyrelated to the granting of different privileges (com-pensations) to the population with low income, in-cluding the unemployed. While analysing thechanges in the unemployment level of the past sev-eral �seasonal� unemployment fluctuations havebeen observed (see Chart 4.1.1-6): the unemploy-

ment level in April reached the highest pointthroughout the year.

Individuals from 16 to 25 years of age (youth) ac-counted for 18.4 per cent of all the registered unem-ployed. Due to the inadequacy of vocational train-ing programs as compared to the needs of local labourmarkets, insufficient training of those being taught,low mobility of the labour force, every third gradu-ate of professional schools and every fifth graduateof higher educational institution was registered withlabour exchanges. As Chart 4.1.1-7 shows, the levelof youth unemployment as of 1 January 1999 was 1.1per cent higher than the average unemployment levelin the country (8.0% and 6.9% respectively). How-ever, in the context of the growth of the total level ofunemployment in the country, the youth unemploy-ment had a downward trend in 1998.

Number of the Registered Unemployed (thousands) and the Rateof Unemployment in Young People (per cent)

Chart prepared on the basis of the data derived from the annual reports for 1997-1998of the Lithuanian Labour Exchange

4. LABOUR POLICY

Tho

usan

ds

Chart 4.1.1- 7

Unemployment

rate in young people

Unemployment rate

in the country

Number of

unemployed

Per

cen

t

40SOCIAL REPORT

Territorial Differences in the Rate of Unemployment as of 1 January 1999

Annual report of the Lithuanian Labour Exchange. � Vilnius, 1999, p. 21 Chart 4.1.1-8

Chapter 4

ÐVENÈIONYS

IGNALINA

ZARASAI

ROKIÐKIS

UTENA

MOLËTAIUKMERGË

ÐIRVINTOS

KAIÐIADORYS

TRAKAI

ÐALÈININKAI

VARËNA

DRUSKININKAILAZDIJAI

PANEVËÞYS

ANYKÐÈIAI

KUPIÐKIS

JONAVA

KAUNAS

VILNIUS

BIRÞAI

PASVALYS

JONIÐKIS

PAKRUOJIS

AKMENËMAÞEIKIAI

ÐIAULIAI

RADVILIÐKISTELÐIAI

SKUODAS

PALANGA

KRETINGA PLUNGË

GARGÞDAI ÐILALË

KELMË

RASEINIAI

TAURAGË JURBARKASÐILUTË

ÐAKIAI

KËDAINIAI

VILKAVIÐKISPRIENAI

MARIJAMPOLËALYTUS

KLAIPËDA

under 5 %

5 - 8 %

8 - 11 %

over 11 %

41 SOCIAL REPORT

Number of Enterprises Affected by the Crisis in Russia

Chart 4.1.1-9Chart prepared on the basis of the results of the survey of enterprises carriedout by the Lithuanian Labour Exchange

Great fluctuations in territorial unemployment re-mained. In some regions the unemployment levelexceeded the average unemployment level in thecountry several times, whereas differences in un-employment levels between separate territories ex-ceeded it 5 times. The highest unemployment levelas of 1 January was in Lazdijai (15.5 per cent),Akmenë (15.0) and Ðalèininkai (14.1 per cent) re-gions, and the lowest unemployment level was reg-istered in Prienai (3.3 per cent), Këdainiai (4.3 percent) regions (see Chart 4.1.1-8).

The analysis of the unemployment level in differ-ent towns showed that in December 1998 the high-est unemployment level was in Lazdijai, i.e. 17.0per cent, and the lowest unemployment levels werein Palanga (in August), and in Prienai (in Augustthrough October, i.e.2.1 per cent.

In 1998, the national labour market was somewhat

effected by the financial crisis in Russia. The firstsigns of the crisis was in the country�s enterprisesthat export their production to Russia and othercountries of the CIS which manifested in July 1998:payments for the delivered production were de-layed, number of orders decreased and further or-ders suspended. However, this did not produce anysudden economic effect. Territorial labour marketsdid not note any other obvious changes in the em-ployment of the population. Almost 8.7 vacancieswere registered in August, through the mediationof labour exchanges over 6.3 thousand persons wereemployed. Therefore, at the end of July the unem-ployment level constituted 5.4 per cent. The impactof a deepening financial crisis in Russia on thecountry�s economy and also on the employment ofthe population more obviously manifested them-selves in Quarter IV of 1998. As of September 1998,the Ministry of Social Security and Labour started

4. LABOUR POLICY

Number of

enterprises affected

by the crisis

in Russia

Percentage of the

enterprises included

in the survey

42SOCIAL REPORT

conducting weekly surveys of enterprises of a dif-ferent size (2.1 �2.2 thousand) and engaged in dif-ferent kinds of activity in which disturbances in eco-nomic activity as a result of the Russian crisis wereobserved. According to the survey results (see Chart

4.1.2. Formulation of Labour Market Policy

4.1.1-9), the number of enterprises affected by theevents in Russia increased from 41 enterprises on10 September 1998, to 118 enterprises, or 5.5 percent, on 28 October 1998.

In 1998, seeking to mitigate the negative effects ofunemployment on the social and economic devel-opment of the country, a change was made in thelabour market policy by turning from the financialsupport of the unemployed to the increase of theiremployment. The labour market policy imple-mented, was directed towards the vocational train-ing of those who have lost their work as well as to-wards their re-qualification, seeking to ensure thebalance between the demand and supply within thelabour market, also towards the reduction of terri-torial differences in the rate of unemployment inthe country, prevention of unemployment, devel-opment of possibilities for participating in the ac-tive labour market policy measures (public works,temporary and supported works). Special measureswere carried out to mitigate the consequences ofthe Russian crisis.

With the adoption of Resolution No. 1122 on 17September 1998 of the Government of the Repub-lic of Lithuania the implementation of ProvisionalEconomic Measures Intended to Facilitate the Ex-ports of Lithuanian Goods and to Secure the Inter-nal Market commenced. With the Order No. 327passed by the Ministry of Economy on 21 Septem-ber 1998, the Centre of Observation and Analysisof the Consequences of the Crisis in Russia has beenestablished. With the Order No. 139 passed by theMinistry of Social Security and Labour on 9 Sep-tember 1998 the Commission was formed with theaim to reduce the possible consequences of theRussian crisis in Lithuania, and the action plan ofpriority measures was approved. The rendering ofpurposeful support to enterprises commenced inorder to combat the temporary financial difficul-ties of the Fund to Meet the Work Related Demands

of Workers in Enterprises Undergoing or HavingExperienced Bankruptcy, also of the Funds of Ex-port Promotion, Support for Rural Areas, Promo-tion of Small and Medium-sized Business, and ofother funds. On 15 September 1998, the TripartiteCouncil of the Republic of Lithuania deliberatedthe issue on the influence of the Russian crisis onthe labour market of Lithuania, and on 20 October1998 � the issue of the efficiency of measures wasprepared by the Government.

GoalsTaking into account labour market developmenttendencies and problems faced in 1997, the labourmarket policy goals in 1998 were as follows:m to develop integration of the youth into labourmarket by orienting them towards the active searchfor jobs and vocational training that would satisfy thelabour market requirements;m to reduce territorial differences of the unemploy-ment rate by increasing the efficiency of active labourmarket policy measures and population employmentprograms;m to settle actual problems of long-term unemploy-ment and of uneven financing of the labour marketpolicy measures.

Improving of the Labour Market LegislationWith the situation and its priorities in the labourmarket of the country changing, laws and other le-gal acts regulating the labour market were improvedby adapting them to the new needs of the employ-ment policy.

In February 1998, the Government of the Republicof Lithuania, by following Article 20 of the Law onSupport to the Unemployed of the Republic ofLithuania, approved the new Order on Performanceof Public Works1.

Chapter 4

1 Records, No.17-414

43 SOCIAL REPORT

4.1.3. Implementation of the Labour Market Policy

The new Order has broadened the group of per-sons that can be engaged in public works, as well asthe sphere of applying public works without limit-ing themselves to simple work that does not requireany special training. Public works were allowed tobe organised at all enterprises, institutions andorganisations irrespective of their form of owner-ship and subordination, provided these works con-tributed to the supporting and developing of thesocial-economic infrastructure of the area. The newOrder also extended the duration of such worksfrom 2 to 6 months. In regions in which the unem-ployment level exceeded the average unemploymentlevel of the country 1.5 times, the EmploymentCouncil at the Ministry of Social Security andLabour allowed the duration of public works to beextended up to 12 months, by financing them by100 per cent from the Employment Fund. The pos-sibility is also given for pupils and students to per-form public works or temporary work during theirsummer holidays. The procedure also provided forthe possibility to organise public works on privatefarms and agricultural companies. In Order No.119passed on 13 July 1998 by the Ministry of SocialSecurity and Labour, a new procedure for the reg-istration of persons performing public works was

confirmed.

With a view to solving the youth�s problems, in itsResolution No.10 of 8 January 1998 the Govern-ment of the Republic of Lithuania approved of theplan of measures for vocational guidance and inte-gration of young people into the labour marketwhich provides for several measures ranging fromthe education of young people and programmes ofemployment to the establishment of the YouthLabour Centre 1.

The Order on Mass lay-offs and its prevention regu-lating the dismissal of a group of employees and theapplication of preventive measures to mitigate 2 itsconsequences in the cases specified in Article 10 ofthe Law on the Support to the Unemployed was ap-proved.

The Ministry of Education and Science togetherwith the Ministry of Social Security and Labour,while implementing Point 23 of Article 34 of the Lawon Vocational Training of the Republic of Lithuania,in its Order No.1607/188 of 29 December 1998 ap-proved of the exceptional conditions of admittanceof persons under 18 without basic skills into labourmarket training institutions.

The labour market policy was implemented throughactive and passive measures. The passive labourmarket measure is the unemployment benefit theaim of which is temporary cash assistance to thepeople who lost their jobs. In 1998, 36.7 per cent ofthe unemployed received unemployment benefits(as a comparison, in 1997 the number was 41.1 percent).

The size of the unemployment benefit depends onthe unemployed individual�s record of state compul-sory social insurance and the reasons of loss of workrather than on his/her former earnings. As in 1997,the size of unemployment benefit was restricted since

it could not be less than the state supported incomeapproved by the Government and it could not ex-ceed the amount of two minimum subsistence levels(MSL). As of 1 January 1999, the minimum unem-ployment benefit was 135 LTL, while the maximumunemployment benefit reached 250 LTL.

The active labour market policy measures are me-diation in finding new jobs, vocational training, cre-ation of new job places for social vulnerable per-sons, support to the unemployed wishing to set uptheir own business, organisation of public works, aswell as organisation of works supported by theEmployment Fund. The above measures are utilised

4. LABOUR POLICY

3 Records, No. 65-18983, 1998

4 Records, No. 98-2478, 1997

2 Records, No. 5-86

44SOCIAL REPORT

in the implementation of the main objective of theactive labour market policy, i.e. provision of theunemployed with the possibilities of temporaryemployment, creation of conditions for the acqui-sition of necessary work experience, helping indi-viduals maintain their present qualifications, up-grading of their qualifications or acquiring new req-uisite skills to meet the demand on the market. Thefinal objective of the active labour market policy isthe integration of the unemployed into the labourmarket.

Implementation of ActiveLabour Market PolicyIn 1998, having set the objectives to integrate youngpeople into the labour market and to reduce terri-torial differences in the unemployment level, it wassought to increase the volume and efficiency of ac-tive labour market policy measures. As seen fromChart 4.1.3-1, about 35 per cent of the total unem-ployed individuals who registered with labour ex-changes were engaged in active labour market policyprogrammes during the year (in 1997 � 27.0 percent). Nearly every third individual who took part

in active labour market policy programmes was aperson under 25 years of age, while about one fourthof them are long-term unemployed.

Increasing of Professional Mobility of theUnemployedIn 1998, exceptional attention in the labour marketpolicy was paid to labour market vocational train-ing. It was aimed at increasing professional mobil-ity of the individuals who were unprepared for thelabour market, teaching the unemployed new req-uisite skills or upgrading their qualifications to meetthe demand that exists in the labour market. Dur-ing the year, 16.1 thousand (22.5 per cent) individu-als participated in labour market vocational train-ing programmes, including 9.8 thousand (60.9 percent) females, 6.4 thousand (40 per cent) youngpeople, 1.9 thousand (11.8 per cent) long-term un-employed, 5.9 thousand (36.6 per cent) individualsto whom additional employment guarantees apply.

The programmes were selected so that 2.3 thou-sand of the unemployed upgraded their qualifica-tions, 6.9 thousand of them acquired new additionalskills. During the year, 89.6 per cent of persons that

Participation in Active Labour Policy Programmes in 1997-1998 (in thousands of people)

Chart 4.1.3-1Chart prepared on the basis of the data presented in the annual reports of 1997-1998of the Lithuanian Labour Exchange

Chapter 4

Registered unemployedInvolved in programmesIncluding: young peopleLong-term unemployed

45 SOCIAL REPORT

have completed a vocational training course, andacquired requisite skills to meet the local labourmarket demands found employment. Basing on apurposive project of vocational training, employeesfor specific enterprises were trained. Nearly 400 tar-get programmes for labour market vocational train-ing and reducing unemployment were drafted in 1998.

Support to EmploymentThe objective of these programmes is to encourageemployment of the unemployed, that is, to createthe possibility for the unemployed to find tempo-rary or permanent jobs. Support to the unemployedwas provided by implementing programs on publicworks, setting up one�s own business, creating ofnew jobs and supported works.

In 1998, a number of programmes were prepared:employment programmes for the regions of high-est unemployment rate (in Ðirvintos and Lazdijai),vocational training and employment programmesfor the regions of highest youth unemployment (inKretinga, Kupiðkis, Pakruojis and Ðilalë). Employ-ment programmes for the population in the city ofDruskininkai, as well as Ignalina and Ðalèininkairegions, which were prepared in 1997, were under-going implementation in 1998.

In the programmes, emphasis was made on busi-ness stimulation and the development of public andsupported works, as well as on the creation of newjobs. The programme for the reduction of unem-ployment and stabilisation of employment inIgnalina region reduced the level of unemploymentin that region from 15.1 to 9.3 per cent. A two-yearPHARE project on The Development of LocalEmployment Initiatives started. The implementa-tion of the project should improve the employmentand social-economic conditions of different regionsthat are in an unfavourable economic situation.

Public Works30 per cent of the individuals who participated inthe active labour market policy programmes weredirected to perform social works. They were theunemployed that did not receive unemploymentbenefits (that had no required social insurancerecord to receive the benefit, whose term of receiv-ing unemployment benefit has expired, the paymentof the benefit had been terminated) and were un-

prepared for the labour market. 92.2 per cent oftotal number of those having participated in publicworks programme were the unemployed. Employ-ees of the enterprises under bankruptcy or that havegone bankrupt, persons that were notified of thetermination of their employment contract took partin public works for the first time. At the decision ofthe Employment Council at the Ministry of SocialSecurity and Labour, in the city of Druskininkai,Akmenë, Ignalina, Ðalèininkai, Lazdijai andÐvenèionys regions in which the unemployment levelexceeded the unemployment level of the country1.5 times, it was allowed to increase the part of theearnings covered from the Employment Fund up to100 per cent and to extend the duration of publicworks up to 12 months. The nature of public workschanged. The number of people who did seasonalwork increased in resort enterprises, agriculture,managed territories of industrial enterprises, insti-tutions, non-producing institutions, parks and cul-tural monuments. Public works created the possi-bility for the unemployed to earn their living, in-creased their chances to find a permanent job, toengage pupils and students in useful activities dur-ing the time free from studies, and reduced socialtension in the regions with high unemployment rate.

Setting up One�s Own BusinessA financial-organisational assistance was providedto the unemployed seeking independent employ-ment in setting up their own business on an indi-vidual or collective basis. Loans are extended fromthe Employment Fund by following the procedureestablished by the law. Business that meets localdemand was encouraged mostly. During 1998, 123interest free loans were extended. 45 per cent ofthe loans were given to women and individuals withadditional employment guarantees. Local govern-ments granted tax relieves to the unemployed de-sirous of setting up their own business to acquireland and premises. The number of the unemployed,that organised their own business by purchasing apatent for up to 3 months on favourable conditions,increased (in 1997, 4.9 thousand, in 1998, 7.6 thou-sand). However, just like in 1997, irrespective ofthe state�s support to the organisation of one�s ownbusiness, the number of the unemployed desirousof setting up their own business was insignificant

4. LABOUR POLICY

46SOCIAL REPORT

(123 and 171, respectively). A great risk of devel-oping small business and ineffective system of sup-port to small business (the loan of 3 thousand Litascurrently extended to the unemployed is insuffi-cient) hinder people from setting up their own busi-ness. Extra hindrance originates from the fact thatthe loan must be paid back, therefore the degree ofrisk increases even more.

Creation of New JobsSeeking to facilitate integration into the labourmarket of those who are particularly socially vul-nerable, the Law on the Support to the Unemployedprovides for additional employment guarantees.The unemployed with additional employment guar-antees (persons under 18, women raising childrenunder 14, and men raising children of the same age,also persons who have returned from penal institu-tions, persons with no more than 5 years remainingtill the right to receive the full old-age pension comesinto force, the disabled (in the manner establishedunder the Law of the Republic of Lithuania on So-cial Integration of the Disabled) had new jobs cre-

ated after having co-ordinated this initiative withmunicipalities and employers. The costs of creationof new jobs in the manner established under theLaw on the Support to the Unemployed are com-pensated to the employers out of the EmploymentFund up to 24 minimum monthly wages are allo-cated per one workplace for the disabled as a singlecompensation, and a single compensation in size ofup to 12 minimum monthly wages is allocated perone new job created for other unemployed withadditional employment guarantees. 390 new jobswere created for the disabled and 430 disabled per-sons were employed therein. Every third disabledperson got one of the newly created jobs. 986 jobswere created for persons to whom additional em-ployment guarantees apply and 998 individuals wereemployed. Totally in 1998, 1376 new jobs were cre-ated and 1528 individuals were employed. In 1998more new jobs were created as compared to 1997,i.e. the number was 1.2 times larger for women withchildren under 14, and 3.6 times larger for the long-term unemployed with additional employment guar-

Employment of Persons with Additional Employment Guarantees in 1995-1998

Chart 4.1.3-2Chart prepared on the basis of the data presented in the annual reports of 1996, 1997,1998 of the Lithuanian Labour Exchange

Chapter 4

%Thousands

Registered

unemployed

Persons employed

Additional

employment guarantees

47 SOCIAL REPORT

antees, and 5.8 times larger for young people withadditional employment guarantees. As can be seenfrom Chart 4.1.3.-2, the unemployed with additionalemployment guarantees constituted 32.4 per centof the total of individuals employed in 1998. This is0.8 per cent more than in 1997.

Supported JobsSupported jobs were mostly organised in the sphereof trade, public catering, industrial enterprises andinstitutions. The jobs supported by the EmploymentFund are organised by the State Labour Exchange,but for the period not exceeding 6 months, by en-tering into agreements with the employers firstlyon the employment of the unemployed people thathave undergone vocational training and can not beoffered a permanent job by the labour exchange, aswell as of those who are starting to work. The sup-ported jobs provide the unemployed with the pos-sibility to acquire primary working skills as well ashelp them to prepare themselves for a permanentjob. The duration of such jobs may be extended to8 months if it turns out that an additional vocationaltraining is necessary for a new permanent job. Thejobs supported by the Employment Fund can alsobe organised for the unemployed without the re-quired state social insurance work record necessaryto receive the unemployment benefit. the long-termunemployed were also covered by this program.

The employers that, according to the job placementsof the labour exchange, employed the unemployedindividuals to carry out work financed from the Em-ployment Fund, were reimbursed from the Employ-ment Fund on a monthly basis for their expenses inthe amount of a minimum monthly wage and socialinsurance contribution calculated as payable for theamount. As compared to the previous year, 5454 ofthe unemployed got supported jobs, that was 14 percent more than in 1997. The above number of sup-ported works was distributed as follows: women � 2526jobs, or 15 per cent more, young people � 1860 jobs,or one and a half times more, 51.4 percent or 1.2 timesmore of individuals remained for permanent work.

Unemployment Prevention and Matching ofLabour Supply and DemandWith the number of low qualified or unpreparedfor the labour market individuals increasing, as wellas seeking to mitigate social and economic conse-

quences of unemployment and to avoid dismissalof a group of employees and increase significantlythe unemployment rate due to stated reasons,programmes for unemployment prevention andlabour supply and search were implemented. Forthat purpose special measures of job search wereused, i.e. groups job searching (job clubs), new typeof informing the unemployed - self-search for va-cancies, job offer in another than permanent resi-dence place, preventive vocational training, voca-tional guidance and psychological counselling, etc.To prevent unemployment and mitigate the conse-quences of mass lay-offs the employed, who weregiven the notice of dismissal, were engaged inprogrammes of preventive vocational training.

The job clubs helped the individuals looking for jobsto get a better orientation to the labour market,encouraged them to take a more active part in theprocess of finding a job, increased their competi-tive possibilities and provided psychological assis-tance in overcoming the negative emotions causedby unemployment. There were 25,599 individualslooking for jobs, or every eighth person applying tothe labour exchange, who took part in the activitiesof job clubs in 1998, and this is nearly 7 thousandindividuals more than in 1997. Among the abovenumber of individuals women accounted for 56.7per cent, i.e. 1.8 times more than in the previousyear, young people accounted for 37.3 per cent, i.e.twice as many, and the long-term unemployed �ac-counted for 30 per cent, i.e. 840 individuals morethan in 1997. Persons with additional employmentguarantees accounted for 41.6 per cent, i.e. 2598individuals more. Among the total number of indi-viduals who participated in the activities of job clubs,persons unprepared for the labour market consti-tuted 90 per cent.

Seeking to harmonise labour supply and demandin 1998 the system of open information and provi-sion of direct services to individuals seeking for jobswas improved and expanded.

In co-operation with the Ministry of Social Affairsof the Federal Republic of Germany and the Min-istry of Social Security and Labour of the Republicof Lithuania, a modern Computerised Centre forProfessional Information, the first of such kind in

4. LABOUR POLICY

48SOCIAL REPORT

the Baltic States, was established at Vilnius LabourExchange. This Centre helped individuals looking forjobs to independently, however, with the help of acomputer, find information on the issues of voca-tional guidance. With the help of computers custom-ers could select the desired methodological materialand assess their professional interests based on theresults of testing, as well as to decide what profes-sion to choose. The self-search information systemabout job vacancies was further developed. Currentlytwo thirds of the Lithuanian territorial labour ex-changes have the self-search information system. Anindividual looking for a job by means of a computercould not only look through the available vacanciesin the country and print out the necessary documentsbut also receive additional information about ser-vices rendered by the labour exchange and advice onhow to behave when looking for a job, as well as tofind out information about laws. The self-search in-formation system is created on the basis of modernInternet technologies. Even computer illiterate cus-tomers may use the system. The implementation ofthe system allowed to fill in the existing job vacan-cies and place into jobs people much faster.

The active labour market policy that was imple-

mented in 1998 had a significant effect on the pre-vention of unemployment and allowed:m to move from passive to active support to the un-employed and to place into jobs or engage inprogrammes 37.5 thousand persons (13.8 per cent)more than in 1997;m to place into jobs 87 thousand (42.6 per cent) ofunemployed permanently or temporarily;m to decrease the level of unemployment amongyoung people by 0.2 per cent, i.e. to 8 per cent;m to decrease the share of unemployed females by1.7 per cent;m to decrease the share of the long-term unemployedby 0.2, i.e. to 12.4 per cent of the total number of theunemployed;m to decrease the level of unemployment in the re-gions with the highest level of unemployment: inRaseiniai - by 1.8 per cent, in Ðvenèionys- by 1.5 percent, in Ignalina - by 5.8 per cent;m to increase the number of young people who havebeen placed into jobs and engaged in active labour mar-ket programmes by 1.5 times; (for more information aboutthe indicators of the implemented labour market policysee Tables A.4.1.3-1, A.4.1.3-2, A.4.1.3-3).

Chapter 4

ProblemsLarge Territorial Unemployment DifferentiationIn 1998, in 28 regions of the country the level ofunemployment was higher than the average (6.4 percent), in one third thereof the unemployment levelwas 1.5 times higher than the average. The unem-ployment rate is higher in regions with the unilat-erally developed infrastructure, as well as in agri-cultural regions.

Growth of Unemployment AmongRural PopulationAccording to the data of the Department of Statis-tics, about 355 thousand people, or 21.4 per cent ofthe total employed population in the country hadbeen engaged in agriculture, hunting and forestry.In 1998, out of 204.3 thousand of the unemployedregistered with labour exchanges in the country 21.4per cent were engaged in these activities before. As

4.1.4. Problems of Labour Market and Forecasts for its Development in 1999

of 1 January 1999, the number of rural unemployedregistered with labour exchanges constituted 34.2per cent. During the recent years the unemploy-ment level in rural areas was higher than that inurban areas. In rural regions of Lazdijai andÐalèininkai the highest unemployment level in thecountry was registered on 1 January 1999 and was15.5 and 14.1 per cent, respectively (the level ofunemployment in the country accounted for 6.9 percent at the same time).

