MINISTER OF SOCIAL SECURITY AND LABOR LAYS OUT VISION FOR

UNCLAS SECTION 01 OF 02 VILNIUS 000306

SIPDIS

E.O. 12958: N/A
TAGS: ECON ELAB EINV PGOV PHUM LH
SUBJECT: MINISTER OF SOCIAL SECURITY AND LABOR LAYS OUT VISION FOR
LITHUANIA'S LABOR FORCE

REF: A. VILNIUS 57


B. VILNIUS 88


1. SUMMARY: On March 21, Ambassador Mull met with Vilija
Blinkeviciute, the Minster of Social Security and Labor, as part
of his ongoing series of discussions with cabinet members of the
new GOL (ref a). Ms. Blinkeviciute, a member of the Social
Liberal party who came in fourth in the first round of last year's
presidential election, spoke effusively of Lithuania's
achievements in the areas of social security and labor and gave
credit to the United States for its contributions to these
successes. She also offered to assist in locating a possible site
for a USG-funded trafficking in persons (TIP) shelter. END
SUMMARY

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Cooperation with NGOs and Thanks for the United States
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2. Noting that March 11 marked the fifteenth anniversary of
Lithuania's independence, Blinkeviciute claimed huge achievements
for Lithuania in the creation of a social security system, a
public assistance system, a labor inspection system, and other
aspects of the social safety net and labor regulation. She
thanked the United States for its contribution to Lithuania's
developments in these areas. She also mentioned that she visited
the United States and found the U.S. model of cooperation between
the government and non-governmental organizations (NGOs) to be an
important example for Lithuania. Blinkeviciute stated that the
GOL works closely with NGOs in crafting policy in the fields of
disability, children's issues, and so-called "social risk groups,"
and she reiterated her thanks to the United States.


3. While on the subject of cooperation between NGOs and the
government in Lithuania, Ambassador Mull detailed problems that a
local NGO is having setting up a shelter for TIP victims in the
town of Sirvintos, using grant money from the U.S. European
Command Humanitarian Assistance Program. The Ambassador raised
the same issue in his meeting with Minister of Agriculture
Kazimira Prunskiene (ref b). The Ambassador asked if
Blinkeviciute could provide assistance in finding a new location
or project towards which the grant money could be spent.
Blinkeviciute expressed her own feeling of the importance of
combating TIP and distress at the Sirvintos case. Blinkeviciute
lamented the entrenched social attitudes that led the community to
block this important project, but she counterposed that with the
example of a successful effort to get local support for the
creation of a drug rehabilitation center in another community.
She believes that Lithuanian communities do not have much
experience working with NGOs, and that the key to a successful
partnership is convincing local communities that NGOs have the
ability and resources to maintain the security and infrastructure
associated with such projects. Blinkeviciute said that she did
not think that it was too late to turn things around in Sirvintos:
towards that end, she promised to speak to the mayor of Sirvintos,
and possibly to other localities that might be suitable for such a
project.

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Pension Reform
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4. When asked about the future of the Lithuanian pension system,
Blinkeviciute was optimistic. She said that discussions of
pension reform date back ten years and that, working with experts
from the World Bank, Lithuania had passed a pension reform law
which took effect in 2004. Blinkeviciute cited the fact that
under the provisions of the new law, fifty percent of eligible
workers have opted to divert a percentage of their contributions
from the basic social insurance system (SODRA) into a privately
managed system of "pension accumulation" funds. Stressing that
participation in the pension accumulation system was entirely
voluntary, she felt that the high participation rate is a sign for
optimism. However, she estimated that it would be ten years
before any realistic evaluation of the reforms can take place.


5. Speaking to the demographic factor of an aging population
which threatens "pay as you go" social insurance and pension
programs, Blinkeviciute stated that, because the current social
insurance payments from the GOL are so low, Lithuania does not
face a crisis of the magnitude of Germany or some other Western
European countries. Blinkeviciute said that her main goal now is
to raise the calculation of the pension level - currently
calculated at forty percent - to fifty percent. Success towards
this goal will be dictated in large part by Lithuania's economic
growth, and she explicitly mentioned the United States as a
possible model, particularly noting that Lithuanians "take too
much rest" compared to Americans.

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Lithuania's Workforce --------------


6. Blinkeviciute believes that Lithuania will become more
attractive to foreign investment, including that from the United
States. While Lithuania's full employment level is below the
average of the European Union (EU),the growth rate is faster than
the EU average. Blinkeviciute credited this faster growth rate
with higher job growth among youth - of which she approved - and
an increase in women's presence in the work place - of which she
was "not so happy" because she felt that it reflected poor social
conditions that force women to take low-level jobs in order to
provide for their families. She said that the employment level of
men was rising, too, which she took as a good sign.


7. Counter-balancing these positive signs, Blinkeviciute
conceded that skilled labor is becoming scarce in Lithuania. She
had two ideas for preventing the flight of skilled workers from
Lithuania to more prosperous countries. The first was that GOL
institutions and employers must work together to increase salaries
and the quality of working conditions in Lithuania. The second
idea was that the GOL should mount a public-awareness campaign to
illustrate that it is not as easy to find good jobs abroad -
including in the United States - as popular sentiment in Lithuania
now believes.


8. COMMENT: Blinkeviciute remains one of the country's most
popular politicians, and it was easy to see why during the
meeting. Persuasive and engaging, she is well-disposed towards
the United States, and is clearly in command of the issues under
her portfolio.

MULL