Large Number of Individuals Unprepared forLabour Market88.4 per cent of the individuals registered withlabour exchanges in 1998 were persons unpreparedfor the labour market, that is, persons with insuffi-cient qualification or persons with skills that do notmeet the demand on the market, or people withoutany profession. Though the number of individualsunprepared for the labour market in the country

49 SOCIAL REPORT

4. LABOUR POLICY

decreased by 0.8 per cent, their training and prepa-ration for the changing labour market remains es-pecially urgent.

Employment of the Unemployedunder 50 Years of AgeIn 1998, the share of the unemployed over 50 yearsof age and especially those over 60 years of age in-creased. The share of the unemployed of pre-retir-ing age increased from 7.4 to 7.6 per cent. Havingextended the working age, the number of individu-als who are to become eligible to receive full old-age pension within less than 5 years increased. Theintegration of such individuals into the labour mar-ket is complicated due to the difficulties related tothe upgrading of their qualifications.

Insufficient Flexibility of the Labour MarketThe growth of the employment of individuals is con-strained by inflexible legal framework regulating thepayment for work and labour relations. The imple-mentation of new information technologies, devel-opment of small and medium-size business estab-lish larger requirements for flexible forms of workorganisation, the improvement of which would pro-mote simultaneous development of employment aswell as of the economy. Low territorial and voca-tional mobility is the feature characteristic to thelabour market.

Forecasts on the Development of the LabourMarket in 1999Continuous restructuring of the economy, deepen-ing of the privatisation process unavoidably relatedto the reduction of inefficient jobs, liquidation ofunprofitable enterprises, stricter tax administration,and the dismissal of some workers has an impacton the development of the labour market in the

future. Striving to manufacture competitive produc-tion, the implementation of new technologies reduc-ing the production costs shall stimulate that tendency.This shall intensify professional and territorial mo-bility and increase the number of individuals apply-ing to labour exchanges. Labour supply in 1999, justlike in 1998, is expected to exceed the demand for it,the number of persons who are unqualified and un-prepared for the labour market shall increase. Witha long-term influence of the Russian financial crisis,a large amount of employees who have lost their jobsbecause their enterprises went bankrupt or reducedthe production volumes shall flood the labour mar-ket. At the same time the need for qualified workersand specialists with qualification in marketing, man-agement of trade, production, finance and banking,business administration, etc. shall grow. Small andmedium-size enterprises shall further remain themain founders of work places, the number of workplaces shall decrease within large enterprises, withan exception of such branches of industry as textileand woven products, as well as manufacture of woodand wood products, where the increase in the num-ber of jobs is forecast. The number of jobs in thesphere of services shall increase. Having assessed thecrisis in Russia, on the eve of the year 2000 it is ex-pected to have 156.8 thousand of the unemployed,which is 34 thousand more than at the end of 1998,with the unemployment level reaching 8.7 per cent.Within such a framework of employment and changesin the labour market, the active labour market policyshall be carried out on a larger scale, that will in-crease and support the employment of the unem-ployed and decrease differences in territorial unem-ployment.

Labour relations are public relations entered intoby people in the working process. In Lithuanialabour relations are regulated by Articles 48 through51 of the Constitution of the Republic of Lithuania,Code on Labour Laws, Law on the Employment

Contract, Law on Wages, Law on Individuals� Safetyat Work, Law on Vacation, Law on Collective Agree-ments and Collective Contracts, Law on the Moni-toring of Collective Disputes, as well as of otherlaws and legal acts.

4.2. LABOUR RELATIONS

50SOCIAL REPORT

Before the employer employs an individual, theparties must agree as to the future working condi-tions: safe and harmless conditions, working hours,remuneration for the work done, holidays and otherguarantees related to the future work. The employeehas the right to demand, and the employer mustensure the provision of adequate work conditions.In providing for concrete work conditions for theemployee, the employer must take into account re-quirements established by corresponding legal acts.Work conditions may also be regulated through col-lective labour relations.

Rights of Employees to Labour ProtectionEmployees have the right to labour protection irre-spective of the type of enterprise, work place, workenvironment, nature of work. This right of the em-ployees is established and implemented by the Lawon Labour Protection of the Republic of Lithuaniaand other legal acts on safety and health at work.In 1998, while implementing the programme onharmonisation of the national law, the draft Lawon the Amendments to the Law on Labour Protec-tion was prepared with regard to the directives ofthe European Union. All provisions set in the prin-cipal Directives of the European Union that regu-late the employees� safety and health at work aretransferred into it. This particular law to be titledthe Law on Safety and Health at Work of the Re-public of Lithuania should be adopted in 1999.

Also, when implementing the programme onharmonisation of the national law in 1998, with re-gard to the corresponding Directives of the Euro-pean Union, the following ten legal acts on labourprotection at work were drawn and prepared: Gen-eral Regulations on Manual Handling of Loads;Regulations for the Protection of Employees fromthe Effect Exerted by Biological Materials at WorkPlaces; Rules on Labour Safety in the Mineral Ex-tracting Industries; Rules for the Protection ofEmployees from Contacts with Vinyl ChlorineMonomer; Rules for the protection of employeesfrom the Effect of Lead and its Ionic Compounds,General Regulations on the Arranging of WorkingPlaces, Rules for the Work with Asbestos, technical

regulations - Requirements for the Designing andProduction of Personal Protective Equipment;Regulations on the Provision of Employees withPersonal Protective Equipment; Regulations on theInstalment of Temporary or Mobile ConstructionSites.

Evaluation of Labour ProtectionLabour protection shall be evaluated according tohow the work conditions (the amount of harmfuland hazardous factors) correspond to the require-ments of legal acts on labour protection. Employ-ers have to guarantee the evaluation of work con-ditions in work places according to the regulationsof hygienic evaluation of the work places approvedby the Government of the Republic of Lithuania.In 1998, by the resolution of the Government ofthe Republic of Lithuania new regulations of hy-gienic evaluation of work places were approved.According to these regulations work places have tobe evaluated by 1 July 1999. The procedure of ac-crediting laboratories carrying out environmentalresearch has been changed, the right has beengranted to evaluate the environmental research re-sults of the work places not only to the employeesof territorial public health centres but also to thespecialists certified in the established procedure ofmedical posts and services of labour protection atenterprises, as well as persons who have acquired alicense for such an activity in compliance with theprocedure established by the Ministry of Health.The employer together with the labour protectioncommittee shall decide whom to obligate to carryout the hygienic evaluation of research results.

A certificate concerning the state of the work con-ditions shall be filled out for each work placewherein factor magnitude of harmful factors of theworking environment, permissible magnitudes inaccordance with hygienic norms, length of actionof harmful factors within a shift, harm in points,summary amount of points shall be indicated.

According to the previous regulations, a summaryamount of points representing harmful factors ofthe working environment was expressed in terms ofthe integral indicator. At present the summary

4.2.1 Improvement of Legal Regulation

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51 SOCIAL REPORT

amount of points of harmful environmental factorsis made up of the total sum of points of actual harmof all factors studied. The employer must preparemeasures to improve the work environment forthose work places for which harmful or very harm-ful working conditions have been established.

Control of Labour ProtectionThe execution of the state control of labour protec-tion is delegated to the State Labour Inspectorateof the Republic of Lithuania. The main task of theState Labour Inspectorate shall be to implementlegal acts regulating labour protection and labourrelations, prevention of violations at enterprises, tocontrol the observation of labour laws and consultemployers and employees. In 1998, the Law on theAmendment of the Law on State Labour Inspec-torate of the Republic of Lithuania was adopted.The law was adjusted taking into account numer-ous violations of labour laws, the situation withlabour protection at work, as well as the opinion ofthe European Commission that this law must cor-respond to the regulations of Convention No. 81�Concerning Labour Inspectorate in Industry andTrade� of the International Labour Organisation.

In the new version of the law, the sphere of activityof the State Labour Inspectorate has been mademore exact, the main aim of the State Control In-spectorate has been made more exact, functions incontrolling the observance of laws on labour pro-tection and laws on labour have been made moreexact.

Working Hours, Regulationand Accounting ThereofThe Law on Labour Protection establishes the nor-mal working hours (40 hours per week) and themaximum length of a workday (not exceeding 48hours per week). The regimes of reduced workinghours that are more favourable to the employee maybe established in collective contracts, collectiveagreements, employment contracts, however, it isnecessary to observe the minimum length of a work-day established by the Republic of Lithuania, thatis, a reduced workday must not be shorter than onehalf of the work day (shift), and a reduced workweek must not be shorter than three days of a week.The establishment of the minimum length of work-

day has been applied as of 1 October 1997 to theconcluded employment contracts (as the law onemployment contract prohibits to unilaterallychange the employment contract).

The working time accounting sheets of the estab-lished form became effective on 1 January 1998,thus replacing the validity of the working time ac-counting sheets of a free-form. Therefore, the lawhas established the liability of managers for theworking time accounting procedures in an enter-prise, institution or organisation. This kind of li-ability has been also legitimised in Article 41-5 ofthe Code of Administrative Offences that providesfor large fines to be imposed on the employers orpersons authorised by them for offences related tothe working time accounting procedures.

Payment for Work as the IndispensableClause in the Employment ContractThe employer and the employee have to agree onpayment for work, the main provisions of which areset by the Law on Wages. The wages of an employeemay not be less than the minimum wage (hereinaf-ter referred to as the MW) set by the state; i.e.,minimum monthly wages and minimum hourly pay-rate. In February 1991, the state established theminimum wage and salary, which is subject to con-tinuous indexation taking into account the inflationrate, financial capacity of the budget and proposalsof employees� and employers� organisations. Deci-sions on the increase in the minimum wage are takenby the Government of the Republic of Lithuania.One of the purposes of the MW is to guarantee thesatisfaction of minimum needs of the individualsemployed under employment contracts and theirfamily members.

The Law on Wages provides that the employees withwhom contracts on part-time employment are con-cluded, shall be paid remuneration proportionallyfor the working time or work performed, establishedfor an employee in the agreement with the em-ployer, but no less than minimum hourly pay-ratefor each working hour; additional guarantees ofpaying for work may be provided for the employeesworking hours which are reduced according to thelaws or collective agreements (for minors, personswith a limited working capacity, employees work-

4. LABOUR POLICY

52SOCIAL REPORT

ing in extremely harmful conditions, etc.).

Notwithstanding the form of property of an enter-prise, institution or organisation, the Law on Wagesguarantees additional payment for those workingat night, on their days off or on public holidays,overtime, as well as for working in harmful and ex-tremely harmful conditions.

Payment for Work to the Employees ofBudgetary OrganisationsThe conditions of payment for work to the employ-ees of institutions financed from the state, munici-pal or social insurance budgets are established inthe resolutions of the Government of the Republicof Lithuania taking into account the complexity ofwork, level of responsibility, working conditions andqualification of the employee.

It is planned to adopt the Law on State Services,the purpose of which is to regulate payment for workto the employees of the state services (includingpayment for the drafting of legislative acts). As longas this law has not been adopted, the resolution onpayment for the drafting of legislative acts and forwork in commissions and task forces formed by theGovernment of the Republic of Lithuania is valid(as of 1 March 1998). Pursuant to the said resolu-tion, civil servants of �B� level are entitled to pay-ment for additional work only in one commissionor task force; while civil servants of level �A� andsenior specialists-experts are not entitled to pay-ment for drafting legislation, if payment for workof such persons meets their qualification require-ments and includes work in commissions and draft-ing of legislation.

The stability of labour relations in enterprises areburdened by the ongoing modifications of the legalframework, since the employers are often forced tocarefully follow amendments introduced into legalacts, and changes in the minimum wages and sala-ries, in particular, in order to be able to ensure thetimely settlement of accounts with employees.

Actual WagesThe change in the actual wages shows the change inthe purchasing power of wages. The actual wage in-dex is calculated by dividing the net wage index bythe consumer price index. According to the data ofthe Department of Statistics, the actual wage in Janu-ary 1998 was 8.7% lower than the actual wage inDecember 1997; however, the actual wage in Janu-ary 1999 was 12.2% higher than in January 1998.Dynamics of actual wages from 1991 through 1998,as well as the actual wage projections up to the year2000 as shown in Chart 4.2.2-1 indicate that in 1997the actual wage started increasing more rapidly. In1997, the actual wage increased by 5.6% as comparedto the year 1996, and in 1998 the increase amountedto 6.3% as compared to the year 1997.

4.2.2. Factors Influencing Labour Relations

Minimum WagesIn 1998, the minimum wage increased only once.According to the data of the Department of Statis-tics, in January-May 1998 the minimum monthlywage was 400 LTL. In May, the minimum monthlywage amounted to 40.2% of the average grossmonthly wage in the Lithuanian economy. Alreadyin June the minimum monthly wage was 430 LTLor 41.6% of the average gross monthly wage in theLithuanian economy.

According to the data of the Department of Statis-tics 1, in October 1998, 16.1 per cent of the hiredemployees in the country�s economy, except indi-vidual (personal) enterprises, received salaries inthe amount of minimum monthly earnings, i.e., LTL430, or less. The portion of such employees in Oc-tober 1997 accounted for 18.7 per cent (at that timethe minimum monthly wages stood at LTL 400). InOctober 1998, a quarter of the employees of theprivate sector and 8.3 per cent of the employees ofthe public sector were paid minimum and lowermonthly wages. In October 1998, the reduction ofthe number of employees receiving minimummonthly wages in the country�s economy was con-

1 Wages and salaries: Informational publication of the Department of Statistics, 27 May, 1999

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53 SOCIAL REPORT

ditioned by the reduced portion of persons em-ployed in the sphere of education receiving the saidsalary. Compared with the total number of the em-ployees of the educational sphere, in October 1996they accounted for 21.3 per cent, in October 1997 �for 22.8 per cent and in October 1998 � 9.6 per cent.

Changes in Payment for Work to theEmployees of Budgetary OrganisationsA trend of increasing wages for the employees ofbudgetary organisations prevailed in 1998. On 1January 1998, the salaries of research and teachingstaff employed at research and education institu-tions were raised by 20% on the average. On 1 Janu-ary 1998, salaries of culture and art staff employedat the libraries of state importance, the NationalMartynas Maþvydas Library, public libraries of thecounties, higher school libraries, national and re-publican museums were raised by 30% on the aver-age; salaries of the same staff employed at munici-pal libraries, museums and cultural centres wereraised by 40% on the average; and of those em-ployed at libraries of budgetary organisations orinstitutions of education, etc. were raised by 20%

on the average. On 1 March 1998, 20%, on the av-erage, were added to the salaries of the principlesand culture specialists employed at museums un-der the subordination of budgetary institutions andorganisations. On 1 April 1998, the salaries of theart staff employed at theatres, concert organisationsand music groups that have been founded by theMinistry of Culture (by 25% on average) or mu-nicipalities (by 35% on average) were raised.

On 1 April 1998, salaries of social workers wereraised by 20% on the average. Thus, currently theaverage salary of social workers is higher than theaverage salary of health care providers and exceedsthe first one by 8.7%. Having issued a respectiveresolution, the Government attempted to putstraight (in terms of coefficients) the salaries of allbudgetary employees; however, the attempts re-sulted only in the increased minimal levels of coef-ficients (including salary coefficients for employ-ees of other education, cultural and art, health andsocial care institutions, as well as employees of otherbudgetary organisations and institutions). On 1September 1998, salaries of the employees of edu-

4. LABOUR POLICY

Development of Actual Average Wages in 1991-2000 (per cent)

Chart 4.2.2-1

Per cent

Actual averagesalary according tothe GovernmentProgramfor 1997-2000

Year

Actual averagesalary

54SOCIAL REPORT

cation and other budgetary institutions were raisedby 15% on the average.

Bonuses amounting to 2 salaries may be paid to theheads of the national culture and art institutions,as well as to the culture and art employees of thehighest level.

Average Gross Monthly WagesAccording to the data of the Department of Statis-tics, in December 1998 the average wages were15.7% higher than in December 1997 (increase from995.7 LTL to 1,153.2 LTL). The data of 1995-1997presented in Table 4.2.2-1 show that the averagewages increased by 27% every year. Meanwhile, theaverage wages of the members of managementboards of enterprises and companies decreased by8.2% in 1996 as compared to 1995, and in 1997 in-creased by as much as 68%. The review of prelimi-nary data of the Department of Statistics for theyear 1998 12 concludes, that the highest averagewages were in the following types of economic ac-tivity: monetary (1,962 LTL) and financial (1,882LTL) mediation; accumulation of insurance andpension funds, except mandatory social insurance(1,527 LTL); state governing and defence (1.483LTL); post and communications (1,363 LTL); power,

gas and water supply (1,349 LTL). The lowest aver-age wages were in agriculture (490 LTL); fishingindustry (548 LTL); hotels and restaurants (606LTL).

Activity of the Fund to Meet the WorkRelated Demands of Workers in EnterprisesUndergoing or Having ExperiencedBankruptcyWith the increasing number of companies declar-ing bankruptcy under the terms of the LithuanianLaw on Bankruptcy of Enterprises, and having fi-nancial difficulties in paying their workers, an ur-gent decree passed by the Government on 1 Sep-tember 1997 temporarily established a Fund to meetthe work-related demands of workers employed withthe enterprises undergoing or having experiencedbankruptcy (hereinafter referred to as �the Fund�).The purpose of the Fund is to provide repayablefinancial assistance to the insolvent institutions, sothat they would be able to satisfy claims of theiremployees related to labour relations, as well asclaims related to mutilation or other bodily injury,occupational disease acquired at work or deathcaused by an accident at work. During the year 1998,the total of 31.7 million LTL of repayable financial

Gross Average Monthly Wages in the Country�s Economy, with Specified Gross AverageMonthly Wages of the Members of Boards of Directors of Enterprises and of CouncilMembers of Companies in 1995-1998 (in LTL)

Table 4.2.2-1

Economicactivities

YearTotal in the country�seconomy Private sector

Members of theBoards of Directors

Total Members of theBoards of Directors

Total 1995 479 1279 267 532 1410 265 433 1244 287,3

1996 621 1173 188,9 683 1995 292 566 1042 184,1

1997 785 1967 250,6 851 2735 321,3 734 1865 254,1

1998 955 1021 880

Public sector

LTL

Total Total

LTL % fromthe total

LTL % fromthe total

LTL % fromthe total

Letter No. 111-07-320 of the Department of Statistics under the Government of the Republic ofLithuania of 10 May 1999 to the Ministry of Social Security and Labour (reg No. 2995)

Chapter 4

Members of theBoards of Directors

55 SOCIAL REPORT

assistance was granted to 21 enterprises. Applica-tions for financial assistance of 20 enterprises werenot satisfied; the most frequent reason for such arejection was the fact, that an enterprise had nopossibilities to provide at least the minimal guaran-tee for the repayment of funds granted, since it hadno property either to pledge or had pledged to othercreditors. nterprises failed to appraise their assetsin time or requested assistance to cover short-term(up to 1.5 months�) debts.

Situation with Labour Relationsin EnterprisesThe assessment of the actual situation with labourrelations in enterprises is possible after the enter-prises are inspected and the violations are revealed.According to the Department of Statistics, as manyas 143,508 enterprises were registered in the Re-

public of Lithuania in 1998. Out of the above num-ber 98,064 enterprises were operating throughout theprevious year. In 1998, the State Labour Inspectorateinspected 14,204 (9.9 per cent) enterprises employ-ing 898,208 employees (see Table A.4.2.2-1).

In 1998, labour inspectors identified 92,264 viola-tions of labour relations in the said enterprises (cf.91,900 in 1997); the majority of these wereorganisational violations (39%), violations of theLabour Law (26%), technical violations (21%) andlabour hygiene violations (14%). The technical andstaff capacity available at present at the StateLabour Inspectorate can conduct repeated inspec-tions of the same enterprise in some 8-10 years only.

As Table 4.2.2-2 suggests, the majority of violationsare labour-law-related; they make up to as much as75% of all violations. According to the data of the

Data provided by the State Labour Inspectorate

Structure of the Legalised Protocols of the Code of Administrative Offences (CAO) in 1998 (per cent)

Chart 4.2.2-2

12 Letter No. 111-07-320 of the Department of Statistics at the Government of the Republic of Lithuania to the Ministry of Social

Protection and Labour (registration No.2995).

4. LABOUR POLICY

Violations of the procedure ofpayment of wagesand salaries (CAO Article 41-4)

Violations of the procedure ofaccident investigation(CAO , part 2 of Article 41-1)

Cases of illegal employment(CAO Article 41-3)

Concealing of accidents(CAO, part 1 of Article 41-1)

Violations of the accounting ofworking time (CAO Article 41-5)

Precluding of the labourinspector from performing his/her duties (CAO Article 41-2)

Violations of labour laws andnormative acts regulating workhygiene and safety (CAO Article 41)

56SOCIAL REPORT

Court Department at the Ministry of Justice, themajority of cases filed were related to the illegaldischarge from employment. In 1997, the employ-ment of 354 dismissed persons (33%) out of 1,072cases was reinstated, while in 1998 these numberswere 214 (21%) and 1,020 respectively.

The second largest group of violations (8%) con-cerns illegal employment; the third group (7%) isthe procedural violations of payment of wages.

In order to eliminate the above violations, labourinspectors issued the necessary instructions and dis-patched more than 10.7 thousand letters of demandto the employers, terminated activities of 262 enter-prises and their affiliates, suspended 2,768 work ac-tivities, prohibited the use of 2,500 work appliancesand 2,393 work places. It should be pointed out, thatlabour laws have been violated in 6,949 enterprises,which makes up 49% of all the enterprises inspected.The most frequently violated legal provisions con-cerned the procedures of payment of wages and re-imbursements, conclusion and termination of em-ployment contracts, working time and free time; 3.2thousand of incorrectly concluded employment con-tracts and 282 employees working without a writtenemployment contract were found. To evaluate theviolations found, 1,294 employers were prosecutedin accordance with the administrative procedure; 113fines were imposed for illegal employment.

The State Labour Inspectorate drew up and filedwith the courts 95 official reports concerning finesfor the failure to pay wages and for impeding theefforts of labour inspectors to fulfil their duties. In1998, as many as 190 cases were filed with courts inrelation to the imposing of fines (these were thecases concerning the failure to pay wages and im-peding the fulfilment of duties, as well as the ma-jority of illegal employment cases, since the employ-ers, as a rule, appeal against the decisions of thelabour inspectors to impose fines). The courts ad-journed trials of 105 cases, decided not to imposefines in 47 cases (55%) and only in 39 cases ap-proved of the imposed fines. Such a situation wasdetermined by the insufficient evidence, which isdifficult to obtain without the assistance of the po-lice officers. Up until now, the courts have approvedof the decisions only in 17 (out of 57) cases related

to the failure to pay wages. According to the dataof the Court Department at the Ministry of Justice,wages-related claims constitute the largest group ofall labour cases received (83% in 1997 and 77% in1998). 7,764 (84%) claims out of 9,271 cases in 1997,and 5,366 (85%) claims out of 6,284 in 1998 werecompletely or partially satisfied.

Working Conditions in EnterprisesAccording to the data of the State Labour Inspec-torate, 14% of all labour violations detected during1998 were the violations of labour hygiene. It wasdetermined, that in 1,715 enterprises (12.07% ofall enterprises inspected) the employers or theirauthorised persons were not certified in the safetyat work; in 2,197 enterprises (15.47% of all enter-prises inspected) there was no agency responsiblefor the safety at work; in 1,220 enterprises (29.54%of all enterprises inspected should establish safetyat work committee) there was no committee on thesafety at work; in 206 enterprises (26.68% of all in-spected enterprises need to establish the occupa-tional medicine service) there was no occupationalmedicine service; and 7,538 enterprises (53.07% ofall enterprises inspected) failed to conduct the hy-gienic assessment of work places.

In 1998, as compared to 1997, the total number ofthe hygiene violations at work decreased by 1 percent (hygiene violations accounted for 15 per centof all violations in 1997), however, the specificweight of enterprises, in which the hygienic assess-ment of working places has not been carried out,increased twice during 1998. In 1997, the hygienicassessment was not performed in 3723 enterprises(28.52 per cent of all inspected enterprises).

In the enterprises or affiliates thereof inspected in1998, 3,386 hired employees (0.38% of the employ-ees of the inspected enterprises) worked in ex-tremely harmful working conditions; 80,373 employ-ees (8.95%) worked in harmful working conditions,and 114,386 employees (12.73%) were engaged indangerous labour.

In 1998, as compared to 1997, the working condi-tions in enterprises did not improve: in 1997, 84,322employees (9.04% of the employees of the inspectedenterprises) worked in harmful and extremely harm-ful working conditions; and 94 705 employees

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57 SOCIAL REPORT

(10.16%) were engaged in dangerous labour.

Accidents at WorkDuring 1998, the State Labour Inspection registered166 reports on lethal labour accidents or cases ofdeath, 173 heavy and 2,989 mild labour accidents(in 1997 the number were 152, 163 and 2,876 casesrespectively).

Out of all lethal accidents that were registered in1998 156 cases were investigated. It was determined,that 86 accidents were labour-related, and 70 caseswere not labour-related; 45 accidents out of the lat-ter were caused by illness, 14 accidents by alcoholintoxication, 9 by suicides, 1 by criminal acts and 1by the absence of labour relations. Most of thelabour-related lethal accidents were caused by thefailure to observe the requirements of normativelegislation (23 cases), violation of traffic rules (13cases), use of neglected equipment (12 cases) andimproperly organised work (9 cases).

Out of all heavy labour accidents registered in 1998170 cases were investigated. It was determined that161 of them were labour-related. The majority ofheavy labour-related accidents were caused by thefailure to observe the requirements set in the nor-mative legislation (31 case) and improperlyorganised work (22 cases).

The investigation of mild labour accidents registeredin 1998 showed that most of them were caused bythe same reasons; i.e., failure to observe the require-ments set in the normative legislation (1,350 cases)and improperly organised work (122 cases).

The comparison of the amount of labour accidentsin 1995 through 1998 (Table A.4.2.2-2) shows thatthe fluctuation in the amount of accidents is insig-nificant and in 1998 lethal accidents amounted to96; heavy accidents to 164 and mild accidents to2989. The total number of accidents at work hasdeclined.

Morbidity from Occupational DiseasesIn 1998, 618 cases of occupational diseases in 427persons were registered in the Register of Occupa-tional Diseases. Men were diagnosed for 510 occu-pational diseases, women 108. The most frequentdisease cases were vibration diseases (230), ear dis-

eases (214) and the diseases of connective tissueand bone-muscular system (90). The majority ofdiseases were diagnosed among the 50-59 year oldpeople with the working record of 20-49 years onthe average. Nine of all occupational diseases diag-nosed were acute, 609 were chronic. By the type ofeconomic activity, the instance of occupational dis-eases is the most frequent among persons employedin agriculture, hunting and related activities (282)and processing industry (139); by occupation � withequipment or machinery operators, assemblers(484).

The comparison of cases of occupational diseasesregistered in Lithuania from 1994 through 1998(Table A.4.2.2-3) shows that the number of occupa-tional diseases is growing with every year. In 1994,the number of registered occupational diseasesamounted to 319, whereas in 1998 this same num-ber equalled 618. Especially rapid growth in thenumber of registered occupational diseases startedin 1996. The number of occupational diseases reg-istered in 1996 was twice as high as in 1994. Thisdifference occurred due to two reasons: first, morepeople address relevant institutions and thereforemore occupational diseases are diagnosed. In 1994,when the Register of Occupational Diseases andthe List of Occupational Diseases were approved,more than one occupational disease in one personwas diagnosed. At the same time the number ofoccupational diseases rather than the number ofpersons suffering from the diseases was registered.

Within the total number of registered occupationaldiseases, the occupational diseases diagnosed inmen made up a considerably larger portion thanthe same diseases diagnosed in women. The por-tion of occupational diseases registered in 1994 inmen and women made up to 77.3 per cent and 22.7per cent respectively, whereas the correspondingfigures for 1998 were 85.5 per cent and 17.5 percent respectively.

As of 1996, 600 to 700 occupational diseases havebeen registered in Lithuania annually. Such diseasesresult from long-term effects of the factors of theworking environment.

4. LABOUR POLICY

58SOCIAL REPORT

The laws should regulate only general requirementsapplied to labour relations, as set forth also in theILO and EU regulations (directives and conven-tions), while the majority of provisions set in thelabour laws have to remain subject to the agree-ment by the parties, providing for the possibility ofregulation thereof through collective agreements.These provisions should be taken into account whenpreparing the draft Labour Code. When the eco-nomic and social situation in the country changes,the laws have to be revised and amended. However,the practice shows that frequently changing legalnorms restrict the freedom of the parties and limitthe development of businesses, but on the otherhand, they also help to control and detect violations.

Hygienic Assessment of Work PlacesBy 31 December 1997, all enterprises, institutionsand organisations had to conduct the hygienic as-sessment of workplaces. The process of hygienicassessment of work places turned out to be slowand insufficient, since in 1998 the enterprises, wherethe hygienic assessment of work places did not takeplace, constituted as much as 53.07% of all detectedsafety at work violations.

Employers were dissatisfied that only the laborato-ries certified by the Ministry of Health were en-titled to conduct the studies of working environ-ment and that only hygiene centres were entitled toconduct the hygienic assessment of work places.Enterprises had to pay a certain fee for the assess-ment of each standard work place. This caused aslow and insufficient process of hygienic assessmentof workplaces in 1998.

Thus, in 1998 the new Regulations for HygienicAssessment of Work Places were drafted and ap-proved of. They included the provision that the labo-ratories engaged in the studies of the working envi-ronment have to be certified by the National Bu-reau of Certification at the Ministry of Public Ad-ministration Reforms and Local Authorities, whilethe right to evaluate the findings of the studies ofthe working environment was granted not only tothe officials of the territorial public health centres,but also to the specialists of safety at work agencies

4.2.3. Problems

and health care posts certified in accordance withthe set procedure, as well as persons who obtaineda licence to engage in such an activity in accordancewith the procedure set by the Ministry of Health.

Assessment of Working Environment FactorsIn order to protect the health of employees duringthe working hours, the magnitude of working envi-ronment factors are assessed against the HygienicClassification of Working Environment Factors, i.e.,the magnitude of a certain factor identified in theworking environment is compared to a permissiblestandard. The said maximum permissible standards(levels) have been defined by the Soviet norms ofhygiene and are referred to up until now.

In the process of harmonisation of the Lithuanianlegislation with the EU directives, working environ-ment assessment indicators appeared. These con-cepts are new, as well as their contents, and up un-til now there is no agreement as to what uniformworking environment indicators should be used.

Extra Payment for Harmful WorkingConditions and Dangerous LabourWhen harmonising the Lithuanian legislation withthe directives of the European Union, the problemto pay extra payments for harmful working condi-tions and dangerous labour, or to annul them, wasfaced.

Most of the EU states refuse to pay extra for work-ing in harmful, extremely harmful conditions or fordangerous labour. The EU experts are of the opin-ion, that the employers should resort to all possiblemeans to reduce the harmful factors of the workingenvironment if such factors exceed the permissiblenorms. The aim should be to improve the workingenvironment rather than extra payment for work-ing in harmful conditions or for dangerous labour.The employers have to ensure safe and sound work-ing conditions in their enterprises. Extra paymentsfor specific working conditions have to be specifiedin the collective agreement or employment contract.

Employers do not object to the opinion of the ex-perts of the European Union, however the saidopinion is not acceptable to trade unions. Under

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59 SOCIAL REPORT

the existing system of payment for work 1, the em-ployees, being afraid of losing the extra payments,do not want to improve their working conditions.Therefore, this problem ought to be solved gradu-ally by cancelling extra payments for harmful work-ing conditions and dangerous labour.

Social Guarantees in Relation to LabourAccidents or Occupational DiseasesProvisional law of the Republic of Lithuania on theCompensation of Damage Incurred Due to LabourAccident or Occupational Disease regulates therelations of compensation for damage that appearedboth prior and after the enforcement of the saidlaw, until the law of the Republic of Lithuania onMandatory Labour Accident Insurance comes intoeffect. The latter law will regulate the compensa-tion of damage that is incurred by the insured per-sons only after the enforcement of the law.

The issues related to the compensation of damageincurred due to injury at work or occupational dis-ease are important not only to the victims, but alsoto the enterprises, institutions, organisations boundto compensate the damage, as well as municipali-ties when such an obligation is transferred over tothe State. The procedure approved by the Govern-ment provides for such obligations to be transferredto the State (municipalities) in cases when an en-terprise is liquidated due to bankruptcy or on othergrounds and is not able to compensate the damagedue to the lack of resources. In such a case, the Stateresumes the payment of compensation for the dam-age as of the day on which, as evidenced by the avail-able data, the enterprise in liquidation suspendedthe payment of compensation due to the lack ofresources. The application of the above provisionsin practice faced many problems in relation to thepayment of compensation for the damage incurredby victims before the liquidation or bankruptcy pro-cedures of an enterprise started, when an enterpriseran into debt for such persons. Although individualdisabled persons are not entitled to request the

payment of compensation for damage, part of theclaims were satisfied through the Fund to Meet theWork-Related Demands of Workers of the Enter-prises Undergoing or Having Experienced Bank-ruptcy.

Control of Illegal EmploymentWhen carrying out the function of control over theenforcement of labour laws, officials of the StateLabour Inspectorate face certain problems. One ofthem is the complexity of exposing illegal activities.This is due to the insufficient legislative basis (notall the cases of labour relations or peculiaritiesthereof are regulated by the law). Moreover: whena labour inspector comes to the enterprise to beinspected, the employees leave their work placesor insist, that they are either not employed in thisenterprise, or have been employed only recently.The officials of the State Labour Inspectorate haveno right to detain such employees, or to interro-gate them, unless the employees voluntarily agreeto do so.

A more efficient labour control is also impeded bythe fact that the employees of enterprises have noidentification documents, while their identity maybe determined only by the police officers. Often theemployers appeal to courts if labour inspectors im-pose fines for illegal employment; as a rule, thesecases are usually lost in court due to insufficientevidence, which is difficult to obtain without theassistance of the police.

Many problems are caused by the absence of statu-tory definitions of properties of illegal employment.For instance, the activities of a natural person whenhiring other employees. The law allows a naturalperson to be an employer, but only in cases whenan employment contract is concluded on the groundsof providing services (cleaning services, baby-sitting,etc.). In addition, the said provision causes a num-ber of problems for farmers, who have no status ofa legal person. Therefore, it is intended to revisethis provision in the future.

1Payment for work: for work under harmful conditions � at least one and a half of the hourly (daily) tariff salary (monthly salary)

fixed for the employee, for work under extremely harmful conditions � at least double hourly (daily) tariff salary (monthly salary)fixed for the employee, for people engaged in dangerous work � extra payment of at least 30 per cent of the minimum hourly (daily)tariff salary (monthly salary) fixed for the employee.

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60SOCIAL REPORT

The purpose of legitimisation of minimum workinghours is to guarantee the protection of the employ-ees� rights. It also serves as a means to avoid illegal

employment and unemployment. However, suchmeans were not equally valid for all categories oflabour, thus the same problems remained in 1998.

The analysis of the actual situation indicates, thatattempts to protect employees from social risks andpoverty through the regulation of labour relations,restricted possibilities of the agreement between theparties and fixing of forced administrative normshave only partial and short-term effect. On the otherhand, the long-term impact of such restrictions isnegative. The regulation of labour relations is toodetailed, the goals of such regulation are not met,while the legislative norms are evaded and the lawbecomes a formality. Thus, we are of the opinionthat only the main principles of relations betweenthe employer and the employee have to be regu-lated by the laws. We should gradually get rid of thedetailed regulation of such relations by delegatingthe solution of these problems to the trade unionsand the employers.

In order to ensure safety and health at work, one ofthe priority tasks is the education of the public onthese issues. In 1998, the State Labour Inspectoratewas carrying out this function by consulting theemployers and the employees, as well as by pub-lishing and circulating the publication �Saugusdarbas� (Safe Labour) and sets of certain laws.

In order to improve the education of the public insafety and health at work, with the assistance of thePHARE experts it was decided to establish a Safetyand Health at Work Information Centre in the Min-istry of Social Protection and Labour. The main taskof the Centre would be to provide the populationwith information on safety and health at work in allpossible ways, including verbal, written information,Internet and circulation of brochures. It is projectedthat the Centre will start its activity in July 1999.

In order to ensure safe and sound working condi-tions in the enterprises, a hygienic assessment ofeach and every work place has to be carried out. In1999, the work places shall be assessed accordingto the revised Regulations for Hygienic Assessmentof Work Places, the complete enforcement of which

4.2.4. Priorities and Proposals

is due on 1 July 1999. The employers will have tointroduce measures to improve the working envi-ronment in the work places that will qualify as harm-ful or extremely harmful. Such measures may in-clude, for instance, replacement of dangerouschemical substances by less dangerous ones, intro-duction of more advanced technology and/or col-lective labour safety means. Until such improvementmeasures of the working environment are imple-mented, the employees will have to be supplied withindividual safety equipment to be used during work-ing hours and the working hours will have to be cut.

During the process of integration into the EU,Lithuania should gradually abolish extra paymentsfor harmful working conditions. The purpose of thelabour policy should not be extra payment for harm-ful working conditions or dangerous work, but ratherthe improvement of working conditions, so thatevery employee has a possibility to have a safe andhealthy work place. Payment for specific workingconditions should be specified in the collectiveagreements of employment contracts.

In light of the above, provisions for extra paymentto employees working in conditions other than nor-mal have been eliminated from the amended andsupplemented draft Law on Safety at Work. It hasalso been determined that extra payment for dan-gerous labour shall be paid at the rates establishedby the presently valid laws until the year 2000.

In order to provide financial assistance to personswho lost health and working capacity due to work(i.e., in order to compensate for the lost workingcapacity in cases of insolvent enterprises), it is nec-essary to amend as soon as possible the provisionalLaw on Compensation of Damage Incurred Due toLabour Accident and Occupational Disease, toadopt the Law on the Guarantee Fund and the Lawon Mandatory Labour Accident and OccupationalDisease Insurance, as well as to revise the proce-dure set by the Government for the compensation

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61 SOCIAL REPORT

of damage incurred due to injury at work or occu-pational disease to victims in cases when such anobligation is transferred over to the state.

In order to defeat illegal employment, it is neces-sary to amend the laws regulating properties of ille-gal employment, and to define specific aspects andcharacteristics evidencing illegal employment. It isalso necessary to unite efforts of the State LabourInspectorate, SODRA (social insurance), the taxpolice and the State Tax Inspectorate in fighting il-legal employment and making payments to employ-ees who are not accounted in the financial account-ing documents; to compile a common data base onthe company register, activities, change of staff, etc.

Harmonisation of national legislation with the EUlaw will remain the priority field of activity in 1999.In the National Activity Programme for theHarmonisation of Laws, the Ministry of Social Pro-tection and Labour has planned to draw up 16 legalacts concerning safety and health at work by theend of 1999. In 1998, under the Programme 12 le-gal acts on safety and health at work were preparedand adopted. Further harmonisation of legislationand preparation of the New Outlook Programmefor the adoption of EU directives, as well as therestructuring of institutions of safety and health atwork are planned for the year 1999.

The principle of gender equality is established inmany principal labour laws of the country: in theConstitution, Law on Wages, Law on the Employ-ment Contract, Law on the Support to the Unem-ployed, Law on Vacations and Holidays and in otherlaws. With a view to implementing equal rights ofmen and women, on 1 December 1998 the Law ofthe Republic of Lithuania on Equal Opportunitieswas passed. When assuring equal opportunities formen and women, this Law establishes the duties forthe bodies of state management and administration,

4.3. GENDER EQUALITY IN LABOUR POLICY

4.3.1. Legal Framework

education and science institutions and employers.The Law provides for the violations of rights of menand women, control and supervision of the imple-mentation of the law, as well as the acceptance andinvestigation of complaints. Supervision of theimplementation of the Law on Equal Opportuni-ties shall be carried out by the ombudsman for equalopportunities. Seeking to ensure the quality of thework of the ombudsman, the independent Ombuds-man Service has been established.

4.3.2. Employment and Unemployment of Women and Men

Equal opportunities for women and men as well asemployment currently are especially closely inter-related. Equal treatment of the rights of women andmen is the indicator not only of social justice, butalso of the stable economy. In developing the edu-cation and vocational training, increasing the choiceof available jobs and the number of working women,the competitiveness of the economy may be im-proved alongside integration into the labour mar-ket.

According to the survey of labour force, employ-ment and unemployment, carried out by the De-partment of Statistics in the 4th quarter of 1998, in

the total number of the employed men accountedfor 51 per cent and the remaining portion of 49 percent comprised women. Hired women made up to83 per cent, while men employed for hired workmade up to 76 per cent of the employed. Self-em-ployed persons accounted for 13 per cent of allemployed. Within this category the number of menexceeds the relevant number of women by the fac-tor of 1.6. Men-employers exceeded the number ofwomen-employers 2.4 times.

According to the data presented in Table 4.3.2-1, in1994-1996, upon the growth of the overall rate ofunemployment, the rate of unemployment among

4. LABOUR POLICY

62SOCIAL REPORT

1993 1994 1995 1996 1997 1998

Total 4,4 3,8 6,1 7,1 5,9 6,4

Women 3,7 3,8 6,4 7,7 6,3 6,6

Men 5,0 3,8 5,8 6,6 5,6 6,2

Dynamics of the Unemployment Rate in Lithuania (in per cent)

Table 4.3.2-1Data provided by the Labour Exchange of the Republic of Lithuania

women grew more rapidly than that among men. Ifin 1994 the rate of unemployment among womenequalled that of men, in 1995 the rate of unemploy-ment among women outpaced the rate of unem-ployment among men. In 1998, the rate of unem-ployment among women was still higher than therate of unemployment among men, i.e., it was 6.6per cent and 6.2 per cent respectively.

Women were more active in registering themselveswith the Labour Exchange. The number of womenemployed and covered by active policy programmesof the labour market exceeded the relevant num-ber of men by the factor of 1.5 (63 per cent and 43

per cent respectively). Women comprised more than50 per cent of all participants of the job club pro-grams. During the 4th quarter of 1998, every secondunemployed for whom a new job has been createdin compliance with the quotas for the establishmentof jobs was a woman. The equivalent situation wasalso among those sent to works supported by theEmployment Fund.

The initiative of employers to create more jobs forthemselves by acquiring preferential patents for upto 3 months continues to receive support. Everysecond person out of all unemployed who haveorganised their own employment was a woman.

The laws of Lithuania provide for equal remunera-tion of persons irrespective of their gender, how-ever, as we can judge from the data presented inChart 4.3.3-1 and in Table 4.3.3-1, the average wagesof women in 1997 accounted for 76 per cent of theaverage wages of men, and in 1998, for 77 per centrespectively. The differences between the level ofwages and salaries paid to men and women are con-ditioned by many factors, the most important ofwhich are of the social and economic nature:1) the structure of employment of men and women,their distribution by economic activities and catego-ries of employees (workers, civil servants);2) professional composition (distribution by techni-cal and economic profile);3) degree of qualification.

4.3.3.Wages and Salaries of Men and Women

The data presented in Table 4.3.3-1 shows, that in1998 the number of employed women exceeded thenumber of employed men by 3.8 percentage points.This Table also shows that managers of all types ofenterprises as well as their deputies made up only7.8 per cent of the total number of civil servants inthe country �s economy. However, having analysedthe structure of employment among men andwomen by the categories of employees we can seethat the top ranking positions are most often occu-pied by men (13.9 per cent. of women-managersaccount for mere 4.3 per cent in the total numberof women-civil servants (64.1 per cent).

More than half of the employed men-workers (57.5per cent) possess a high degree of qualification andonly a small number (16.9 per cent) of them is at-

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63 SOCIAL REPORT

Chart 4.3.3-1

Gross Average Monthly Wages by Gender of the Employed in 1996-1998 (in LTL)

Remuneration of the workers and civil servants of the main qualification groups inApril 1998: Publication No. B336, 1999 of the Department of Statistics

Table 4.3.3-1

Women 51,9 64,1 4,3 67,4 3,5 56,0 6,7

Men 48,1 35,9 13,9 32,6 7,9 44,0 25,0

Total 100 100 7,8 71,5 5 28,5 14,7

Number of Employed Civil Servants and Managers of all Types of Enterprises by Gender(April 1998, in %)

Number of menand women ascompared to thetotal number of theemployed,in per cent

Including

In the country�seconomy

Public sector Private sector

Civilservants

Including:managers

Civilservants

Including:managers

Civilservants

Including:managers

Remuneration of the workers and civil servants of the main qualification groups in April1998: Publication No. B336, 1999 of the Department of Statistics

4. LABOUR POLICY

MenWomen

64SOCIAL REPORT

4.3.4. Problems

tributed to the group of employees of the lowestqualification engaged in simple or ancillary work.The largest number of women is attributed to theQualification Group I (46 per cent), whereas theHighest Qualification Group contains only 5 percent of employed women-workers.

Civil servants look less different from the point ofview of qualification groups. Most of the men-civilservants (42.4 per cent) and only a quarter ofwomen-civil servants occupy the posts of all typesof managers, their deputies and chief specialists andspecialists. Women-civil servants occupy the posi-tions of senior specialists or specialists. Even onefifth (19.9 per cent) of women-civil servants are at-tributed to the lowest qualification category (sec-retaries, typists, operators of data preparation andrecording with the help of computer, etc.). Whenanalysing the differences in the wages and salariesof men and women, we can draw a conclusion thatthe higher the qualification category of workers is,the larger is the gap between the amount of salarypaid to men and women. The differentiation ofwages and salaries paid to men and women by quali-fication groups is larger due to the fact that some

jobs receive higher evaluation.

Having analysed the distribution of men and womenby economic activities we see that in most cases theaverage salary paid to women is smaller than thatpaid to men. For example, in the institutions of sec-ondary education the average salary paid to menand women is equal and amounts to 853 LTL,whereas in the institutions of higher education,where the difference in salaries depends on scien-tific degrees, the average salary of men is 62 percent higher than that of women (LTL 931). Theopposite tendency is also evident, for example, inthe sphere of social work, where the average salaryof men is LTL 855, while that of women is LTL 866;men employed in the sphere of mandatory socialinsurance are paid LTL 1074, while women em-ployed in the same sphere are paid LTL 1124. Thegreatest influence on the relatively lower averagesalary of women resulted from the fact that a largenumber of women did the economic-ancillary workor were employed in the sphere of services, i.e., of-fice-cleaners, watchwomen, accountants, typists,etc., as well as part-time employees and, in particu-lar, women raising small children.

According to the labour laws in force, the employer,when employing women and men, must observeequal selection criteria, create equal conditions forwork and grant equal privileges, as well as createequal opportunities to upgrade qualifications, ap-ply the same quality of labour assessment criteria,pay equal salaries for the same work or for the sameduties. However, sociologists, psychologists and realfacts in life testify otherwise. Men predominate inhighly paid institutions and places offering careerperspectives. The existing term of �glass ceiling� canbe applied not to the laws (they do not provide forany discrimination in the labour market), but tocertain provisions and stereotypes concerningwomen (women-housewives, women-raising chil-dren, women having no abilities to work, etc.) Menare invited to occupy managerial posts related tohigh individual responsibility and staff management.Professions, which require high qualification andwhich are related with quite autonomous activities

of individuals, are more often reserved for menrather than for women.

Requirements for future demographic criteria (gen-der) are grounded, firstly, on the prevailing under-standing of the role of men and women in the fam-ily. Maternity and family duties for women are theprincipal difficulties faced when seeking to main-tain the job or to look for another one. Meanwhile,the paternity and family, in most cases, are consid-ered the advantage of the candidate man and theprecondition of his reliability and interest in striv-ing for professional career.

Older women (over 35 years of age) more oftensuffer in cases when the number of employees atinstitutions and organisations is reduced. It is alsoconsiderably more difficult for them to find a job,since their age is the principal factor conditioningsuccess in trying to find a job (even family duties inthis case play a smaller role). Younger women quite

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65 SOCIAL REPORT

often are told, that they will not get a job, becausethey have (or may have) children.

Unequal treatment of the rights of men and womenis not so obvious within public authorities andorganisations. Meanwhile, the position of women

in private enterprises depends on the economic in-terests of the employers, also on the competitionbetween them, and rather often the laws are dis-obeyed.

With a view to ensuring equal opportunities in thelabour market, it is necessary to:

1.Co-ordinate all legal acts, so as to eliminate the legalbasis for the discrimination of one or another gender;

2.Prepare legal acts, regulating flexible forms of work(flexible working time, execution of small-scale works,work at home, etc);

4.3.5. Settling of Problems

3.More actively support small and medium-size busi-ness initiated by women. This form of employment ismore acceptable for women who need to combineworking time with the duties to their families;

4.Create legal conditions and prepare different train-ing and upgrading programmes for women (working,raising small children at home).

The European Social Charter requires providing forpossibilities to carry out negotiations and concludeagreements between the employer and the em-ployee, the employer and the association of employ-ees, and between the association of employers andassociations of employees. In Lithuania, the possi-bility of negotiations between the employer and theemployee is provided for in the law on CollectiveAgreements and Collective Covenants.

Right to Join OrganisationsTaking into account the ratified ILO conventions,the right to join organisations is guaranteed by theConstitution, the law on Collective Agreements andCollective Covenants, and the law on Trade Unions.Peculiarities related to other rights arising from thisright (such as prohibition to strike, to conclude col-lective agreements with civil servants, etc.) are regu-lated by other laws.

According to the Law on Trade Unions, membersof the trade union may be citizens of the Republicof Lithuania who work under the employment con-tract or on other grounds provided for by the laws.

Pursuant to the Law on Trade Unions, employersor the persons authorised thereof can not be mem-

4.4. SOCIAL PARTNERSHIP AND RELATED PROBLEMS

4.4.1. Development of Social Partnership

bers of trade unions functioning in an institution,enterprise or organisation. According to the Lawon Employment Contract, a person authorised bythe employer is an individual to whom the employerassigned part of his rights; i.e., any representativeof the administration should be deemed a personauthorised by the employer.

Activities of Lithuanian Trade Unions andRelated ProblemsToday in Lithuania there are 4 major centres oftrade unions: Union of Lithuanian Workers,Lithuanian Centre of Trade Unions, Unification ofTrade Unions and Lithuanian Labour Federation.The main purpose of these centres is to protectmembers of trade unions and other employees ofenterprises, where trade unions are functioning.However, trade unions in Lithuania cover only 6-10% of all employees; often trade unions of enter-prises do not represent the interests of all or at leastof majority of employees.

In many cases the law leaves certain issues to bedecided by the employer and the employees by wayof negotiations and collective agreements. The lawalso stipulates that in case a collective agreement isconcluded the employees may be represented only

4. LABOUR POLICY

66SOCIAL REPORT

by a trade union; thus, the employees of the enter-prises that have no trade unions are deprived ofthe right to negotiate, and often all the conditionsare set by the employer unilaterally. This is why theprotection of employees of the enterprises that haveno trade unions functioning has turned into one ofthe major problems. Long lasting debates betweenthe centres of trade unions regarding the establish-ment of representative councils of employees, theirstatus and rights have been fruitless so far. The dis-agreement and unwillingness to have such an insti-tution introduced is based on the refusal to pay con-tributions, as well as on restrictions of certain privi-leges and rights. While rejecting the above, tradeunions are fighting for the legitimisation of profes-sional negotiators who would represent employeesof small business enterprises on the industry levelthat have no trade unions or collective agreements.This, actually, means that the rights of trade unionswill be extended, so will the field of application ofcollective agreements. However, there is a dangerof forcing agreements and covenants concluded bytrade unions on the non-trade union members who

are not represented in the agreements, and this isbeneficial only to a part of employees. Thus, keep-ing to the rule that an agreement is binding only tothe parties of the agreement, it is necessary to abol-ish such a forcing of the trade unions will on otheremployees. The world-wide practice evidences thatin most European countries both employee groupsand trade unions are successfully functioning. More-over, the EU directives also provide for the repre-sentation of employees.

Employers� OrganisationsIn 1998, in Lithuania there were 3 employers�organisations, i.e., the Confederation of Industri-alists of Lithuania, the Confederation of LithuanianEntrepreneurs Employers, and the National Con-federation of Entrepreneurs. Until now no law hasbeen passed to regulate the status of employers,therefore, the employers find it more difficult toprotect their rights not only against trade unions,but also against the Government that is seeking toinfluence business, in particular small business, de-velopment policy.

The system of Tripartite Commissions is alreadyfunctioning in Lithuania. In 1991, a Tripartite Com-mission was established with the National LabourExchange; tripartite commissions were also estab-lished with regional labour exchanges (in cities andregions). In August 1994, the Lithuanian Commis-sion on Safety at Work was formed on the basis of atripartite partnership principle in order to co-ordi-nate the interests of employees, employers, and thestate, and to regulate relations regarding questionson job safety. In 1996, while shaping and implement-ing the labour market policy for the protection ofthe interests of the employees, employers, as wellas the public interests, the Employment Council wasestablished under the Ministry of Social Securityand Labour. With regard to the principles of socialpartnership, the Tripartite Commissions have beenestablished within the State Social Insurance FundBoard and within the Lithuanian Labour MarketTraining Service for the settlement of separate is-sues.

4.4.2. Tripartite Partnership

Activity of the Tripartite Council of theRepublic of LithuaniaIn order to achieve more efficient co-ordination ofinterests in the process of solving social, economicand labour problems, as well as in order to improveharmony in the society, on 5 May 1995 the Govern-ment of the Republic of Lithuania and organisationsof trade unions and employers executed a tripartitepartnership agreement. On the basis of the agree-ment, the Tripartite Council of the Republic ofLithuania was established. In 1998, the Secretariatof the Tripartite Council was established at the Min-istry of Social Security and Labour (hereinafter re-ferred to as �the Secretariat�). The main purpose ofthe Secretariat was to provide both organisationaland technical assistance to the Tripartite Council ofthe Republic of Lithuania in convening its sittings.

Analysis of the minutes of the sittings supplied bythe Secretariat shows that during 1995-1997 theTripartite Council of the Republic of Lithuania wasconsidering 29, and in 1998 as many as 30 issues

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67 SOCIAL REPORT

related to labour, social and economic situations inthe country. The lack of negotiation skills oftencauses arguments and long lasting discussions re-garding the solution of certain problems, thus manyissues were considered repeatedly and more thanone sitting of the Council was required. The mostfrequent subjects of considerations were draft legalacts, resolutions and reactions to the conductedactions; the Tripartite Council more than onceadopted solutions and proposals, which had impacton further considerations of the above documents.

Activity of the Lithuanian Commission ofSafety at WorkIn the process of the safety at work policy develop-ment and implementation, in 1994 the LithuanianCommission of Safety at Work was established toco-ordinate the interests of the employers, the em-ployees and the state, as well as to co-ordinate therelations between the three parties. The Commis-sion consists of 15 members (5 representatives ofthe employees, 5 representatives of the employersand 5 representatives of executive authorities). Itis chaired by a chairperson, who is elected on theprinciple of rotation out of the representatives ofthe parties every six months.

The Commission, together with the Ministry of So-cial Security and Labour takes part in the process ofdevelopment and implementation of the state safety

at work policy that meets the interests of the threeparties; it also submits proposals to the Minister ofSocial Security and Labour regarding draft laws andother normative legislation on the safety at work is-sues, amendments and supplements thereof; dis-cusses annual activity report provided by the StateLabour Inspectorate at the Ministry of Social Secu-rity and Labour; assesses enforcement of labour andsafety at work laws and normative legislation.

In 1998, the Commission held 9 sittings. During thefirst six months the sittings were chaired by a rep-resentative of trade unions, and during the last sixmonths - by a representative of the employers. Inits sittings, the Commission considered and gaveproposals regarding draft laws prepared in 1998. Italso considered the Annual Activity Report for 1997of the State Labour Inspectorate. The major partof the sittings� time was dedicated to the consider-ations of the new wording of the Law on Safety atWork, as well as the analysis of problems related tohygienic assessment of work places and investiga-tion of occupational diseases. The said issues werediscussed 3-4 times each, since the representativesof the trade unions and employers� organisationscould not reach a consensus. The problem is, thatsince the year of establishment (1994) the mem-bers of the Commission have almost not changed;all of the members of the Commission are men.

In order to expand the social partnership inLithuania, it is necessary to:1) expand the system of collective relations andstrengthen trade unions, employers� organisations, andincrease their involvement in negotiations;2) expand branch territorial agreements;3) encourage regional tripartite agreements;4) legitimise consequences of failure to meet obli-gations under collective agreements, liability of theemployers, as well as the necessity to consult on is-sues related to conclusion and implementation ofemployment contracts, disputes related thereto, etc.;5) legitimise the concept of social partners by defin-ing the rights and obligations of certain organisationsor unions thereof in the process of conducting nego-

4.4.3. Proposals

tiations in tripartite agreements and other;6) define the role of the Ministry of Social Securityand Labour in the social partnership by legitimisingthe possibility for a representative (e.g., labour inspec-tor) to negotiate on the level of an industry or an en-terprise in cases when trade unions are absent or whenagreements can not be reached;7) enlarge the circle of employee representatives (e.g.,to legitimise labour councils) in enterprises, and grantthem equal representative powers to those of the tradeunions;8) define the term of office of the members of tripar-tite commissions (e.g., two years); this will ensure thechange of commission members and participation ofmore competent people in the activities of commissions.

4. LABOUR POLICY

68SOCIAL REPORT

Chapter 5

From 1995 till the beginning of 1998 the main prob-lem the State Social Insurance Fund has been fac-ing is the problem of deficit. In the beginning of1998 the budget deficit made about 40 million LTL,although in 1997 the State Social Insurance Fundreceived 97.8% of its planned budget income. Itsmajor part (90.8%) was payments made by the in-sured for all types of insurance (pensions, benefits)and the remaining part was payments made by self-employed persons and other persons carrying pen-sion insurance.

Legal regulations providing for measures againstillegal employment and also strict sanctions againstthe insured for not making insurance payments aswell as good work of control services of the Boardof the State Social Insurance Fund contributed tothe collection of budget funds. The Law on SingleTime Exemption of the Insured from Paying Penal-ties and Fines which were Calculated but not Paidinto the Budget of the State Social Insurance Fund,

5. SOCIAL INSURANCE

The state social insurance comprises the principalportion of the social security system. It covers almostall residents of Lithuania: part of them pay social in-surance contributions, the others receive social insur-ance payments (pensions, benefits). The principal aimof the state social insurance system is to guaranteeincome for the insured, in the event of the loss of abil-ity to work due to illness, maternity, old age, disabil-ity, or in other cases provided for in the Law on theState Social Insurance.

The social insurance, likewise the entire social secu-rity, is based on the fundamental principles of theuniversality, solidarity of generations, continuity andfulfilment of undertaken obligations. There are noexceptional privileges and rights for separate social

groups or representatives of certain professions withinthe system of social insurance.

The state social insurance system functions accord-ing to the pay-as-you-go principle. It means, that so-cial insurance contributions are not collected as capi-tal, but are forthwith utilised to cover the social insur-ance payments.

The state social insurance is designated as an inde-pendent system. It means that the social insurancebudget is separated from the state budget. Separationof the social insurance budget from the state budgetmeans, that its funds shall be used only for benefitsprovided for under the Law on the State Social Insur-ance. Moreover, the tripartite system of the social in-surance administration has been created.

5.1. SITUATION WITH THE SOCIAL INSURANCE SYSTEM IN THE BEGINNING OF 1998

5.1.1 Problem of Balance of the State Social Insurance Fund Budget

effective until the beginning of 1998, allowed theinsured to pay their debts to the Budget of the StateInsurance Fund without penalties and fines andimproved collection of social insurance paymentsfrom small and medium enterprises.

Unfortunately, these measures have not solved theproblem of the budget deficit of the State SocialInsurance Fund.

In 1998, likewise in the previous years, the belowlisted factors had the greatest negative influenceon the balance of the State Social Insurance Fundbudget:m liabilities to those citizens of Lithuania, whoworked during soviet years and, after reaching the pen-sion age, became old-age pensioners. These people didnot pay social insurance contributions into the bud-get of the newly created state social insurance system,but receive pensions that are paid to them taking intoaccount their work record of the soviet years as wellas their wages and salaries;

69 SOCIAL REPORT

m upon the transition from the soviet to marketeconomy, reduction of production volumes, appear-ance of unemployment, the number of individuals in-sured by the state social insurance was reduced. Thecontributions of the insured individuals to the budgetof the State Social Insurance Fund was also reduced;

m concealment of contributions, when social insur-ance contributions are paid only from the minimum

monthly wages, and the other portion of the salary ispaid illegally. Seeking to avoid payment of social in-surance contributions illegal employees are recruited,i.e., without legalising the labour relations;

m the number of pensioners, and, in particular, ofthe disabled, is increasing due to the growing pensionage.

In 1991, a decision to assume the obligations of thesoviet social care system to the existing and futurepensioners was adopted. It was a very importantdecision with long term consequences. It actuallymeans that the length of time worked and partiallythe earnings accumulated during the soviet periodare recognized and they entitle a person to a socialinsurance pension. However, it was only in 1991 thata social insurance system based on the pay as yougo principle was created and payments started com-

5.1.2. Change in the Number of Working Age Populationand Individuals Covered by State Social Insurance

ing in. Only these contributions should entitle tosocial benefits.

An eight-year period of independence is too shortto allow for conclusions about long-term demo-graphic processes. Nevertheless, an analysis of themain demographic indicators of the past period re-veals the negative effects upon the development ofthe social security system. Over the last years thebirth rate has decreased, the mortality rate has in-

Chart 5.1.2-1The data of the Department of Statistics under the Government of the Republic ofLithuania and State Social Insurance Fund Board

Working age people and persons covered by State Social Insurance(1991-1998 in thousands of people)

Thousands of people

5. SOCIAL INSURANCE

Years

Working age people Persons covered by StateSocial Insurance system

70SOCIAL REPORT

In the beginning of 1998 the number of people ofpension age accounted for 20.1 per cent of the totalLithuanian population of 3.7 million. The major partof pensioners were women.

According to the current state social pension insur-ance system there are three types of pensions: oldage pension, disability pension and survivors� andorphans� pension.

The state social insurance pension consists of twoparts: a base pension and a supplementary pension.At present the size of both portions is almost thesame. The supplementary portion depends on thewages and length of work of the insured and pro-vides a possibility for greater differentiation of pen-sions. This portion makes almost half of the totalpension size.

Old age pensions State social insurance old age pensions are awardedand paid to persons of pension age (in 1998 pen-sion age for men was 60 years and eight monthsand for women - 56 years and four months) whohave a minimum social insurance record necessaryfor eligibility for old age pension (15 years). Theold age pension consists of two parts: a base pen-sion and a supplementary pension. The base pen-sion is equal to the base state social insurance pen-sion if the person has the mandatory social insur-

creased and so did the relationship between emi-gration and immigration.

Due to the above reasons the population of thecountry has decreased by 44.5 thousand or 1.2%since 1992 and in the beginning of 1998 it was 3 702.4thousand. These changes have influenced the pro-portion of working age people to the number ofpeople covered by state social insurance. Chart5.1.2-1 shows the change in the number of workingage people by 5.7 thousand from 2 127.6 thousandin 1991 to 2 121.9 thousand in the beginning of 1998.Meanwhile, the state social insurance system wasvery badly affected by the reduction of the numberof the insured by 418.8 thousand or by 23.8% from1764.3 thousand in 1991 to 1345.5 thousand in 1998.

It must be noted, that in 1991 persons covered bystate social insurance made up almost 83% of thetotal working age population, and in 1998 � only63.4%. Although this share of the insured in thetotal number of the working age population hasdecreased, the trend of increase in the number ofthe insured has been observed since 1994. Thismeans that working age people are returning to thelabour market gradually.

In 1998, some self-employed persons (patent hold-ers, members of general and limited partnerships)were included into the state social insurance sys-tem. This also influenced a slight increase in thenumber of the individuals covered by state socialinsurance.

5.1.3. The System of Social Insurance Pensions

ance record entitling to a state social insurance pen-sion. The base pension equals 110% of the MSLand in the beginning of 1998 it was 132 LTL. Thesupplementary pension is calculated for each pen-sioner individually according to his/her length oftime worked and insured person�s income ratio. Theincome ratio of an insured person and the length oftime worked reflect the individual input of the per-son into the budget of the State Social InsuranceFund and determine the amount of the future pen-sion.

In 1998, there were 648  thousand old age pension-ers or 63 per cent of the total number of pensionersin Lithuania (105.5 thousand out of them wereemployed and 542.5 thousand were unemployed).That year the average old age pension was 286.15LTL (277.92 LTL for a working pensioner and287.82 LTL for a non-working pensioner). Sincepensions are relatively small, not all persons stopworking when they reach pension age. Every sixthold age pensioner has a job.

In 1992, the average old age pension equalled 44%of the average wages of the insured. In 1993, thisindicator decreased to 34%. The proportion of theamount of the old age pension to the average earn-ings of the insured remained almost stable until 1998and it equaled 35 per cent.

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71 SOCIAL REPORT

Disability pensionsDisability pensions are awarded and paid to dis-ability group I, group II and group III individualswho have at least a minimum state social pensioninsurance record necessary in order to be eligiblefor a disability pension (minimum insurance recordis five years). Disability pension consists of the sameparts as the old age pension - the base pension andthe supplementary pension. In case of persons whohave the minimum state social insurance recordnecessary for eligibility for a disability pension, thebase portion of group I disability pension is equalto 1.5 of the base pension. The base portion of groupII disability pension is equal to one base pension.The supplementary portion of the disability pen-sion is calculated in the same way as the supple-mentary old age pension. The state social insurancegroup III disability pension is calculated in the sameway as group II disability pension and it is reducedby 50 per cent.

In 1998 there were 158.8 thousand disability pen-sioners who accounted for 15 per cent of the totalnumber of pensioners in Lithuania (27.5 out of themwere employed and 131.3 thousand were unem-

ployed). That year the average disability pensionwas 260.91 LTL (218.27 for a working pensionerand 269.92 LTL for a non-working pensioner). Al-most every sixth pensioner receiving a disabilitypension is employed.

Survivors� and orphans� pensionThe purpose of the survivors� and orphans� pensionsis to ensure the continuity of the obligation of onespouse to support the other who is disabled or tosupport his/her child.

State social insurance survivor�s and orphans� pen-sions are paid on the basis of the state social insur-ance pension calculated for or received by the de-ceased spouse. Since state social insurance pensionsare not inherited and the person was paying insur-ance contributions for a certain period of time, somepart of his/her input into the budget of the StateSocial Insurance Fund is awarded and paid to his/her spouse and under-age children after his/herdeath. Three categories of state social insurancesurvivors� pensions are paid with respect to the dateof death of the spouse: individuals who were wid-owed before 1 January 1995 receive 25% of the state

Chart 5.1.3-2

The ratio of the number of covered by State Social Insurance and the number ofsocial insurance pensioners 1991- 1998 year (people)

The data of State Social Insurance Fund Board

5. SOCIAL INSURANCE

Year

72SOCIAL REPORT

social insurance base pension; widows(ers) as of 1January 1995 to 1 July 1997 receive 50% of the de-ceased spouse�s state social insurance pension, andthose who were widowed after 1 July 1997 receive20% of the deceased spouse�s pension.

In 1998 there were 173 thousand people receivingsurvivors� and orphans� pensions, which is 17 percent of the total number of pensioners. That yearthe average amount of survivors� and orphans� pen-sion was 58.10 LTL.

The total number of recipients of state social insur-ance pensions is increasing annually. It has increasedby 18 per cent since 1992 and in the beginning of 1998was 1 million and 22 thousand. Although since 1992the newly adopted Law on Pensions according to whichthe pension age was extended has reduced the num-ber of recipients of old age pensions by 5.7 per cent or39.5 thousand in 1998, the number of recipients of

disability pensions has increased during the same pe-riod by 24.1 per cent or 29.6 thousand.

Due to the growing number of social insurance pen-sioners, the total number of insured persons is re-ducing. Chart 5.1.3-2 shows that the number of in-sured persons supporting one pensioner is con-stantly decreasing. The disproportion between theincreasing number of recipients of pensions anddecreasing number of the insured is responsible forthe fact that in 1991 one pensioner was supportedby 2.10 working persons, in 1997 - by 1.41 workingpersons and at the end of 1998 - only by 1.38 work-ing persons. Therefore, it can be noted, that due tothe relative increase in the number of pensionersand decrease in the number of the insured it be-comes more and more complicated to collect socialinsurance contributions for the payment of pensionsto the existing pensioners. Table (A.5.1-3)

In 1998, when the social insurance policy was de-signed, the main emphasis was put on expandingthe number of categories of the insured, determin-ing the ceiling of earnings according to which state

5.2. CHANGES IN THE LEGAL REGULATIONOF THE SOCIAL INSURANCE POLICY IN 1998

social insurance contributions are calculated, de-fining additional social guarantees and improvingthe collection of social insurance contributions.

In 1998, a new phase of the pension insurance wasdeveloped in Lithuania. Its legal basis will be theLaw on Pension Funds which will expand the exist-ing state social insurance system and enable it toprovide better pensions in the future.

Amendments to the existing legal regulations havebeen made with a view to creating favorable con-ditions for the establishment and existence of Pen-sion Funds, and encourage employers and the in-sured to participate in the activities of these funds.To this end, from the beginning of 1999 it has beenprovided for that state social insurance contribu-tions will not be calculated from the amount ofearnings that exceed the average monthly earn-ings of the month before the last month approvedby the Department of Statistics by 3.5 times. As ofthe year 2000 mandatory insurance contributions

5.2.1. Amendment to the Law on the State Social Insurance

will not have to be paid from the amount exceed-ing the average earnings three times. We expecteda new Law on Pension Funds to be adopted to-gether with these amendments. We thought thatfree funds would be used to promote the estab-lishment of Pension Funds. That is why limitationof the contributions payable into the budget of theState Insurance Fund was introduced and had tobe gradually implemented during a period of twoyears. Unfortunately, the Law on Pension Fundswas not adopted and the planned losses of the StateInsurance Fund budget during 1999 due to limita-tion of the contributions equal approximately 130million LTL.

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In order to balance the budget of the State SocialInsurance Fund in 1998 suggestions were made tofollow the experience of Western countries and re-distribute the tariff of social insurance contributionsby increasing the part of the contribution paid bythe insured person and reducing social insurancecontributions made by the insurer.

In order to balance the budget of the State Social In-surance Fund the Seimas and the Government shouldnot adopt resolutions to increase state social insur-ance benefits, and if they do, they should providesources from which this expenditure could be recov-ered. Now funds for the insurance of mothers raisingchildren under the age of 3 and for the insurance ofthe clergy are provided for in the state budget.

Collection of state social insurance contributionshas the greatest impact on the balance of the statesocial insurance budget. In order to ensure the pay-ment of social insurance contributions and preventuninsured persons from getting social insurancebenefits, attempts are made to improve the singleinformation system of the State Social InsuranceFund and to create a single data base with the StateTax Inspectorate, the State Labor Exchange and theState Patient Fund.

In 1998 attempts were made to improve the collec-tion of state social insurance contributions. Appro-priate amendments to the existing laws and Gov-ernment resolutions were prepared and measuresimproving the work of the Board of the State So-cial Insurance were introduced. Personal responsi-bility of heads of territorial branch offices for the

5.2.2. The Balance of the Budget of the State Social Insurance Fund

collection of funds into the budget of the State So-cial Insurance Fund was expanded. Preparations arebeing made to shift to producing monthly data andinformation on contributions. Territorial social in-surance councils which should influence the qualityof work of the territorial branch offices and betterinform the population are being developed. A com-parative analysis of the data bases of the State TaxInspectorate and the Board of the State Social In-surance Fund was initiated in order to better iden-tify tax payers, improve the interaction of the StateTax Inspectorate and the Board of the State SocialInsurance Fund in administrating the collection oftaxes and social insurance contributions.

These measures enabled us to improve the collec-tion of state social insurance contributions regard-less of the financial problems which the State So-cial Insurance Fund encountered at the end of theyear due to the crisis in Russia.

In 1998 the actual income of the budget of the StateSocial Insurance Fund was 4 159 362 thousand LTLwhich was 74 368 thousand LTL more than planned.The budget income of the State Social InsuranceFund increased by 14 per cent in comparison to1997. However, the actual expenditure of the StateSocial Insurance Fund was 4 164 023 thousand LTLwhich exceeded the planned expenditure by 131 343thousand LTL. In 1998 the expenditure of the StateSocial Insurance Fund budget increased by 15 percent in comparison to the expenditure of 1997. Thatis why the budget of the State Social Insurance Fundwas not balanced.

In order to ensure mandatory social insurance guar-antees to people who were not covered by the socialinsurance system and to increase relatively small so-cial insurance pensions, proposals were made in 1998to include self-employed people into the social in-surance system. It was decided to insure patent hold-ers, members of general and limited partnerships,users of personal farms and other persons under

5.2.3. Resolution of the Government of the Republic of Lithuaniaon the Social Insurance of the Self-employed

mandatory social insurance for a basic pension.

Other private persons engaged in economic activi-ties (artists, freelancing journalists, consultants, etc.)will not be insured under mandatory state socialinsurance in the meanwhile. It was decided not toinsure them on a mandatory basis, but they havethe right to voluntary insurance contributions.

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74SOCIAL REPORT

In order to provide social guarantees to persons whohave not been covered by the mandatory state so-cial insurance since 1995 and trying to increase thebirth rate the following steps were taken in 1998:

- proposals and draft regulations regarding pensioninsurance of nonworking mothers (fathers) raisingchildren up to 3 years using state funds were sub-mitted;

- amendments to legal regulations enforcing theinsurance of the clergy of religious communities,societies and centers for a base pension with thestate funds were prepared.

This proposal was approved. The prepared draft onamendments to the law came into force as of the 1st

of January 1999, and social insurance contributionsare payable from the 1st of October 1999.

Adoption of such amendment was conditioned bythe amendment to the Law on the State Social In-surance Pensions which came into force in 1996 andprovided only for the insurance of mothers (fathers)who had worked before and were on child care leaveraising their children from the age of 1 to the age of3. In 1998, 17 thousand mothers (fathers) receiv-ing social insurance child-care allowances had thestate social insurance coverage or were insured byusing state funds as mothers (fathers) who are onleave for raising children up to 3 years.

The Law on the State Social Insurance Pensionssays that the work record of all clergymen of thetraditional creeds and religious communities andsocieties of Lithuania until 1995 is treated as thelength of time worked acquired, working as a self-employed person but it has not solved the problemof further social insurance of clergymen of all tra-ditional and other religious communities and soci-eties recognised by the state.

Having insured all mothers (fathers) raising chil-dren up to 3 years of age and clergymen of allrecognised traditional religious communities andsocieties the state will have to transfer additional50 million LTL into the State Social Insurance Fundevery year starting from the 1st of January 2000.

5.2.4. Amendments to the Law on the State Social Insurance Pensions

On the 1st of January 1999, an amendment to theLaw on the State Social Insurance Pensions accord-ing to which victims (political prisoners, exiles, par-ticipants of World War II, individuals who becamedisabled during the aggression on 11-13 January1991, participants of the resistance and oppositionagainst soviet occupation) started receiving indexednot recalculated old age and disability social insur-ance pensions came into force.

Since the enforcement of the new Pension Law onthe 1st of January 1995 the old age and disabilitystate social insurance pensions paid to some vic-tims were reduced by deducting the period of theirimprisonment or exile which used to be multipliedby three from their work record. This provision wasincluded into the law following the opinion that theamount of the state social insurance pension hadto be related only to the person�s work record enti-tling to the social insurance benefits and the amountof personal earnings from which the state social in-surance contributions were deducted. Victimsstarted receiving victims� state pensions from thestate budget according to the Law on the State Pen-sions. Evidently, those victims whose social insur-ance pension decreased were not satisfied. There-fore, after the law was amended, the rule of notreducing state social insurance pensions of victimswas applied to victims from the 1st of January 1999.The difference for the period from the 1st of Janu-ary 1995 until the 1st of January 1999 will not bepaid out.

From the 1st of January 1999 the provision statingthat the time of exile is included into the length oftime worked entitling to the social insurance ben-efits only as of the age of 14 has been nullified.

Amendment to the Law on State Social InsurancePensions has established that the right to receivethe survivors� pension shall be enjoyed by severalguardians (in cases when several different personstake care of several orphans), without exceeding theoverall amount of the survivors� pension � 20 percent of the state social insurance group II disabilitypension. In order to maintain the proportions ofthe amount of the survivors� and orphans� pensions,

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75 SOCIAL REPORT

the orphans� pensions are allotted in the amount of25 per cent of the state social insurance group IIdisability pension, if one child has such a right. Ifsuch a right is granted to more children, each ofthem is allotted 25 per cent, but not exceeding 80per cent of the overall estimated pension amount.

The supplement in the amount of 50 per cent ofthe state social insurance base pension, previouslypaid to the disabled of group I for their nursing,now is included into the base portion of the group Idisability pension. The following amounts of thebase portion of the pension have been establishedby the amendments to the law: in the event that aperson has a minimum social insurance record, thebase portion of the group I disability pension makes

up 1.5 of the base pension, the base portion of thegroup II disability pension equals one base pension.If a person has a shorter social insurance recordthan required, the base portion of his disability pen-sion is calculated by multiplying the amount of the1.5 base pension for the group I disabled and theamount of one pension for the group II disabled bythe existing social insurance record and dividing itby the minimum social insurance record.

This amendment solved the problem which existedby 1 January 1999 concerning the payment of statesocial insurance disability pensions to the workinggroup I disabled. Before the adoption of this amend-ment the supplement for nursing was paid only tothe non-working disabled of group I.

Difficulties related to the collection of state socialinsurance contributions remained until 1998. Thekey reason for that is slow economic development.Among other reasons were illegal employment andavoidance to pay social insurance contributions.With a view to preventing the expansion of illegalemployment and avoiding of payment of social in-surance contributions, the Amendment to the Lawon State Social Insurance was passed, enabling theofficials of the State Social Insurance Fund Boardto request from the insurer explanations concern-ing the payment of state social insurance contribu-tions and benefits, as well as explanations of allpersons within the territory of the insurer, as to theregistration of labour relations between them andthe insurer. Also, the State Social Insurance FundBoard undertook organisational measures. Institu-

5.3. THE MOST URGENT PROBLEMS OF STATE SOCIAL INSURANCE IN 1998

5.3.1. Difficulties in Collecting Contributions

tions controlling the collection of contributions havebeen reorganised. Regional co-ordinators of thecontributions control division are currently in chargeof this task. Application of new methods of con-trolling the problem insurers was commenced: cross-examinations (counter examinations) and surveys,as well as the analysis of cash flows in the enter-prise, upon suspicion that the insurer carries outmonetary operations in cash (via the cashier�s of-fice). The essence of the cross-examination (counterexamination) and survey method comprises the fact,that the inspection of the economic entity is com-menced not in its enterprise, but at the consumerof his services. Thus, the legal status of individualsemployed in enterprises engaged in supplies is ex-amined.

Transfer of the financing of part of health care ex-penses from the State Social Insurance Fund to theHealth Insurance Fund enabled a more expedientuse of the State Social Insurance Fund money. How-ever, there was a need to revise legal acts regulat-

5.3.2. Necessity to Update Legal Acts Regulatingthe State Social Insurance System

ing the state social insurance system, so as to dis-tinguish between the types of state social insurancein individual regulations.

In solving the problem of ensuring the social insur-ance guarantees, related to the ageing of society,

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76SOCIAL REPORT

the possibility of more rapid increase in raising theage of eligibility for the old age pension has beenconsidered in 1998. Taking into account demo-graphic changes, in future the pension age shouldbe raised to 65 years for both men and women.However, meanwhile the Seimas of the Republic of

Lithuania follows the provision not to speed up thepension age, since this must be solved simulta-neously with the employment guarantees and so-cial support for persons who can not work or re-ceive the unemployment benefit.

By the end of 1998, as many as 73 586 farmers wereregistered as the insurers. Of which around 49 thou-sand of the farmers (67 per cent) and their adultfamily members working on the farm did not haveto pay state social insurance contributions, sincethey were pensioners or worked according to em-ployment contracts. The state social insurance con-tributions were paid only by 1662 farmers in 1998.Other farmers (around 24.5 thousand) exercised theright granted by the State Social Insurance FundCouncil to postpone the payment of contributionsuntil 31 December 1998. Throughout 1995 to 1998,the debt of farmers to the budget of the State So-cial Insurance Fund accounted for around 56 mil-lion LTL of the defaulted social insurance contri-

5.3.3. Social Insurance of Farmers

butions. During the same period, the debt of thefarmers in terms of state social insurance contribu-tions calculated per capita made up the average of2 770 LTL. The practice has showed that the post-ponement of contributions has not solved this prob-lem, but even more induced the Lithuanian farm-ers to avoid the mandatory social insurance. Cur-rently, the farmer is to pay for himself and for hisadult family members employed on the farm con-tributions in the amount of 50 per cent of the statesocial insurance base pension. However, the prob-lem of state social insurance of other individualsliving in the country, who are not farmers, still re-mains unsolved. This problem is planned to besolved in the future.

Pension Funds are not an innovation designed inLithuania. Together with the state pensions, West-ern countries have long had private pension plans,offered both by insurance companies and by spe-cial Pension Funds. Having taken on their own eco-nomic restructuring, Central and Eastern Europeancountries, also undertook the task of changing theprovision of pensions by handing increasingly moreresponsibility over to private insurance. Especiallysince state social insurance pensions have greatlydiminished and the social insurance budget is in astate of constant deficit � both because of economicdifficulties resulting from the transition period, andbecause of the ageing of the society (the number orworking age people is decreasing while the numberof pensioners is increasing). The reforms became anecessity. A possible solution to the problems thathave accumulated is the development of a pensionsystem to include both state and private accumula-tive pension insurance plans. The practice of West-

5.3.4. Forming the Legal Framework of the Pension Funds

ern countries shows that private Pension Funds donot replace, but rather supplement mandatory so-cial insurance.

Therefore, preparations are underway in Lithuaniato introduce a Law on Pension Funds. The employ-ers are waiting for this law since they will be able topay supplementary pensions to their employees andthis way maintain the competitive labour force andcreate a favourable image of the enterprise; theemployees are also waiting for this law since theyare expecting to improve their old age pension cov-erage; the capital market experts are waiting forthis law since Pension Funds will bring the accumu-lated large means to the market.

The governmental programme provides for the pro-motion of the establishment of the cumulative Pen-sion Funds already as of 1998. Even two drafts onthis law have been worked out � one of them waspresented by the Industrialists Confederation, an-

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other one � by the Lithuanian Free Market Insti-tute. Upon the instruction of the Ministry of SocialSecurity and Labour, which supervised the prepa-ration of the law, the joint Draft Law on PensionFunds was prepared on the basis of these two drafts.

Considerations take place in Lithuania concerningthe fact that Pension Funds should be non-profitorganisations. However, according to the adoptedlegal concept of non-profit organisations, such alegal status does not suit the pension fund. Non-profit organisations may receive profit, but they maynot distribute it (also to its members), they may onlyput it aside for the future development of theorganisation. The Lithuanian legal system also doesnot have the concept of trust (right of trust), whilstthe application of this concept only to PensionFunds, in the opinion of experts, would be ratherproblematic. The tradition of trust in other coun-tries developed during the entire century, its legalframework was created step by step, certain per-ception among people was also formed, therefore,its direct take-over in the Law on Pension Fundswould be almost impossible.

In Lithuania or in other post-communist countries,it would also be impossible to apply the way of pen-sion financing used in German-speaking countries(the system of balance-sheet entries): this might berather dangerous, since the economy is too unstable.It would be very risky with regard to pensions.

Since Lithuania is �going to Europe� while prepar-ing new laws or establishing new institutions, co-ordination of compatibility of our regulations withthe European Union requirements is underway.However, the European Union documents do notcontain the definition of the concept of PensionFunds.

Meanwhile, there are no special directives of theEuropean Union concerning Pension Funds. Onlyas of 1990 the first attempts have been made tosingle them out from other financial institutions.In 1991, the Directive on Pension Funds was pre-pared, but not adopted. In 1995, the directive guar-anteeing the rights of migrating workers (realisingthe right of movement of the labour force) to supple-mentary pensions was prepared. This directive wasnot enacted either.

Currently, the following requirements are estab-lished for Pension Funds in the European Uniondocuments: an advance permit for their activities isrequired, the funds of pension fund must be en-tirely separate from the funds of the subsidisingorganisation, Pension Funds must invest into ob-servance of the �prudent man� rule. The pensionfund is an institution different from the institutionof the statutory social security, and is establishedindependently from any subsidising organisation,seeking to provide supplementary pension paymentsand creating reserves for investments.

Therefore, on the basis of the experience of othercountries and developing new tendencies, the pro-visions of the Law on Pension Funds have been es-tablished in Lithuania, too.

When functioning, Pension Funds implement twokey goals: social and economic. The social purposeof the establishment of Pension Funds is to supple-ment the existing system of social insurance pen-sions. The social insurance guarantees minimumsocial security in the old age (the pension makes up35-40 per cent of the average wages). Pension Fundswill form the second stage in the pension system,which in perspective will supplement the first oneup to 60-70 per cent of the average wages. The eco-nomic purpose of the Pension Funds is to speed upthe economic development and thus increase re-sources for social security.

Voluntary participation in Pension Funds is planned.The principle of the financing of private pensionsis the accumulation of contributions on personalaccounts and increasing them by investing in capi-tal market. Contributions paid by a fund memberor by his employer, are invested in purchase of se-curities and real estate, the growth of price whereof,as well as interest and dividends increase the valueof accumulated assets. These assets are accountedfor by personal accounts of pension fund members,and are looked upon as their property and are notsubject to any distribution. The period of the accu-mulation of assets continues until the Pension Fundmember acquires the right to receive pension ben-efits. Therefore, it is important that Pension Fundcontribution investments are reliable and profitable.Thus, the key economic assumption for the appear-

5. SOCIAL INSURANCE

78SOCIAL REPORT

ance of Pension Funds is a strong and well func-tioning securities market. In the context of capitalmarket condition, the situation in Lithuania is rela-tively better than in other post-communist coun-tries, since both its legal and institutional arrange-ment is better. Certainly, the newly established Pen-sion Funds are not large investors, therefore, theirinfluence on the capital market is inconsiderable �the insurance companies and banks are by far big-ger participants of the market. However, PensionFunds will be continually growing, they will developfinancially and be long lasting. Therefore, they willprecondition the development of capital market.Participation in Pension Funds is voluntary.

It is also important to establish the optimum ratioof pension contributions to Pension Funds to con-tributions to the State Social Insurance Fund.

Unfavourable ratio of pensioners and workingpeople (1:1.38) meanwhile prevents strengtheningthe development of Pension Funds on the accountof the reduction of the social insurance contribu-tions� rate. Accumulation of the funds in privatefuture pensioners� accounts must be commencedforthwith, so as to make it possible to minimise theburden of social insurance to economic entities.However, with a view of a more effective two-stagesystem in the future, it is expedient to establish at

least minimum concessions in payment of state so-cial insurance taxes.

With a view to promoting the establishment of Pen-sion Funds, the following tax concessions may beapplied:m no tax is levied on contributions to Pension Funds(in the case of natural persons, their taxable incomewill be reduced by this amount, and enterprises willdeduct this amount from the taxable profit or income).Certainly, the limit of such non-taxable contributionsmust be established;m no income tax is levied on the investment incomeof the pension fund;m benefits from the pension fund received by a pen-sion fund member shall be attributed to income andshall be subject to taxation with the income tax ofnatural persons according to the general procedure.

Within the system of Pension Funds, similarly as inthe state social insurance system, the dependencyof generations remains, only if it expresses itself notvia the labour market, where social contributionsare paid by the working generation and are usedfor the financing of pensions, but through the capi-tal market. If the capital is out of demand, then thefunds accumulated in Pension Funds will not en-sure an adequate standard of living for future pen-sioners.

In order to improve the collection of contributionsinto the State Social Insurance budget, it might benecessary to impose sanctions for the delayed pay-ment of contributions more flexibly, in observanceof the particular situation. It would be worth pre-paring an amendment to the Law on the State So-cial Insurance, providing for the right of the StateSocial Insurance Fund Council not only to postpone,but also, after having assessed the reasons of in-debtedness and other circumstances, to exempt en-terprises from the calculated late charges. Such aprovision would create a real possibility for themajority of the insurers to settle with the budget ofthe state social insurance fund. Such insurers (en-

5.4. PROPOSED WAYS FOR THE SOLUTION OF SOCIAL INSURANCE PROBLEMS

5.4.1. Improvement of the Collection of Contributions

terprises) would avoid the institution of bankruptcyproceedings, moreover, the working places wouldbe preserved.

It would be necessary to prepare the draft amend-ment to the Law on the State Social Insurance pro-viding for a public or private company, seeking toavoid the institution of bankruptcy proceedings, theright to propose to the State Social Insurance FundBoard its assets or shares, as well as the rights ofthe Board to accept assets or shares and to realisethem. In such a way the preconditions would be cre-ated to restore the solvency of enterprises in bank-ruptcy, to preserve working places, and recover baddebts. This is particularly urgent for enterprises

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which have faced temporary economic problemsand problems caused by the economic crisis in Rus-sia.

The controls of the formation, implementation andaccountability of the state social insurance fundbudget, in order to ensure their compliance withthe European standards, should be further strength-ened.

It would also be necessary to increase the interestsof contribution payers to insure themselves. Seek-ing to ensure the largest possible voluntary and jointparticipation of tax and contribution payers in the

financing of the social insurance schemes, all lowerpricing possibilities should be analysed and em-ployed, also including the reduction of administra-tive expenditure.

With a view to preventing illegal employment, thelaw on the State Social Insurance should be supple-mented with a provision entitling the state socialinsurance officials to require, from the insurer andindividuals within his territory, explanations as tothe presence of legal labour relations between them,and payment of social insurance contributions andbenefits.

Until now the Law on the State Social Insurancepassed in 1991 is in force. This law was preparedand enacted in the transitional period from planeconomy to market economy. During eight years ofthis law in force, it was amended several times, tak-ing into account the changes in the economy. It be-came difficult to act in observance of this law. There-fore, the Law on Social Insurance is being restruc-tured, providing therein the key grounds for thestate social insurance system: types of social insur-ance, categories of persons insured by social insur-ance, principles of system financing and manage-ment, as well as the rights, duties, and responsibil-ity of the subjects of the system. The laws on pen-sion insurance, sickness and maternity insurance,unemployment insurance, health insurance andwork accident insurance should be revised and madesystematic. The purpose of this work is to make thesystem more transparent, clear and reasonable, andbetter adapted to market conditions.

The base of this package should comprise the DraftLaw on the Principles of Social Security, which wouldamend the Law on Guaranteed Income and Law onthe Principles of the State Social Protection System.This Draft Law should revise the principles of thesocial security system, formulate social rights andduties of individuals; the financing and administra-tion of social security should be revised and the prob-lems of indexing the social benefits settled.

Other laws of the package should be no less impor-tant. A provision concerning the establishment of

5.4.2. Updating of Legal Acts Regulating the System of the State Social Insurance

the new institution - an appeal commission � shouldalso be made, which would settle the disputes be-fore the court proceedings, arising from the legalrelations of social insurance. Decisions of the ap-peal commission should be binding on the officialsof social insurance divisions. It is expected thatlegalising such institution would strengthen the con-fidence in social insurance, as well as improve thequality and availability of guarantees provided bysocial insurance.

It is necessary to revise the allocation and paymentof disability and maternity benefits. The main in-novation in such a draft law should be the introduc-tion of a qualifying (waiting) period. The need forthis period is conditioned by the fact that abusesoften occur in cases when immediately after em-ployment attempts are made in order to receivedisability or maternity benefits.

A new Law on Monetary Support should co-ordi-nate and combine different payments of monetarysupport to families, payable upon examining theincome of beneficiaries.

The Law on Unemployment Insurance should regu-late unemployment benefits, distinguishing theirfinancing from active labour market instruments.

The Law on Work Accident Insurance should in-clude the newly regulated compensation of dam-age, which, according to the principle of solidarity,would be guaranteed by employers via the mecha-nism of insurance.

5. SOCIAL INSURANCE

80SOCIAL REPORT

It would also be necessary to work out the Law onState Social Insurance Contribution Rate Modifi-cation, under which certain social insurance contri-bution proportions would be established for sepa-rate types of insurance.

The new package of law amendments should beprepared and submitted to the Seimas in 1999.These laws, along with the Law on Pension Fundsshould create the background for the reform of theLithuanian social insurance system.

Particular attention should be paid to the unifica-tion of the legislation in the sphere of social insur-ance with the EU legislation, as well as to the de-velopment of legal framework of social insurance(Pension Funds, supplementary pension insuranceto the employees of different professions, accidentinsurance, unemployment insurance, mandatorycivil insurance) and supervisory system.

Harmonisation of legal systems of state social in-surance pensions and state pensions should be com-menced. Compatibility of the state social insurancebenefits with the state aid should be considered.

The work in the sphere of public relations shouldbe improved, to better inform people of the guar-antees provided by the social insurance, as well asof the principles of organising and functioning ofthe social insurance system.

Systematising the social guarantees while adjustingthe Law on the Principles of the State Social Pro-tection System, the Law on the Guaranteed Income,and other laws, reduction of the number of groupsof individuals enjoying exceptional social guaran-tees (increase of the universality of the system),improvement of the principal regulations for theindexing of income will improve the social guaran-tees provided to individuals.

A new draft law should be passed, containing morefavourable conditions for the farmers to insurethemselves with state social insurance, having re-gard to their economic capacity. The draft lawshould contain a proposal to establish that economi-cally weaker farmers are allowed to pay a part ofthe amount of the contribution. In addition, theremaining part of the state social insurance contri-bution of economically weak farmers should be cov-

5.4.3. Improvement of the Organisation of the Social Insuranceof the Self-employed Persons

ered from the funds of the state budget.

It would also be necessary to provide for the man-datory social insurance of certain categories of self-employed persons for the whole amount of the statesocial insurance pension. Such a decision should bemade only after having assessed the capacity of self-employed persons to insure themselves with thestate social insurance.

It would be necessary to separate the state socialinsurance base pension from the indicator of theminimum subsistence level. To index the base pen-sion, in observance of the standing of the State So-cial Insurance Fund budget, something is missingas well as of the development of price index.

In calculating the average monthly insurable income,account should be taken not only of the income, outof which the state social insurance pension contribu-tions have been paid into the State Social InsuranceFund budget, but also the ratio of those insured bythe state social pension insurance to the recipients

5.4.4. Improvement of the Pension System

of the state social insurance pensions. Moreover, incalculating the average monthly insurable income, itshould be noted, that part of the insured are not full-time workers and make contributions only from apart of the minimum monthly wage.

It would be necessary to legalise a more rapid in-crease in the age of eligibility for the old age pen-sion and also to establish a higher ceiling for theage entitling to the right to receive the old age pen-sion.

The possibility to change the procedure of payment

Chapter 5

81 SOCIAL REPORT

of state social insurance old age pensions to work-ing pensioners should be considered. The possibil-ity of gradual reduction of the minimum insurableincome limit should also be considered (1 minimummonthly wage instead of 1.5 minimum monthly wagefor working individuals). In the future, the proce-dure for payment of pensions should undergo keychanges, since social insurance is interrelated withthe �insurance event�. In this case � with the dis-ability to work and earn money. When a person ofpension age is not able to work, he/she is paid thesocial insurance pension. When a person is work-ing, there is no �insurance event�, and the pensionshould not be paid. One more provision enacted inthe Law on the State Social Insurance Pensions willalso be advantageous for a working pensioner, thatis, in the event a person at a particular time ac-quires the right to receive the state social insuranceold age pension, and has the necessary state socialinsurance record, but does not receive a pensionand applies for it only later, then the pension forhim will be calculated according to the data avail-able at the time of application and will be increasedby 4 per cent of the estimated amount for each fullyear which passed from the day he/she was entitledto receive the old age pension while having the nec-essary social insurance record. Upon the request ofa person who receives the old age pension and hasthe minimum state social insurance record entitlingto the old age pension, the payment of pension maybe postponed. In that case, his/her pension will becalculated again according to the data available atthe time of application and increased by 4 per centof the estimated amount for each full year from themoment the payment was postponed.

In addition to the aforementioned proposals, theLaw on Amending and Supplementing the Law onthe State Social Insurance Pensions is already pre-pared. This law proposes, in calculating the part ofthe pension for the period by the year 1994, to arti-ficially increase the low coefficients of the insur-

able income, and to leave the remaining coefficientsunchanged. Upon making such an amendment, thedifferences in the former wages, regardless of theirinfluence on pension amounts, would not be solarge, and the amount of pension for the period bythe year 1994 would be more dependent not uponthe wages, but rather upon the work record. There-fore, in such a case, those pensioners who had longerwork record, but relatively small wage, would ben-efit. However, this is related to the additional statesocial insurance fund budget expenditure, whichshould be covered from the state budget.

In implementing the Elderly Year Programme, thedraft amendment to the Law on the State SocialInsurance Pensions must be worked out. It shouldpropose to annul additional conditions qualifyingfor the payment of old age and disability pensionsestablished in the Law on the State Social Insur-ance Pensions. In addition to the minimum statesocial insurance record established by the provisionsof the aforesaid law, which as of 1 January 1999,for women is 25 years, and for men � 30 years, ad-ditional conditions for the payment of the old ageor disability pensions would come into force from 1January 2000. Under these conditions, it would berequired to have no less than three years of the so-cial insurance record during the last five years, orto have one year of social insurance record duringthe last one year, or to have no less than 35 years ofthe state social insurance record. In recognising, thatthese conditions are irrational, and that they cre-ate a lot of difficulties for the unemployed peopleof prior-pension age, the draft amendment to theaforementioned law must be worked out and theabove conditions refigured.

The experts of the Ministry of Social Security andLabour think that the Law on Pension Funds, aswell as accompanying secondary legislation estab-lishing Pension Funds, ought to be passed as soonas possible.

5. SOCIAL INSURANCE

82SOCIAL REPORT

Chapter 6

6.1. SOCIAL ASSISTANCE. PRINCIPLES OF RENDERING SOCIAL ASSISTANCE

6.2. BENEFITS IN CASH

6.2.1. Benefits in cash to Families

Social assistance constitutes a significant portion ofthe social security system.

The main purpose of social assistance is to help meetthe basic needs of families (persons) whose earnedincome, social insurance benefits and other incomeas well as the ability to take care of themselves is in-sufficient for reasons beyond their control.

The system of social assistance is based on a percep-tion that it is not aimed at ensuring long-term eco-nomic and social security for a person; it just helpsthe person to survive under extreme conditions. Thesocial assistance system should be organised so as toenhance the activity and individual responsibility ofpeople themselves.

The responsibility for rendering social services liesmainly with municipalities. Municipalities can mosteffectively bring to light both the social needs of peopleand social problems. Social assistance is comprisedof benefits in cash and social services. In 1998, bud-get funds of city (region) municipal authorities allo-cated for social assistance accounted for 11.9%. Atpresent benefits in cash accounts for the largest partof Lithuania�s social assistance system. The effectivefunctioning of the social assistance system can beachieved under the condition that monetary benefitsare provided along with social services.

Cash assistance is mostly given in the form of ben-

efits. Such assistance is especially significant for low-income families.

Social services represent a form of social assistance,which stimulates the individuals� activity and initia-tive to live a more valuable life. Social services areaimed at satisfying a variety of social needs for peopleassigned to different age groups.

The main purpose of social services is to restore theindividual�s ability to take care of him/herself and in-tegrate into society by assuring living conditions thatallow maintaining an individuals� dignity if the indi-vidual is unable to achieve that. Social services arealso rendered for preventive purposes in order to pre-clude possible social problems.

This chapter will deal with the ways of providing theprincipal social assistance: benefits paid to familiesregardless of family income, benefits paid accordingto the income evaluation principle, financial supportto victims and groups of people of particular risks,social guarantees and privileges to families and chil-dren. Moreover, this chapter will contain the analysisof the 1998 social services programmes, their imple-mentation within different social groups of individu-als: old people, disabled, children and families facingsocial problems, and individuals attributed to the groupof social risks.

The end of the chapter deals with the findings andsummaries.

The policy of state support to families is imple-mented pursuant to the following principle: to pro-vide conditions under which the family itself couldeffectively perform its functions and support those

families that are unable to perform such functionsappropriately. The Programme of the Governmentof the Republic of Lithuania for 1997-2000 providesfor the enhancement of assistance to the families

6. Social Assistance

83 SOCIAL REPORT

CLASSIFICATION OF THE BENEFITS IN CASH TO FAMILIESAND TYPES OF BENEFITS

BENEFITS IN CASH TO FAMILIES

Chart 6.2.1-1

The Chart prepared in observance of: Law of the Republic of Lithuania No. I-621 of 3November 1994 on State Benefits to Families Raising Children (the official gazette �Valstybeszinios�, 1994. � No. 89-1706) and The Resolution of the Government of the Republic ofLithuania No. 808 of 5 July 1996 on the Approval of the Provisions for the Granting andPayment of Social Benefits (the official gazette �Valstybes zinios�, 1996. � No. 66-1583)

Families raisingchildren

Children deprivedof parental care

Familiesof militaryservicemen

Foster care benefitOrphan�s grantBenefit for the settlement oforphans and childrendeprived of parental care

All families Families without theright to state socialinsurance maternity(paternity) benefits

Non means-testedbenefits

To low-income families,after the means-testing oftheir income

Social benefitLump-sum payments

Benefits to familiesraising3 and more children

Maternity benefit forstudying womenFamily benefit untilthe child reaches theage of 1 year

Familybenefit perchildfrom 1 to 3 years

Benefit for thechildren of militaryservicemen (conscripts)

Birth grant

6. SOCIAL ASSISTANCE

84SOCIAL REPORT

raising children, in particular to low-income ones.

Families receive benefits on the basis of the follow-ing two principles:m families with children are supported irrespectiveof their income;m persons or families with income that is lower thanthe fixed level of income supported by the state (seeTable 6.2.1-1).

Non-means tested family benefitsBenefits in cash to families raising children andchildren without parental care is provided irrespec-tive of income. The provision of various types of

benefits is regulated by the Law on State Benefitsto the Families Raising Children (see Table 6.2.1-1). At the end of 1997, a new type of benefit forfamilies raising three and more children was intro-duced. A benefit for three children is paid uponthe means testing of family�s income and for fourand more children - irrespective of income. The sizeof non means-tested benefits paid to families islinked with the minimum subsistence level (MSL)and approved by the Government of the Republicof Lithuania (see Table 6.2.1. -1).

According to the data presented in the Table 6.2.1-1,

Amounts and Development of Benefits Paid to Families Regardless of Their Income

Benefits Amounts

Establishedby the law

At thebeginningof the year,LTL

At the endof the year,LTL

Table 6.2.1-1* Note: until 1 July 1998 the fixed amount of the benefit was 1.5 MSL

Chapter 6

Birth grant 6 MSL 720 750

Maternity benefit for studying women 0.75 MSL 90 93.75

Family benefit 0.75 MSL 90 93.75

Benefit to the children of military servicemen 1.5 MSL 180 187.75

Benefits to the families raising3 and more children

Including:

Families with 3 children

Families with 4 and more children 156+36+� 162.5+37.5+..

Foster care benefit 2 MSL* 180 250

Settlement benefits fororphans and for the children deprivedof parental care 18 MSL 2160180 2250

Orphan � students� allowance 1.5 MSL 180 187.5

1 MSL 120 125

1.3 MSL +0.3 MSLfor 5 and per eachsubsequent child

85 SOCIAL REPORT

in 1998 the size of all benefits for families increasedafter the establishment of higher MSL (as of May1998 the MSL was fixed at LTL 125). In addition,the increase in foster care benefit was determinedby the newly fixed amount of benefit.

According to the data of the Children�s Rights Pro-tection Service at the Ministry of Social Securityand Labour, in 1998, and at the beginning of 1999,there has been a further decrease in the total num-ber of children under 18 (929,9 thousand at the be-ginning of 1998 and 913,6 at the beginning of 1999).In 1998, the number of children without parentalcare amounted to 3,500, which means a 10% an-nual increase. The analysis shows that family dis-cord is the main reason for losing parental care. Ifall reasons for losing parental care could be dividedinto unavoidable (death of parents, recognition ofthe parents� location as unknown in accordance withthe procedure established by the laws) and avoid-able (disfunctioning families, abandonment of chil-dren by parents, failure of taking care of the chil-dren by parents, parental violence), one may assertthat out of all children for whom care has been es-tablished only in 10% of cases was it done for ob-jective unavoidable reasons.

Taking into account the fact, that children withoutparental care constitute one of the main social prob-lems, in 1998, the assistance provided to childrenwithout parental care was given priority. In 1998,the Law on Child Guardianship and the Law onthe Amendments to the Law on State Benefits tothe Families Raising Children were adopted. Thesize of the Foster care benefit is set by the state andhas been gradually increased. On 1 July 1998, it wasincreased from 1.5 MSL to 2 MSL (LTL 250) permonth (when MSL=125 LTL). This benefit is paidto children until the age of 18. From the age of 18these children as a students receive an orphan�sgrant.

In addition, further gradual increasing of assistanceto children without parental care is planned. On 1January 1999, Foster care benefit was set at 4 MSL(LTL 500). However, in case an orphan�s pensionand/or an alimony is paid, the size of this benefit isequal to the difference between 4 MSL and thesebenefits. In order to gradually equalise the assis-

tance provided to a child under care and the stateassistance rendered during studies, the orphan�sgrant is planned to be increased: from 1 January1999, the orphan�s grant was increased from 1.5MSL to 3 MSL (LTL 375 when the MSL = LTL125) and as of the year 2000 it will increase to 4MSL. For a child without parental care receivingan orphan�s pension, the size of the orphan�s grantis determined upon the deduction of the orphan�spension received by the orphan. As of 2000, thegrant to orphans and children without parental carewill be increased from 18 MSL to 50 MSL. Thismoney will be used for the acquisition of a dwellingor settlement.

According to the statistical data, the number of or-phans or children without parental care was on theincrease during recent years. During 1992-1998 itincreased twice.

Low-Income Family BenefitsBenefits in cash based on the evaluation of incomeis provided to families and individuals who, for ob-jective reasons, have no means sufficient to meettheir minimum needs. Such families receive socialbenefit and lump sum grants (see Chart 6.2.1-1).

The size of a social benefit to a family makes up 90percent of the difference between the size of thestate-supported family income and the average fam-ily income.

Lump sum grants are given in accordance with theprocedure established by municipalities to familieswho experience particularly serious financial diffi-culties. Such one-time grants are usually given topersons in poverty or in the case of a serious dis-ease, natural disaster etc.

The structure for recipients of benefits in cash in1998 is represented in Chart 6.2.1 -2.: 56 percent offamilies receive benefits in cash independently of afamily�s income.

Families receiving social benefit account for the larg-est part (31 percent) of the recipients of assistanceto families. Recipients of family benefits, which arepaid to all of the parents raising children under 3years of age, account for 29 percent.

6. SOCIAL ASSISTANCE

86SOCIAL REPORT

Table A.6.2.1-2 shows changes in the numbers ofrecipients of family assistance in 1998 as comparedto 1997. 283,1 thousand individuals (7.6% of thetotal population of Lithuania) were receiving fam-ily benefits in 1998. In 1998, as compared to theprevious year, a decrease in the number of benefitrecipients has been observed.

The number of recipients of each type of benefit isdetermined by various factors: demographic pro-cesses taking place in Lithuania (changes in birthrates, changes in the numbers of children of certainage groups etc.), as well as changes in the newlyapproved size of benefits, changes in the growth ofthe real income, etc.

Chapter 6

Structure of the Recipients of Benefits to the Families Raising Children, Benefits to ChildrenDeprived of Parental Care and Benefits to Low-income Families in 1998 (in per cent)

Data of the Ministry of Social Security and Labour andof the Department of Statistics

Birth grant

Maternity benefit for studying women

Family benefit

Benefit to the children of military servicemen

Benefit to families raising 3 and more children

Foster care benefit

Settlement benefits for orphans

Orphan students� allowance

and for the children deprived of parental care

Social benefit

Lump-sum payment

Chart 6.2.1-3

Chart 6.2.1-2Data of the Ministry of Social Security and Labour and of the Department of Statistics

Structure of the Recipients of Benefits in Cash in 1998 (in per cent)

Non means tested benefitsMeans tested benefits

87 SOCIAL REPORT

In 1998, the state assistance to victims and peoplefalling under risk groups increased.

Following the Law on the State Support to the Par-ticipants of the Armed Resistance - Volunteer Sol-diers, the procedure and conditions of giving grantsto volunteers who participated in the armed resis-tance and were injured or became disabled duringinvestigation or imprisonment were approved. 18million LTL were allotted from the state budget in1998-1999. However, due to the slow procedure ofrecognition of the status of a volunteer soldier, only0,53 million LTL of such grants were paid in 1998.

The resolution of the Government of the Republicof Lithuania �On the State Support to the Familiesof Persons Killed in the Fights of Resistance to theOccupation in 1940-1990� was adopted in the courseof implementation of the Law on the State Supportto the Families of Persons Killed in the Fights ofResistance to the Occupation in 1940-1990. Theresolution provides for the payment of grants to thefamilies within five years starting with 1999. For thispurpose 30 million LTL were allotted from the statebudget for 1999.

People who suffered during the consequences of theaccident at Chernobyl nuclear power station areentitled to grants depending on the degree of dis-ability caused by such a breakdown. Grants are alsopaid to the members of the families of the deceasedpersons who participated in the above breakdown.

The size of a state pension paid to persons who suf-fered from the aggression on 11-13 January 1991and further events was doubled.

Upon the adoption of the Law on Amendments tothe Law on State Pensions of the Republic ofLithuania under which state pensions to those whosuffered, and their family members, were doubledas of 1 January 1999, the payment of compensa-tions to such persons was stopped. It should be notedthat considerable compensations were paid to per-sons falling under this category during the periodfrom 1992 to 1998. Data on these compensations ispresented in Table A.6.2.2-1.

In 1998, the concept of differentiation of state pen-

6.2.2 Benefits in cash to Victims

sions paid to victims was prepared based on theconditions and length of imprisonment and exile ofpolitical prisoners and deportees.

Deportees and prisoners of state detention camps(the so-called �GULAGS�) account for one of thelargest part of victims of occupation. The numberof persons who were deported from Lithuania dur-ing the entire period of Soviet occupation totals132,000. In 1956-1960, about 63,000 deportees werereleased. About 150,000 people were imprisonedin camps and prisons; and about 35 percent of themperished there.

Residents of Lithuania were deported to and im-prisoned in various regions of the Soviet Union,while the length of their imprisonment and depor-tation is varied. Based on the information presentedby the Lithuanian Centre for Genocide and Resis-tance Studies, the majority of deportees (about55,500 people) stayed in deportation for a periodof up to 10 years; 6,100 people stayed for up to 15years; 2,300 people - up to 20 years. The averagelength of stay in camps and prisons is 8 to 10 years.This data shows that the degree of suffering assessedon the basis of the length of deportation and im-prisonment is different. It is also known that Lithu-anian people were deported and imprisoned in theareas of the Soviet Union that were different geo-graphically, such as the land of eternal frost orareas of the same climatic zone as Lithuania.

According to the Law on State Pensions of the Re-public of Lithuania, all political prisoners anddeportees possessing documents (rehabilitation cer-tificates) issued by the law enforcement institutionsof the Republic of Lithuania proving the restora-tion of political prisoners� and deportees� rights re-ceive state pensions irrespective of the location ofand length of stay in deportation or imprisonment.

It is proposed that the size of state pensions pay-able to rehabilitated political prisoners and depor-tees would be differentiated and set individuallyhaving regard of the degree of damage done to them(i.e. taking account of the place and length of de-portation or imprisonment). Special methodsshould be elaborated for this purpose, and the

6. SOCIAL ASSISTANCE

88SOCIAL REPORT

amendments to the Law on State Pensions of theRepublic of Lithuania are to be drafted in 2000.

Former political prisoners and deportees returningto Lithuania have acquired the right to receive anold age pension under the laws of the Russian Fed-eration but not under the laws of the Republic ofLithuania. Thus, persons who stayed in imprison-ment or deportation in the Far North areas for along time but have not reached the age entitling toan old age pension, receive neither state social in-surance old age pension, nor state pension. In or-der to rectify this social inequality, certain benefitsin cash is to be provided to such persons as of 2000(until an interstate agreement with Russia is signed).It is proposed that political prisoners and deporteeswho were imprisoned or stayed in deportation fornot less than 15 calendar years in the Far Northregions of the former Soviet Union or not less than20 years in the regions equivalent to them wouldreceive a state pension for victims, the size of whichwould be equal to the basic state pension. Such astate pension for victims would be paid for 5 yearsprior to the age entitling to the old age pension. Itis also proposed that the payment of such a pen-sion would be conditional on non-receipt of a statesocial insurance old age, disability or long servicepension provided by the Republic of Lithuania oranother state, pension of the Republic of Lithuania,

personal pension, or any residential compensatorybenefit for special working conditions establishedunder other legal acts.

At present, compensations for the time spent inprisons or other penal institutions are only paid topersons who have been deported from the territoryof Lithuania. In case a person has been deportedfrom another place of the former Soviet Union butcurrently resides in the Republic of Lithuania andhas Lithuanian citizenship, he/she is not entitled tothe compensation. Thus, there exists inequalityamong persons who have suffered equally. In 2000,a proposal for a governmental resolution is to bedrafted providing for a payment of compensations(20 LTL per month) for the time spent in prisonsor other penal institutions to citizens of the Repub-lic of Lithuania permanently residing in the Repub-lic of Lithuania who experienced repression duringthe years of Soviet and Nazi occupation irrespec-tive of their citizenship and place of residence atthe time of repression, or their heirs (survivors whohave not re-entered into marriage, parents, adop-tive parents, children, adopted children) for whomall civil rights were restored in accordance with theLaw on the Restitution of Rights for Persons WhoSuffered Repression for Resistance to OccupationalRegimes.

Social guarantees and privileges, provided alongwith benefits in cash, remain an important form ofassistance to the families and children where thelevel of income of certain groups of residents (pen-sioners, disabled, unemployed, large families) isinsufficient. Assistance is provided to families in theacquisition of a dwelling or payment for utility ser-vices; benefits to support children attending pre-school institutions and schools; tax privileges; em-ployment guarantees for parents etc. Privileges inthe area of using communication and transport ser-vices, land lease tax privileges etc. have been pro-vided for.

There are several forms of assistance in the acqui-sition of a dwelling: preferential credits (interest-free credit, compensation for part of interest or for

6.2.3 Other Forms of Assistance

part of the principal amount), grants for building/purchase of a dwelling house/apartment, rent ofdwelling area owned by municipalities.

Utility costs (heating of dwelling area and hot wa-ter) are partially compensated for low-income fami-lies upon means testing. Before 1998, such compen-sations were financed by the state budget. In 1998,compensations were started being paid from mu-nicipal budgets. According to preliminary data pro-vided by local authorities, about 110 million LTLwere spend for heating and hot water compensa-tions in 1998. About 15 per cent of the total popu-lation of the country were paid such compensations.

Children attending pre-school institutions and sec-ondary schools are supported through these insti-

Chapter 6

89 SOCIAL REPORT

tutions. Low-income families are exempted frompayment for children�s maintenance at pre-schoolinstitutions, while socially vulnerable families (largefamilies, single-parent families, student families)pay half the amount of such payment.

Children from low-income families studying at sec-ondary schools are provided with free meals atschool. Allocation of the state budget funds for thispurpose commenced in April 1997. In 1998, 60 mil-lion LTL were allotted from the state budget forthe provision of free food to school-children.157,000 school-children received free lunch (29%of all schoolchildren). In addition, free breakfastwas also provided to 23,000 children from familiesin particularly difficult financial situations (5% ofall school-children). In day-time summer campsorganised by secondary schools during summer holi-days, about 7,000 children from low-income fami-lies received free meals.

In 1998, the Law on the Amendments to the Lawon Social Integration of the Disabled and theamendments to the laws regulating the granting ofpensions were adopted. These provisions filled cer-tain gaps in the system of granting pensions to handi-capped; payment of a nursing benefit for personswith total disability was established. In the new Lawon Social Integration of the Disabled, two new con-cepts have been defined, namely, of �a disabledperson� and �a disabled person with total disabil-ity�. The main criteria following which total disabil-ity is recognised for the disabled of Group I anddisabled children under 16 have been established.Upon confirming the status of full disability, a nurs-ing benefit amounting to the state social insurancebasic pension will be granted to the disabled per-son. The nursing benefit due to a person with totaldisability who has been recognised as incapable willbe granted and paid to his guardian. Nursing ben-efits will be granted and paid from the state budgetirrespective of other income received by the dis-abled or his guardian.

The above-mentioned law legalised a provision con-cerning insurance of persons nursing disabled per-sons with total disability. Such person or a guard-ian of the disabled (who has been recognised as in-capable in accordance with the established proce-

dure) will carry state social insurance in order toreceive basic pension, except for the cases when healready receives a state social insurance pension,state pension or support (social) pension. The Lawon the Amendments and Additions to the Law onState Social Insurance Pensions adopted simulta-neously with the Law on Social Integration of theDisabled settled the issue of additional payment forcare (amounting to half of the base pension) pay-able to working disabled of Group I. This additionalpayment has been included in the main part of thepension paid to this category of the disabled. Ac-cording to the provisions of the amended law, thesize of this pension will be 1.5 of state social insur-ance basic pension. Thus, working disabled ofGroup I will receive the full disability pension andthe former additional payment for care.

The disabled receive free prosthetisation, ortho-paedic appliances and other compensatory equip-ment.

In 1998, 24,4 million LTL were allotted and utilisedfor compensatory equipment and 2,1 million LTL �for the maintenance of the Lithuanian Centre forCompensatory Equipment to the Disabled. Theneed for orthopaedic and prosthetic articles andcompensatory equipment is not satisfied due to thelack of funds: according to the data of the Ministryof Social Security and Labour, in 1998 the need forthe above articles was satisfied only by 20 per cent.

Persons who experience difficulties in using publictransport due to motor function disorders receive acompensation for the acquisition and adaptation ofspecial vehicles or electric wheelchair, provided aperson is entitled to acquire and is able to drivesuch vehicles or carriages by themselves as deter-mined by the disability commission and stated in acertificate issued in the set form. Compensationsare paid by the branches of the State Social Insur-ance Fund Board and the Lithuanian Centre forCompensations to the Disabled. In 1998, 455 dis-abled persons exercised this right (425 in 1997) andthe amount of compensations paid was 1,82 millionLTL (1,7 million LTL in 1997).

Having regard of the fact that there are many peoplein the country who have serious motor disabilitiesand cannot make use of public transport preferences

6. SOCIAL ASSISTANCE

90SOCIAL REPORT

nor drive vehicles themselves, and also aiming tohelp municipalities set up �home transport� ser-vices, the Ministry of Social Security and Labourhas been implementing a programme on the acqui-sition of special-purpose vehicles for the transpor-tation of disabled. Under this programme 111 ve-hicles were purchased and distributed among mu-nicipalities. In 1998, 28 special vehicles adapted tothe disabled were allotted. Every town and districtmunicipality now has 2 special-purpose vehicles.

At present there are four university-level rehabili-tation centres, a scientific-practical laboratory fordisability problems, the Lithuanian Centre for Com-pensatory Equipment to the Disabled, the Councilfor Disability Issues at the Government, 17 enter-prises engaged in the production/sale of compensa-tory and orthopaedic equipment, and about 150municipal services engaged in the development,care, employment and other issues related to thedisabled.

The main purpose of the social service system is toprovide social services to those persons who are ingreatest need of them. There are various popula-tion groups needing social services: single oldpeople, families having social problems, childrenwithout parental care, orphans, persons releasedfrom penal institutions, alcohol and drug addictsetc. Each social group has its specific needs affect-ing the quality of life. In the provision of social ser-vices, the differences between social groups areevaluated, at the same time enhancing their inter-relationship by establishing a social service networkin each community. People�s social needs are metby implementing social programmes on various lev-els: national, district, and municipal. On the statelevel, the programmes aimed at improving the qual-ity of life of the society as a whole. However, theexperience of both developed countries andLithuania shows that nation-wide social solutionsare expensive and often do not yield expected re-sults. Most problems may be solved most effectivelyon the local level.

The principal direction of the development of thesystem of social services in 1998 was the decen-tralisation of social services and improvement ofthe quality of services rendered.

In observance of the Law on Social Services, theprincipal responsibility in rendering social servicesis vested in city (region) municipalities. Differentsocial needs of people are better revealed withinthe municipalities, and the most actual social prob-lems of the community manifest themselves mostdistinctly. Community is understood as a group ofpeople, living in the same territory or having the

6.3. SOCIAL SERVICES

same interests. In rendering social services withinthe community, the needs of separate social groupsare also assessed with greater accuracy, more flex-ible forms of work are applied, the initiative of lo-cal people is promoted, as well as their responsibil-ity for members of their community.

Currently, the system of social services in Lithuaniais in the stage of formation and rapid development:the network of social services is being developed inmunicipalities, in-patient guardianship institutionsof different types are being established and out-patient services are delivered to various groups ofpeople (for example, daily centres, community cen-tres, home services, etc.).

In developing the system of social services and inthe planning of services, the listed below key prin-ciples are observed:m The needs of different social groups are exam-ined and the priorities of particular types of social ser-vices are established;m Social services that are most acute for separatesocial groups are developed;mPeople are provided with social services for the long-est possible period at their place of residence, i.e., athome;m Provision of social services, along with public andmunicipal institutions, also incorporates non-govern-mental organisations, volunteers and informal serviceproviders.

With a view to organising the provision of socialservices, a new legal framework of the system ofservices is developed by simultaneously improvingthe existing one.

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91 SOCIAL REPORT

On 29 January 1998, the Government of the Re-public of Lithuania passed Resolution No. 111 onthe Approval of Principles and Procedure of Pay-ment for Social Services, regulating the procedureof payment for general and special social services.

By Order No. 31 of 29 January 1998 of the Ministryof Social Security and Labour the qualification re-quirements and certification procedure for socialworkers was approved, providing possibilities forthe employed to improve and upgrade their quali-fications.

In developing the system of social services, it is en-visaged to analyse the quantitative and qualitativechanges which take place, to further develop andimprove the legal framework for the system of so-cial services, and tighten the supervision of the ac-tivities of care institutions. The specialists of theMinistry of Social Security and Labour maintainclose co-operation with the municipalities and atthe same time try to find the most suitable ways ofsolving social problems.

Changes in the age structure of the Lithuanianpopulation are the changes towards demographicageing: the share of people 60 years of age and overis increasing every year. According to the data ofthe Department of Statistics at the Government ofthe Republic of Lithuania, there were 663,000 per-sons over 60 at the beginning of 1998 (635,000 in1995). The amount of old people is increasing. Itexceeded 16 percent several years ago. This meansthat Lithuania has overstepped the limit of demo-graphic old age. Changes in the age structure giverise to new economic and social problems. The de-mand for medical care and social services to oldpeople is increasing.

The Parliament of the Republic of Lithuania pro-claimed 1999 the International Year of ElderlyPeople in Lithuania (resolution No. VIII-649 of 3March 1998) in response to the appeal made by eld-erly people organisations and pursuant to Resolu-tion 47/5 of the UNO General Assembly of 16 Oc-tober 1992. The purpose of this act is to help changepeople�s attitudes towards old age: every year mustbe a year of full-fledged life for an old person.

A state programme has been drafted and approvedfor the Year of Elderly People in Lithuania. Thisprogramme will be implemented in 1999.

As the number of single old people is increasing,provision of social services is becoming increasinglyimportant. Institutional care services to old peopleare rendered in care homes, and non-institutionalservices, i.e., social services at home � in the com-munity. Social services to old people are delivered

6.3.1. Social Services to the Old People

by care institutions and organisations of differentsubordination: county care homes for old-agedpeople, municipal care homes for old-aged people,daily centres, community centres, non-governmen-tal organisations, parishes.

In rendering social services to old and elderly peoplethe Directions of the Development of Social Ser-vices at Home approved by Order No.137 of theMinistry of Social Security and Labour of 4 Sep-tember 1998 are followed. The principal provisionof these Directions is, that a person is to be sent toa residential care institution only in case that thesocial services rendered at home are ineffective anddo not ensure an adequate degree of independencefor the person.

Social services rendered at home is some of the mostadvanced forms of social services. They are directedtowards individuals who by reason of age, disabil-ity, family position, weak health or other problemsare not able to live a quality life independently.

Provision of social services at home:m improves the quality of life of persons who can-not take care of themselves due to age, family status,disability, weak health etc.;m is the most economical type of social servicesbecause the cost of services provided at home is about10 times lower than that one of services provided atcare homes;m offers a possibility to assess individual needs ofan old person or a person with disability and to pro-vide services he/she needs most;

6. SOCIAL ASSISTANCE

92SOCIAL REPORT

m allows staying at home without disrupting tieswith one�s relatives and community;m offers an opportunity of co-operation betweenstate institutions and non-governmental organisations,volunteers and informal service providers.

Social services at home are rendered according tothe individual agreement, wherein the social worker,upon having evaluated the individual needs of aperson, specifies the services that will be renderedto that person as well as their frequency. Once thesaid agreement is signed, the established servicesare delivered by the visiting care staff.

According to the data of the Department of Statis-tics, in 1998 there were 7 229 single persons forwhom care and nursing was provided at home (4073 in urban and 3 156 in rural areas). The numberof visiting care workers totalled 813, and 550 per-sons provided services on a contractual basis.

According to Chart 6.3.1-1, the volume of socialservices rendered at home in 1998, as compared to1997, decreased. The number of persons, who havebeen provided with said services in 1998 decreasedby 988 as compared to 1997. One of the reasonsconditioning the reduction of the delivery of social

services at home is that part of the social workersrendering services at home were part-time work-ers, and, according to the new version of Resolu-tion No. 21 of 1 October 1997 of the Governmentof the Republic of Lithuania, the part �time workwas limited.

Social services at home are particularly needed inrural areas, because in these areas about one quar-ter (23 per cent) of people are those aged 60 andover. Throughout the Republic, on the average, 43people out of 1000 aged 75 and older were attendedand nursed at home.

One may conclude that the volume of social ser-vices at home differs from region to region: the larg-est service volumes in 1998 was observed inJurbarkas, Pakruojis, Varëna, Kaiðiadorys, Ðakiairegions, and the smallest volume in Kretinga,Plungë, Kaunas and Kelmë regions.

In 1998, the Ministry of Social Protection andLabour prepared methodical materials for theorganisation of social services at home and the set-ting up of home service units at the municipalities.These materials include:

1. General regulations for home service units.

Chart 6.3.1-1

Individuals Guarded and Nursed at Home in 1995-1998 (number of individuals)

Data of the Department of Statistics under the Government of the Republic of Lithuania

Chapter 6

Totalin urban areasin rural areas

93 SOCIAL REPORT

2. Methods of assessment of a person�s self-depen-dence.

3. Questionnaire for the evaluation of the need toreceive social services.

4. Job description for the head of the home serviceunit.

5. Job description for a visiting care worker.

6. Normative workloads for the head of the homeservice unit and a visiting care worker.

Drafts of the above documents were deliberated inthe training courses for municipal officials respon-sible for the organisation of social servicing at homeheld by the Social Workers Training Centre at theMinistry of Social Security and Labour. The offi-cials were provided with appropriate knowledge andskills. Five representatives of municipalities visitedDenmark where they had the possibility to acquaintthemselves with the provision of social services in

that country. The provision of services at home isregulated by the documents, and the knowledgeacquired during the courses should assist the mu-nicipalities in more active development of this typeof social services to individuals who are in need ofthem.

Specialists in various fields (social workers, visitingcare workers, community nurses, pedagogues, themedical profession etc.) must collaborate in the areaof provision of social services at home since strictdelimitation of health care, education and socialprotection is impossible.

Provision of social services at home organised bymunicipalities is combined with the primary healthcare services and other forms of social assistance inthe community (setting up of day care centres andcommunity centres, transportation services, self-support groups etc.).

Municipalities establish old people care homes as a

1995 1996 1997 1998

Total number of residential

care institutions (units) 61 66 76 87

Number of their inhabitants 3245 3404 3647 4101

County care homes1 ) 9 8 8 8

Municipal care homes 35 39 42 48

Special care homes2 ) 1 1 1 3

Non-government care institutions3 ) 16 18 25 28

Table 6.3.1-1

Residential Care Institutions for Old People in 1995-1998

1) In 1998 the boarding institutions subordinate to the Ministry of Social Security and Labour weretransferred to the administrations of county governors.2) In 1998 - the care institution of Veisiejai, the Deportee�s Home� (subordinate to the Ministry ofSocial Security and Labour), Gerontology and Rehabilitation Centre of the Experimental and ClinicalMedicine Institute of Vilnius (subordinate to the Ministry of Education and Science).3) Parish care homes, �Caritas�, the Agricultural Company Care Home.

Informational publication of 14 May 1998 of the Department of Statisticsunder the Government of the Republic of Lithuania

6. SOCIAL ASSISTANCE

94SOCIAL REPORT

form of stationary services to old people. Carehomes for elderly and old people are also estab-lished by non-governmental organisations and reli-gious communities. According to the data of theDepartment of Statistics, there are 8 state and 48municipal old people care homes and 28 non-gov-ernmental care establishments (see Table 6.3.1.-1).

Chart 6.3.1-2 shows, that the number of people liv-ing in the county care homes decreases inconsider-ably. However, the numbers of old people living incare homes and institutions of non-governmentalorganisations speedily increases. In 1998, 1640people lived in the municipal care homes, i.e. 210people more than in 1997.

Upon the development of the network of care in-stitutions, more applications for settlement in carehomes of old people are being satisfied. However,the existing network of care institutions still does

not satisfy those willing to live in such institutions.According to the data of the Ministry of Social Se-curity and Labour, in 1998, 1969 applications forsettlement in the care homes for old people werereceived, of which 1239 applications were satisfied.

Social services are particularly needed for old peopleliving in rural areas, because about one quarter (23per cent) of people living in rural areas are aged 60and older.

Non-stationary services are also established in mu-nicipalities. Currently 6 community centres and daycentres are functioning for old and elderly people.Institutions of this type are particularly needed forold people and elderly people, since they createpossibilities for such people to communicate witheach other, solve rising problems together and thushelp each other.

Number of individuals in residential care institutions for old-aged people in 1995-1998

Data of the Department of Statistics Chart 6.3.1-2

Statistics indicate that the number of children un-der 18 years of age is continuously decreasing: therewere 929,9 thousand children in the beginning of

6.3.2. Social Services to Children and Families Encountering Social Problems

1998. 79 percent of all children lived in families withboth parents, and 17 percent in single-parent fami-lies. According to the data of the Children�s Rights

Chapter 6

In county care homesIn special care homes

In municipal care homesIn non-government care institutions

95 SOCIAL REPORT

Protection Service at the Ministry of Social Secu-rity and Labour, the growing number of so-calledproblem families is registered each year. In 1998,the number of such families registered exceeded 15thousand, with more than 34 thousand children liv-ing in such families. These figures are not precise,because these are the families, which were success-fully detected by the municipal Children�s RightProtection Services. However, the real number ofsuch families might be larger.

In 1998, children without parental care accountedfor about 2 percent of total number of children inLithuania. Conflicts within the family are more of-ten becoming a reason, due to which children be-come deprived of parental care. Inevitable reasons,such as the death of parents, long-term illness ofone or both parents, declaration of the parent miss-ing according to the procedure established by thelaws, etc. make up only 10 per cent of the reasonsfor which children are deprived of parental care.

In the Constitution of the Republic of Lithuania itis stated that the state provides care for orphanedchildren. The state�s obligation is also to take careof children without parental care.

Seeking to regulate the issues of guardianship ofchildren deprived of parental care, in 1998, the Par-liament of the Republic of Lithuania passed the Lawon Child Guardianship, which created the legal ba-sis for the establishment of the guardianship of chil-dren. Several forms of child guardianship are es-tablished in this Law � within the family guardian-ship, foster family guardianship and institutionalguardianship, as well as the types of child guardian-ship � temporary guardianship and residentialguardianship. Attempts were made to pay attentionto the reasons that caused loss of parental care. Atthe same time attempts were made to make the workof municipalities more active by analysing the con-dition of families and providing support to familiesseeking to avoid the establishment of ungroundedguardianship. Amendment to the Law on StateBenefits to the Families Raising Children waspassed, according to which the benefit for fostercare was increased. It is granted to a child deprivedof parental care, if the said child is not fully main-tained out of state funds.

The number of orphans and children without pa-rental care in all types of child care institutions andfamilies in 1998 totalled 13 thousand.

Changes in the structure of child care institutionsare taking place. With the implementation of theadministrative state reform, the former state childcare institutions which were subordinate to differ-ent ministries now are under subordination of coun-ties. They are being re-organised into smaller insti-tutions. Apart from the state child care institutions,municipalities are establishing small child carehomes, social support groups, and family-type childcare homes that are closer to family environment.In 1998, the number of children living in 39 regis-tered homes of this type totalled 382. 2707 childrenlived in 66 municipal child care homes (groups, cen-tres). More and more public organisations becomeguardians of children. Among them the Agency�Visos Lietuvos vaikai� (�Children of Lithuania�),�Viltis� Society, the Lithuanian Children�s Fund canbe listed. A temporary care home �Atsigrezk� hasbeen established in Vilnius for former street chil-dren (51 children). The structure of child care in-stitutions and the number of children living in themis presented in Table A.6.3.2-2.

The proportion of children who live in differentinstitutions to those living in families is changingevery year � the number of children living in fami-lies is increasing (see Table 6.3.2-1). In 1997, ap-proximately 40 per cent of all guardianship for or-phans and children without parental care were es-tablished in the foster families. In 1998, the num-ber of such children accounted for 46 per cent (2nd

half of 1998 � about 50 per cent). This was influ-enced by an increase in the size of the foster carebenefit (from 1 July 1998 � up to 2 MSL, and from1 January 1999 - up to 4 MSL).

It is too early to conclude whether the size of thebenefit had direct effect upon the number of chil-dren without parental care taken into foster family.The Ministry of Social Security and Labour intendsto conduct a survey in 1999, which should enablemore objective assessment of the results of imple-mentation of the Law on Child Guardianship.

With the increasing number of families fosteringchildren, the number of families which have applied

6. SOCIAL ASSISTANCE

96SOCIAL REPORT

Placement of Children Deprived of Parental Care in 1992-1998 (number of people)

1731 2907 3516

19981992 1995 1996

2567 3391 3175

1994 1997

Table 6.3.2-1Data of the Children�s Rights Protection Service of the Republic of Lithuaniaunder the Ministry of Social Security and Labour

for adoption or adopted children without parentalcare is decreasing. In 1998, 112 families applied forthe adoption of children, and 1174 families � forguardianship of children without parental care. In1998, 362 children were adopted, including 135 chil-dren adopted to foreign families (see A.6.3.2-3). Atthe beginning of 1999, 326 foreign families wishingto adopt children were on the waiting list.

The main problems encountered by municipalitieswhile establishing guardianship for children are re-lated to the shortcomings of the legal framework:the part of the Law on Child Guardianship relatedto the temporary child care has only been enforcedso far (such care is established for a child left with-

out parental care in case it is expected that there isa possibility of returning the child to his/her bio-logical family by joint efforts of the workers of mu-nicipal social care and support department andchildren�s rights protection services).

However, due to the lack of employees and knowl-edge, as well as problems faced by families, the tem-porary guardianship usually is extended for an un-limited period, irrespective of the fact that theworked out procedure for the establishment ofguardianship for a child deprived of parental careobligates the social workers of municipalities to bemore active in doing their social work within thefamily, seeking to return the child to his/her bio-

Chapter 6

Total number of children deprived of

parental care or of orphans annually placed

in different residential care institutions

Including:

Children under 7 701 1048 1049 1254 1136 1219

sent to

infant homes 111 201 240 275 252 266

State care homes for children 238 694 774 703 460 382

boarding-schools of a general type 45 255 247 242 232 193

special boarding-schools � � 53 62 78 79

vocational, high, higher educational institutions

in which children are maintained out

of the state funds 30 39 39 24 35 50

boarding homes for disabled children � 5 5 20 30 14

municipal residential care homes

for children 100 128 120 306 309 328

municipal day care groups for children � � 8 216 380 432

guardianship in public organisations 9 43 16 22 70 102

family-type care homes for children ( foster families) 21 37 76 54 56 59

parish care homes for children � � � 19 3 61

guardianship of families, single persons 934 1044 1260 1372 1236 1545

Total number of adapted children 332 308 220 418 421 362

Including: international adoption 15 198 94 104 129 135

97 SOCIAL REPORT

logical family to the extent of existing possibilities.

Children�s rights protection services of municipali-ties play a central role in the supervision over theenforcement of children�s rights. The staff of theseservices totalled 218 in 1998. However, the numberof workers was smaller, i.e. 196 people at the be-ginning of 1999.

Taking into consideration, that in 1998, the totalnumber of children in Lithuania was about 1 mil-lion, it may be assumed that the average propor-tion of children to workers of Children�s Right Pro-tection service of municipality was 5,000 childrenper worker. Since the workload of the services isincreasing and their functions are being extended,a revision of the workloads and assessment of func-tions of other units of municipalities (social assis-tance, education and science) is necessary to re-al-locate both functions and responsibilities for theprovision of social assistance to families and chil-dren and protection of children�s rights and legalinterests.

Though legal documents require that Children�sRights Protection Services were independent unitsof municipalities with the number of staff no less

than 3, the Children�s Rights Protection Services oftwenty regions have 2 workers each, fourteen re-gions - 3 workers each, and one region has 1 worker.The distribution of the number of children to beserviced also varies greatly. The scope of problemsencountered only by the workers of services differs.The heaviest workload is observed in the children�srights services established of the big cities. Theseservices also encounter the biggest problems. Ac-cording to the data of the Children�s Rights Protec-tion Service at the Ministry of Social Security andLabour, the heaviest workload per worker was ob-served in the following areas:

In 1998, there were 350,000 to 370,000 people withdisabilities in Lithuania, i.e. about 10 percent ofthe country�s population. About 240,000 of themhad an officially recognised disability group. Thenumber of the disabled in Lithuania correspondsto the data of the United Nations Organisation,according to which the disabled account for 10 percent of the total population of the world.

According to the data of the State Commission ofMedical Social Expertise (SCMSE), since 1990 bothprimary and general disability figures are constantlyincreasing: there has been an increase of more than1.5 times in 1998 as compared to 1990. As it is seenfrom the data presented in Chart 6.3.3.-1, the num-ber of working-age people who have beenrecognised as disabled for the first time, has in-creased by 34 per cent from 1993 to 1998.

The growth was caused by a number of factors: the

Vilnius region - 11,500 children

Këdainiai region - 9,074 children

Anykðèiai region - 8,826 children

Kaunas region - 7,347 children

Plungë region - 6,565 children

Ðiauliai town - 9,358 children

Panevëþys town - 8,470 children.

6.3.3. Social Services for People with Disabilities

way of life and health status, social and economicfactors (unemployment, underdeveloped profes-sional rehabilitation system and highly developedsystem of social protection and preferences).

Elderly persons are also encouraged to apply forthe recognition of disability by the preferences avail-able to the disabled, by difficult financial situationor other social factors. In 1998, persons of workingage accounted for 61% in the structure of primarydisability, while persons of pension age accountedfor 39%, which means a 5% increase as comparedto 1997 (the influence of a preference related tothe repayment of deposits).

The number of primary disability in non-workingpeople of working age is constantly increasing: ithas doubled in 1998 as compared to 1993. In 1998,persons working under employment contracts ac-counted for 45.6% of working-age persons in the

6. SOCIAL ASSISTANCE

98SOCIAL REPORT

primary disability structure, while non-working per-sons of working age accounted for 54.4%. This tes-tifies to the bad situation of working-age disabledpersons on the labour market - the majority of themhave lost work or were unemployed at the time ofrecognition of disability. As employment possibili-ties are reduced, disability for certain people be-comes an opportunity for increasing their income.

It may be concluded from the above that the growthin the number of disability pensioners is influenced,apart from the health status, by the situation on thelabour market, low standard of living, preferences,and a possibility to receive both pension and remu-neration at the same time.

Table 6.3.3-1 shows that persons for whom 1st and2nd disability groups (seriar handicapped) have beenrecognised prevail in the primary disability struc-ture. They account for 73.2% of those recognisedas disabled for the first time (the long-term aver-age exceeds 70%).

As regards repeatedly recognised disability, thecauses of full rehabilitation (disability not

recognised) were decreasing and those of aggrava-tion of disability (graver disability recognised) wereincreasing.

It is stated in the Law on Social Services that thedisability of a person is one of the cases when aperson is entitled to social services. As the numberof the disabled is constantly increasing, one mayjudge about the increasing demand for social ser-vices. Any disabled person is entitled to social ser-vices of some type and thus may be treated as apotential service recipient. The level of meeting thedemand for social services is reflected in the num-ber of satisfied applications compared with the to-tal number of applications. According to the statis-tical data, in 1997 the demand for accommodationin adult care institutions was met by 56%, i.e. justslightly more than half of those willing, to get intothe above institutions and in 1998 �the number was63%.

Residential social services to the disabled are pro-vided both at adult and child residential care insti-tutions. In 1998, Lithuania had 5 residential care

Chapter 6

Chart 6.3.3-1

Number of People Recognised as Disabled for the First Time in 1993-1998

Data of the State Medical Social Expertise Commission

Pensioners

Of working-age

99 SOCIAL REPORT

Of which

Results of the Initial Examination by Age and Disability Groups in 1998

Table 6.3.3-1Data of the State Medical Social Expertise Commission

Disability groups

Recognisedas disabled

Totalnumber ofdisabled

Under29

30-44yearsof age

Women aged45-55, menaged 45-59

Olderpeople

Group I Group II Group III

Total 28566 2604 4686 10117 11159 4885 16016 7665

Employed 9384 517 2162 5263 1442 562 5199 3623

Unemployed 1918 20872 2524 4854 9717 4323 10817 4042

homes for disabled children and 21 institutions fordisabled adults. The number of all these institutionsremained practically unchanged from 1992 to 1998.They remained state residential care institutionswhere people from all over Lithuania are accom-modated and their maintenance is guaranteed bythe state.

The current situation shows that the demand forresidential care for people with disabilities is con-stantly increasing. According to the data of theMinistry of Social Security and Labour, in 1998 thenumber of persons willing to get into residential careinstitutions accounted for about 400 individuals. Atpresent, services provided at residential care insti-tutions for the disabled are insufficiently differen-tiated by individual needs. People of various age,with various disabilities and needs are accommo-dated in the same institutions. Children with physi-cal disabilities pose a great problem: while becom-ing adult they are mostly guided to care homes forelderly with prevailing care and nursing services andmedical aid, therefore the process of developmentof young people is slowing-down or even stops.

It is very important to separate institutions forpeople with mental disabilities from the institutionsfor psychiatric patients. Development services, fos-tering skills of independent life, and creation ofgroup living home should prevail in the institutionsystem for people with mental disabilities. This

would allow a gradual reduction of residential careplaces for such people. Many of these people couldlive a partially independent life in group livinghomes.

Development of community social service shouldbe the priority line of development of social ser-vices to the disabled. This should stop the processof increasing the number of residential care insti-tutions.

In contrast to the residential care institutions themajority of which were established in Soviet yearsand currently are under reconstruction, non-resi-dential services to the disabled is a relatively newservice area.

The main types of non-residential institutions pro-viding social services and related to meeting theneeds of the disabled are as follows: day-care cen-tres, workshops, children�s development centres,special groups at pre-school institutions and schools,professional rehabilitation institutions, rehabilita-tion centres, special boarding schools (for the deafand those hard of hearing, for weak-sighted per-sons, and sanatorium-type, speech therapy schools).

Social services for the disabled are organised andprovided by institutions of various profile and sub-ordination: state, municipal, and non-governmen-tal. The main organisational burden is shoulderedby municipalities.

6. SOCIAL ASSISTANCE

100SOCIAL REPORT

In order to alleviate work for municipalities, non-governmental organisations as equal partners shouldbe included, to the widest extent possible, in theprocess of organisation and provision of social ser-vices.

The adoption of the Law on Social Integration ofthe Disabled created favourable conditions for thesetting up and functioning of public organisationsof the disabled. Their programmes receive partialfinancing assistance from the state and municipalbudgets. At present there are about 30 national-level public organisations of the disabled. Thus, dis-abled people have been provided with an opportu-nity to solve their problems themselves, to take partin the formulation of social policies and nationalprogrammes. In 1998, these organisations made aconsiderable contribution to the rendering of so-cial services to the disabled. �Viltis�, a society forcaring for people with mental disorders, focused onregional projects. An integration programme intro-duced by the society covered 5,420 people withmental disabilities. Regional projects were imple-mented jointly with district administrations andmunicipalities with their subordinate institutions.As guarantees of project continuity were provided,projects for early intervention centres, pre-schooland school activities (including integrated class-rooms), labour and family employment centres,community homes etc. could be implemented. Sup-port provided by early intervention centres is aimedat all children with development disorders residingin a region. In 1998, such centres were establishedin 12 regions of Lithuania. �Viltis� society providedconsiderable financial support for the centres oflabour and employment and the development of aninstitutional system for people with mental disor-ders. Day care centres and workshops centres guar-antee employment for such people who cannot com-pete with healthy persons in the labour market. Insuch centres people may find work, reveal their abili-ties and realise themselves. At the same time theirindependence, labour and social skills are devel-oped. Employment centres have been or are goingto be set up in Alytus, Jonava, Jurbarkas, Kaiðia-dorys, Kaunas, Pasvalys, Ukmergë and Vilnius.

A community living home system is under develop-

ment. Community living homes provide family-typeliving conditions for mental invalids who have losttheir parents or guardians. Small homes requirelower maintenance costs than large ones. However,at present there are only four homes of such type inmunicipalities � in Maþeikiai region, Vilnius (2) andUkmergë region.

So called temporary care centres are new inLithuania and are intended for short-term care formental disabled persons when their parents orguardians cannot take care of them. Such centreswere established in Klaipëda and 20 families usethese services. Social services for families raisingor having under their guardianship persons withmental disorders were started to be established aswell.

In 1998, community social service centres for peoplewith sight disabilities were set up in Panevëþys andVilnius.

Deaf people as a separate cultural minority alsoneed centres of their own. A social-cultural centrefor deaf persons from Panevëþys and Utena districtswas established in Panevëþys.

It may be concluded that further development ofsocial services for the disabled is an integral part ofthe overall social service system. Development ofservices for this social group is based on the follow-ing main principles: decentralisation of the service,deinstitutionalisation, and priority of home servicesover residential care institutions. Improvement ofthe quality of both social services and care shouldbe considered to be the main line of development.The quality improvement process has such compo-nents as personnel qualification, living conditionsand the environment, increasing of the number ofoptions, human rights and dignity guarantees. De-velopment of community social services should bethe priority area; this would bring services closer tothe person�s place of residence, to reduce the num-ber of residential care places, to guarantee stayingat home for a longer time, and to create a betterquality of life for people with disabilities.

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101 SOCIAL REPORT

6. SOCIAL ASSISTANCE

Refugees in Lithuania are a new phenomenon inthe life of the state. Therefore on 4 July 1995 theParliament of the Republic of Lithuania passed theLaw on the Refugee Status in the Republic ofLithuania. This Law came into force at of 27 July1997, and at the end of the same year already thefirst foreigners were granted the status of refugee.Currently, more than 40 foreigners who have comefrom Georgia, Belarus, Iraq, Afghanistan, and Iranhave been granted the refugee status in Lithuania.One third of the refugees comprises under-age chil-dren.

When a foreigner is granted the refugee status, hemust be integrated into the society of Lithuania.Social integration of refugees is a process, duringwhich attempts are made to provide them with thepossibilities of being integrated into the society ofLithuania and start living on their own. The maindirections of social integration are providing therefugees with the place of living, organising theiremployment and education, ensuring social care andhealth care, and public aveariness raising.

Social integration of refugees is being regulated bythe Procedure of Social Integration of Refugeesapproved by Resolution No. 239 of 26 February 1998of the Government of the Republic of Lithuania.

Social integration of refugees is organised and thework of institutions involved in its implementationis co-ordinated by the Ministry of Social Securityand Labour.

The duration of social integration is 12 months. Therefugees, who do not have sufficient funds neces-sary for them to be integrated into the Lithuaniansociety on their own, may participate in the inte-gration programme. According to this programme

6.3.3 Social Integration of Refugees

the refugees are granted a lump-sum settlementbenefit, they are found by the local municipality inwhich they can settle, also they are provided assis-tance in finding a job, courses of the Lithuanianlanguage for children are organised, as well as pos-sibilities for children to attend a kindergarten anda secondary school. Each month a family that doesnot have any sources of income is paid each month,a benefit of up to 90 per cent of the income financedby the state for the acquisition of the goods of ut-most need. Moreover, refugees are covered by thecompulsory heath insurance and this provides themwith the possibility to use health care services of alllevels. One of the directions of social integration ispublic aweariness raising on the issue of refugees,and to this end continuously communicating withmass media, organising meetings with employeesand residents of municipalities, political groups andpublic organisations, issuing informational publica-tions, holding conferences, seminars and other mea-sures are regular activities.

The source of financing the integration is the fi-nancial aid provided by foreign states and interna-tional organisations, funds of humanitarian aid es-tablished by natural and legal persons of Lithuania,as well as budgetary funds of the Republic ofLithuania.

In 1998, the amount of 274 thousand LTL was allo-cated for this purpose from the State Budget. Theamount of 40 thousand LTL was allocated for thesocial integration of refugees by the United NationsDevelopment Programme. These funds were usedto pay for the Lithuanian language coursesorganised for the refugees, as well as to cover theirhealth insurance expenses.

Social assistance is rendered in the form of ben-efits in cash and services. From the point of view ofmanagement, social assistance is both centralised

6.4. ADMINISTRATION AND FINANCING OF THE SOCIAL SUPPORT SYSTEM

and decentralised. Social assistance benefits andsocial services are financed by the state and mu-nicipal budgets.

102SOCIAL REPORT

Benefits established by the laws and other legal actsare administered by city and district municipalities.Municipalities may only provide benefits in cash tolow-income families upon the evaluation of the ap-plicants� income and, in some cases, upon the clari-fication of their financial position. Consequently,municipalities assume great responsibility for en-suring that assistance would reach those who are ingreatest need of it.

Benefits in cash for families are paid from the statebudget and municipal budgets. Maternity benefitsfor women students, orphans grants and foster carebenefits are financed from the state budget. A fos-ter care benefit is paid out of special-purpose fundsallotted for municipalities from the state budget.

The structure of costs of social assistance to fami-lies in 1998 is represented in Chart 6.4.1-1. The costof cash assistance irrespective of family income ac-counts for 76 % of total cost.

The distribution of expenditure for individual typesof benefits paid to families varies.

According to the data presented in Chart 6.4.1-2and Table 6.4.1.-1, in 1998 the expenditure on fam-ily benefits accounted for 101.1 million LTL (34 percent), on benefits for 3 and more children - 79.3million LTL (26 per cent) and social benefit � 68,3million LTL (23 per cent).

6.4.1. Benefits in Cash

The cost of various benefits depends on the size ofa benefit, number of recipients, conditions of grant-ing a benefit, and length of payment.

In 1998, expenditure on all family benefits amoun-ted to 300,6 million LTL.

The main sources of financing social assistance tothe disabled include the State Social Insurance Fundbudget, the state budget and municipal budgetfunds. The Law on Compulsory Health Insuranceprovides for the financing of handicapped healthcare from the compulsory health insurance budget.Article 13 of the Law on Social Integration of theDisabled prescribes that the Government of theRepublic of Lithuania must draft and implementthe national programme for medical, professionaland social rehabilitation of the disabled, with re-gional and territorial programmes to be drafted andimplemented by district administrations and mu-nicipalities respectively. Funds of the state budgetand municipal budgets are utilised for the financ-ing of these programmes. These budgets are alsoused for the financing of rehabilitation programmesfor the disabled implemented by national and ter-ritorial public organisations of the disabled. It hasbeen estimated that means provided by private andlegal persons account for only 1-2 % of the totaldisability financing structure. Apart from the above-mentioned sources, utilisation of the World Bank,

Structure of Expenditure on the Financial Support to Families in 1998 (in per cent)

Chart 6.4.1-1Data of the Ministry of Social Security and Labour andof the Department of Statistics

Support regardless of income

Support having evaluatedthe income

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103 SOCIAL REPORT

Phare and other international financing is plannedfor various projects and programmes.

The state social insurance budget funds were usedto pay the disability pensions and compensate trans-port expenses, while the funds of compulsory healthinsurance were used to compensate sanatoriumtreatment, acquisition of medicines and medical aidsas well as for temporary disability benefits.

Social pensions are financed from the state budget,with the payment administered by municipalities.

Actions by non-governmental organisations are co-ordinated by the Council for the Affairs of the Dis-abled at the Government of the Republic of Lit-huania. The Council provides assistance in the for-mulation of the national social policy taking accountof the invalids� needs, implementation of the Lawon Social Integration of the Disabled, drafting andimplementation of the national programme formedical, professional and social rehabilitation of the

disabled, and exercising control over the realisationof the programme. The Council is responsible forthe administration of funds allotted for the imple-mentation of the Law on Social Integration of theDisabled. National public handicapped organisa-tions and state institutions are partners of the Coun-cil. In 1998, LTL 28,8 million were allotted to theCouncil for the implementation of medical reha-bilitation and social integration programmes. In1998, financing was provided to 38 programmesdrafted by public organisations of the disabled, stateinstitutions, and educational establishments� etc.

As seen from Chart 6.4.1-3, attention was focusedon the programmes of integration of people withphysical disabilities (LTL 11421,4 thousand or 40%of all funds). Programmes for the blind and weak-sighted accounted for 23% (LTL 6645,4 thousandof the financing. LTL 4948,3 thousand (13%) thatwere allocated for the integration programmes forpeople with mental disabilities in 1998.

Structure of Expenditure on Benefits for Families with Children, Benefits for ChildrenDeprived of Parental Care and Benefits for Low-Income Families in 1998 (in per cent)

Chart 6.4.1-2Data of the Ministry of Social Security and Labour andof the Department of Statistics

Birth grant

Maternity benefit for studying women

Family benefit

Benefit to the childrenof military servicemen

Benefit to the families raising 3 andmore children

Foster care benefit

Settlement benefits for orphans and for thechildren deprived of parental careOrphan� student�s allowance

Social benefit

Lump-sum payment

6. SOCIAL ASSISTANCE

104SOCIAL REPORT

Note: 1 Payment of benefit commenced as of 1 November 1997

Data of the Ministry of Social Security and Labour and of the Department of Statistics

Table 6.4.1-1

Development of Expenditure on Family Benefits in 1998 (as compared to 1995, 1996 and 1997)

Benefits

LTL million 1995 1996 1997

1995 1996 1997 1998Developmentin 1998 (per cent),As compared to:

Benefits to families regardlessof their income

including: 79,5 109,4 137,7 227,2 85,9 7,6 65

Birth grant 13,5 20,6 25,7 27,5 3,8 33,1 6,9

Maternity benefit to studying women 0,061 0,073 0,073 0,077 27,1 5,9 5,8

Family benefit 60,2 79,0 93,5 101,1 67,9 27,9 8,0

Benefit to the children of militaryservicemen 0,255 0,251 0,206 0,157 -38,6 -37,6 -23,8

Benefit to families raising - - 4,81 79,3 - - -3 and more children

Including:

Families with 3 children - - � 52,9 - -

With 4 and more children - - � 26,3 -

Foster care benefit 4,1 6,8 9,6 14,6 159,2 14,2 51,6

Settlement benefit for orphans andchildren deprived of parental care 0,403 0,737 1,02 1,08 67,4 46,1 5,2

Orphan�students� allowance 1,01 1,89 2,73 3,50 145,5 85,0 28,1

Means tested benefits to families 68,7 81,4 82,6 73,4 6,8 -9,8 -11,1

Including:

Social benefit 63,0 76,6 76,1 68,3 8,4 -10,8 -10,2

Lump-sum payment 5,7 4,8 6,6 5,1 -10,1 7,3 -21,6

Total 148,2 190,8 220,3 300,6 2,8 57,6 36,5

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When shaping the public policy of social services,the Ministry of Social Security and Labour, is re-sponsible for the functioning of the system of socialservices and its further improvement. The docu-ments of the Republic of Lithuania on the Man-agement of Counties, documents of Local Govern-ment, Social Services, Narcological Supervision, aswell as other documents regulating the social sup-port provide for the liability of separate manage-ment levels in the implementation of the system ofsocial services.

The implementation of the system of social servicesis carried out in observance of the principle thatcounties are responsible for the organisation of suchsocial services and for the establishment of suchsocial care institutions, the establishment of whichin separate municipalities is not expedient due tothe insufficient number of customers as well as dueto the fact that the funds of one municipality areinsufficient for such a purpose.

The system of social services is being implemented

6.4.2. Administration of Social Services

by municipalities, therefore their role is very im-portant. People�s most relevant social problems arerevealed in municipalities. Municipalities have toplan the rendering of social services to the popula-tion in order to better meet their social needs.

The Ministry is searching for ways to enhance col-laboration with municipalities, by applying a newstrategic partnership model for this purpose. Themodel defines the roles of ministerial departmentsand municipal social assistance departments andensures regular submission of data on the provi-sion of social support by municipalities. The essenceof the model lies in the signing of partnership agree-ments between the Ministry and municipalities in1999 pursuant to the �Development of Social Part-nership Between the Ministry and Municipalitiesand Introduction of the Strategic Plan Part I� ofthe Social Policy and Community Social ServiceDevelopment Project financed by the World Bank.

Strategic partnership involves the objectives of theMinistry and municipalities, distribution of compe-

Utilisation of Budgetary Funds Allocated for the Council of Disabled Persons ofLithuania by Type of Disability for the Year 1998 (in per cent)

Chart 6.4.1-3

Programs of medical rehabilitation and

social integration of the blind and the weak-eyed

23%

Programs of medicalrehabilitation and socialintegration of the deaf

15%

Programs of medical

rehabilitation and social

integration of mentally

disabled people

17%

Other (general)integration programs

2%

Programs of integration of

invalids with

the help of sports

3%

Medical rehabilitation and social

integration programs for physically

disabled people (except

for the blind and the deaf)

40%

6. SOCIAL ASSISTANCE

106SOCIAL REPORT

tencies, main tasks, dissemination of best practices,and methods of control and evaluation in the areaof social assistance.

The partnership should improve the performanceand efficiency of provision of social assistance onthe municipal level.

The model of strategic partnership between theMinistry and 56 municipalities defines the functionsof ministerial departments and municipal socialsupport departments. The function of the Ministryconsists in the comprehensive formulation andevaluation of policies, while social care and supportdepartments are responsible for the implementa-tion of policies. Strategic partnership should bringpolicy-makers closer to the implementing structuresand help municipalities better plan relevant socialprogrammes. A possibility is provided to evaluatenew positive initiatives and to compare performance

of various municipalities.

Social assistance departments submit data on so-cial assistance and its costs to the Ministry.

The information furnished by municipalities is re-quired to ensure control over social assistance andto evaluate and plan services and benefits provided.Furthermore, the Ministry may support best initia-tives and projects via the implementation of statesocial programmes.

In the seminars held in 1998 jointly with the mu-nicipal social assistance departments and interestedministries, the draft strategic partnership agreementwas discussed and the joint action plan was agreedupon. The partnership concept received approvaland the Ministry got a number of proposals andcomments from municipalities.

Partnership agreements with 44 municipalities weresigned in 1998.

Social services are intended for meeting the needsof the most vulnerable social groups. Though theresponsibility for the provision of social servicesmainly lies with municipalities, this activity is sup-ported by the state. State support for the develop-ment of municipal social infrastructure and inno-vations in this area is realised through state socialservice programmes. While residential care home(maintained by the state) existed in the Soviet pe-riod, the establishment of a network of non-resi-dential social services has just been started.

Two state-supported social service programmes wereimplemented in 1998, i.e.�Programme for the De-velopment of Social Service Infrastructure in 1998-2000� and �Social Policy and Community SocialService Development Programme�.

The Programme for the Development of Social Ser-vice Infrastructure is a three-year national progra-mme, with funds allotted for the implementationof measures by the Ministry of Social Security andLabour. In 1998, LTL 5 million were allotted forthe implementation of the programme.

6.5. DRAFTING AND IMPLEMENTATION OF STATE SOCIAL PROGRAMMES

6.5.1. Implementation of Social Service Development Programmes

The aims of the Programme for the Developmentof Social Service Infrastructure:1. Enhance the social service system in Lithuaniaensuring the effectiveness of the social policy pursued,with the full use of all human, financial and materialresources available.2. Encourage the initiative of local authorities, publicorganisations and religious communities, develop theircollaboration.3. Pool funds of the state budget and municipal bud-gets, attract financing by international funds, privatepersons and other sources.4. Encourage the initiative of local community andpersons in need of social support who should learn toprovide help to themselves.5. Prevent major social problems by creating condi-tions for municipalities and non-governmentalorganisations to draft social service projects; select,by way of tender, the best social service projects ten-dered by municipalities and non-governmentalorganisations for the partial financing by the state.

Under the Programme for the Development of So-

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107 SOCIAL REPORT

cial Service Infrastructure by municipalities andnon-governmental organisations in 1998, 143projects were submitted including 90 projects bymunicipalities or municipal institutions, 53 projectsby non-governmental organisations. There were 29projects among the award-winners (21 project ten-dered by municipalities and 8 projects by non-gov-ernmental organisations).

In the 1998 programme the following four servicegroups were considered to be priorities: 1) servicesto old people; 2) services to children and familiesencountering social problems; 3) social services torisk groups; and 4) services to the disabled. Theprogramme supports the reconstruction of the newproject to be established and acquisition of primaryfacilities; project reconstruction, acquisition of pri-mary facilities and costs of routine repairs.

The projects are assessed on the basis of the fol-lowing criteria: project presentation and projectmanagement; conformity of the project concept withthe laws; justification of the demand for social ser-vices proposed in the project; feasibility of theproject objective, project continuity, benefits pro-vided by the implementation of the project and itsefficiency in the community; availability of financ-ing from other sources; and innovation qualities ofthe project.

Drafting of social service projects is a new form ofactivity for municipalities that requires sharing thebest practice and knowledge. To this end, trainingcourses and seminars were organised by the Minis-try of Social Security and Labour in the Social Work-ers Training Centre for the heads of municipal so-cial assistance departments and representatives ofnon-governmental organisations. In these seminarsthe municipalities have shared the best practice,have acquired knowledge and methodological ma-terial useful for municipalities in drafting projectsunder the above mentioned national programmeand other programmes, as well as when seekingbenefits in cash from international funds and othersources.

The Ministry of Social Security and Labour has,jointly with the Institute of Labour and Social Re-search, elaborated the methods to assess the projectsthat are taking part in the tendering process. The

strengths and weaknesses of the projects were dis-cussed in a seminar in which representatives ofmunicipalities, districts and non-governmentalorganisations took part.

In 1998, ten projects of the programme were addi-tionally selected by way of tender and will be fi-nanced from the EC Social Development Fund.

Another state programme, a social policy and com-munity social service development project, has beenunder way since 1997. The project is financed fromthe World Bank loan, SIDA (Swedish Government),the Dutch Government, and the Lithuanian State.The project contributes socially and economicallyeffective provision of social services in communi-ties by establishing non-residential care centres.

The above-mentioned project involves the settingup of 13 day-care centres in six municipalities se-lected by way of tender (Anykðèiai district, Molëtaidistrict, Utena district, Ðvenèionys district, Vilniuscity and Ðiauliai town). Eleven of them were set upin 1998. They include development centres for chil-dren and youth with mental disorders, home ser-vicing centres for elderly people, servicing centresfor people released from penal institutions, day-timeactivity centre for elderly and disabled people,labour centre for people with mental disorders,mother and child homes, and temporary child carehomes etc. In the nearest future a rehabilitationcentre for alcohol and drug addicts �Parama� willopen in Vilnius.

At present, about 1,000 persons are served by theexisting centres every month. Children with disabili-ties, battered women and their children, and sociallyvulnerable children receive indispensable intensivesupport. It is planned that this number will reach8,000. Activities of these centres are organised basedon best practices adopted from other countries. Theexperience of the centre will be transferred to otherregions of Lithuania. About 180 jobs are plannedto be created in the newly established centres. It isimportant to note that the personnel of all centrestook theoretical/practical courses in Lithuania andSweden held in 1997-1998. Over 100 social workerstook part in the training activities.

The implementation of the above state socialprogrammes encourages municipalities to allot

6. SOCIAL ASSISTANCE

108SOCIAL REPORT

funds for social needs and to seek new ideas andintroduce them in communities.

Thus, project activities are not confined to the re-

furbishment of buildings - activities are to beorganised in a qualified way and appropriate per-sonnel are to be recruited.

The Ministry of Social Security and Labour imple-ments the governmental strategy for the support torehabilitated political prisoners and deportees andtheir families returning to Lithuania. The Govern-ment approved of the �Guidelines for the Activi-ties of the Government of the Republic of Lithuaniain the Area of Political Prisoners and Deporteesand Their Families Returning to Lithuania andTheir Provision with Apartments and Employment�(No. 19 of 11 January 1992).

In this programme the State declared its obligationto help rehabilitated political prisoners anddeportees and their families by establishing the mainmeasures that would enable them to return toLithuania and integrate into their lines. By its reso-lution No. 904 of 27 September 1994 the Govern-ment of the Republic of Lithuania established thatthe right to use state support under the aboveprogramme is granted to the following persons re-turning for residential residence to Lithuania: po-litical prisoners and deportees, persons who had leftLithuania because of repressions upon the presen-tation of archive certificates of rehabilitation orinclusion in deportation lists issued by the law en-forcement institutions of the Republic of Lithuania;children of these persons irrespective of the date ofbirth, place of birth and place of residence beyondthe territory of the Republic of Lithuania, providedthat they present the above-mentioned certificatesissued to their parents as well as documents prov-ing their relationship (and grandchildren if disabledor orphans).

The implementation of the deportee programmecovers the following issues:m drafting, on an annual basis, of governmentalresolutions on the allocations from the state budgetto municipalities for the purpose of purchasing apart-ments for former deportees;m compensation of moving expenses;

6.5.2. Drafting of Comprehensive Programmes and Implementation of the ExistingProgrammes for Victims and Social Risk Groups

m settlement grants;m grants to former deportees (able-bodied persons)for starting one�s own business;m financing of job creation upon the proposals sub-mitted by territorial employment centres;m financing of courses in the Lithuanian language;m care for ill, single and incapacitated formerdeportees;m financial support for the children of returningdeportees residing beyond the territory of the Republicof Lithuania or studying at Vilnius secondary school�Lithuanian House� and spending their summer holi-days at child summer camps in Lithuania;m financial support to Lithuanian communities anddeportee organisations in holding congresses and con-ferences the purpose of which is to inform about de-portee matters, pension security, employment oppor-tunities, acquiring Lithuanian citizenship etc.m providing former deportees with living space; tem-porary accommodation of returning deportees andpartial compensation of heating costs to persons liv-ing in such temporary places of accommodation.

The overall cost of the programme of providingdeportees with apartments is 135 million LTL. Theimplementation of the programme started in 1992and is planned for completion in 2003. The esti-mated number of deportee families covered by theprogramme is 2,000.

As seen from Table P.6.5.2-1, from 1992 through1998 as many as 1032 apartments were purchasedfor the families of deportees. Over 37 million LTLhave been allotted from the state budget to theprogramme during 1992-1998. In addition, there wasa 14 million LTL loan raised from the EC SocialDevelopment Fund during 1997-1998 based on theagreement for partial financing of the project.

It must be noted, that the number of deporteeswilling to return to Lithuania is growing due to

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109 SOCIAL REPORT

the crisis in Russia.

The Deportee Home that opened in Vilnius in theautumn of 1997 received recognition. At present itaccommodates 80 residents and is too small to ac-cept all of those willing to return. Therefore, theconstruction of a second block of the Home beganin 1999.

In 1998, a temporary home for returning deporteesin Naujoji Vilnia was extended by 20 apartmentsand now it can receive 60 families.

In 1998, a draft programme for the social adapta-tion of persons returning from prisons and otherpenal institutions and social/psychological rehabili-tation establishments (1999-2003) was completed.

With regard to the fact that social support is nowbeing directed to meeting of needs of the most vul-nerable part of the society, the implementation ofminimal social services must be supported by thestate. The above-mentioned social adaptationprogramme is designed for the development of asystem which would ensure proper social adapta-tion of target groups.

As practice shows, the majority of former prisonerssettle in the largest cities. The new social adapta-

tion centres would serve as models that will be fol-lowed later in other districts. The functions of pris-oner adaptation units include the collaboration withpenal institutions, employment centres, municipali-ties, police commissariats etc. and co-ordination oftheir work to ensure the successful adaptation offormer prisoners returning to society; collection andcompilation of information about such persons re-siding in the district; and establishment of specialsocial service institutions for former prisoners (mi-nors, persons ill with contagious diseases etc.).

It is planned to establish municipal social adapta-tion institutions for persons who have returned fromprisons, corrective institutions, social and psycho-logical rehabilitation establishments (services, daycentres, over-night homes etc.).

In 1999, social adaptation units are going to be setup in the remaining districts and the training of so-cial workers in working with prisoners and personsreturning from imprisonment is going to be im-proved.

It is provided for in the project that the programmewill be implemented by district administrations andmunicipalities jointly with the interested depart-ments. The implementation will be co-ordinated by

Dynamics of Drug Related Crimes in 1991 - 1998

Chart 6.5.2-4Data of the Reformatory Affairs Department at the Ministry of the Interior

Num

ber

of c

rim

es

Year

6. SOCIAL ASSISTANCE

110SOCIAL REPORT

the Ministry of Social Security and Labour.

Data on the employment and training of formerprisoners is presented in Tables P.6.5.2-2 and P.6.5.2-3. Table P.6.5.2-2 shows that the number of formerprisoners registered with employment centres wasmore than doubled in 1998 as compared to 1993.The number of those for whom employment wasfound is also increasing. In 1998, 45.5% of formerprisoners that have registered within one year foundemployment.

Table 6.5.2-3 reveals that Kaunas and Vilnius dis-tricts are the leaders in the registration and em-ployment of former prisoners. This shows, that theproblems encountered in these cities are the big-gest. As many as 2,520 former prisoners (or 60% ofthose registered in 1998) had their employmentsearch terminated because they did not appear inthe employment centre after the receiving unem-ployment benefits.

In 1998, a National Programme on Drug Controland Drug Addiction Prevention was drafted in 1999-2003. The drafting of this programme was intro-duced by the rapidly spreading drug addiction inLithuania.

Lithuania is a country with favourable geographi-cal situation and developed surface, sea and airtransport links. As such became a transit country,which created favourable conditions for drug traf-fic from the East to Western Europe and vice versaand also for that distribution in Lithuania. Nopreparations were made to solve this problem; thereis no legal framework for drug control. Access toand the supply of drugs have increased, followed bya stronger demand for them. Due to changing so-cial and economic circumstances, people, particu-larly the young, ones, have become more vulner-able, including the inclination towards drug abuseand engaging in drug-related activities. Drug ad-diction has become a threatening social phenom-enon. Drug-related crime statistics show a markedgrowth trend. Chart 6.5.2-4 reveals the annual growthin the rate of crime related to illegal drug sales. Dur-ing 1991-1998 it increased 5.2 times. Especially rapidgrowth was observed after 1995.

The illegal drug business is becoming the object ofactivities of organised criminal groups. The scope of

violence and illegally acquired money is extending. Thenumber of drug addicts is increasing, which is relatedto the threat of infectious diseases, AIDS in particu-lar.

The main purpose of the National Programme onDrug Control and Drug Addiction Prevention is toassess the scope of drug addiction in Lithuania, toidentify the main problems related to drug controland prevention of drug addiction, and to draft drugpolicy measures to resolve these problems. The mainactions are defined in the programme measures forthe period from 1999 to 2003.

It is estimated that 52,5 million LTL are requiredto be allotted from the state budget in 1999-2003for the implementation of the programme. Relatedinstitutions have to project corresponding funds intheir budget estimates.

The following measures are planned by the Minis-try of Social Security and Labour for 1999-2003:m work out a concept of integrating narcologicalpatients into the society in accordance with the Lawon Narcological Supervision;m draft a programme of drug and alcohol abuse pre-vention at work places;m conduct a survey of activities of various publicand other institutions in the area of drug addictionrehabilitation;m encourage activities of pedagogical, psychologi-cal, social and legal consulting centres functioning inthe largest cities in order to ensure appropriate aid tochildren belonging to risk groups as well as their par-ents;m train and retrain social workers in working withrisk group representatives and their family members;m provide support for drug addicts� rehabilitationprogrammes by setting up of communities for recov-ering drug addicts, and providing material facilitiesfor such communities etc.

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111 SOCIAL REPORT

6. SOCIAL ASSISTANCE

112SOCIAL REPORT