AMBASSADOR'S INITIAL CALL ON SOCIAL-SECURITY

C O N F I D E N T I A L VILNIUS 000706 SIPDIS E.O. 12958: DECL: 12/23/2019 TAGS: PGOV PREL SMIG SOCI ELAB LH SUBJECT: AMBASSADOR'S INITIAL CALL ON SOCIAL-SECURITY MINISTER Classified By: Acting Deputy Chief of Mission John M. Finkbeiner for re asons 1.4 (b) and (d). ¶1. (C) In her first meeting with Minister of Social Security and Labor Donatas Jankauskas, Ambassador Derse heard that emigration is a problem for Lithuania as workers seek better opportunities elsewhere in the EU and usually do not return, that the GOL is moving forward with overhauling its debt-laden pension system, and that a planned shift of responsibility for labor issues from this ministry to another has been delayed because of the economic crisis. The Ambassador voiced concerns she has heard from American businesses about the need for more flexible labor rules, said she would work to attract U.S. investors to Lithuania, and said the Embassy would provide what assistance it could to help Lithuania in the areas of equal opportunity and nondiscrimination. End summary. ¶2. (U) The Ambassador met December 17 with Donatas Jankauskas, Minister of Social Security and Labor. Also participating were Vice Minister Audrone Morkuniene and Rita Skrebiskiene, director of the ministry's international relations department. ¶3. (C) Jankauskas said that the GOL is concerned that Lithuania continues to lose emigrants to other EU countries. He said middle-aged workers seek higher paying jobs elsewhere in the EU, often so that they will be able to repay bank loans they took in the boom years that followed Lithuania's 2004 EU accession. Younger people, he said, often go abroad to study, which frequently is followed by job offers abroad. While some emigrants do return to Lithuania, most do not, said Skrebiskiene. Even with this outflow of labor, the officials said, unemployment has been high since the start of the financial crisis more than a year ago. And even with jobs less plentiful in other EU countries, Lithuanians continue to emigrate in search of work. Labor regulations -------------- ¶4. (C) The Ambassador said that businessmen had praised Lithuania's educated and multilingual workforce as one of its great advantages, and that she would like to see increased trade and investment between the United States and Lithuania. But, she said, American businessmen had told her that labor regulations, particularly regarding wages and hours, were so rigid as to discourage investors. The minister agreed that reforms were needed, and said the GOL was working on them. He said his ministry and the Ministry of Economy were jointly working on the issue and "we think it will not be too difficult to make these administrative changes." He said an overhauled labor code also was being considered, but that such a major step would be further in the future. "We have our social partners in the National Agreement, and we're trying to keep social peace. For the next year, rules on labor relations will be amended only in conjunction with our social partners in the National Agreement." Two months ago the GOL signed what it calls the "National Agreement" with major labor unions and organizations representing business, employers and investors. In it, the government pledged to refrain from tax increases or changes in labor law before the end of next year without consulting with those partners. The Ambassador told the minister that she wanted to work with the GOL on proposals to increase U.S. investment, and would closely follow the GOL's labor reform efforts. Pension reform -------------- ¶5. (C) Jankauskas said the GOL also is continuing with reform of its pension system, which over the past two decades "became too complex and not transparent." The social-security system, known as SODRA, also is mired in debt. The GOL in recent years has allowed workers to direct some of their pension withholdings to private pension funds rather than to the state-run SODRA fund. The next phase, which Jankauskas said he hoped would be introduced in the Seimas (parliament) in the spring and take effect in 2011, would allow additional, voluntary contributions to private pension funds, but with some degree of government guarantee of the money. "We want to separate state support and social insurance and let people with higher pay have that reflected in their pensions." ¶6. (C) When the current government took office just over a year ago, Prime Minister Andrius Kubilius announced plans to shift responsibility for labor issues from Jankauskas' ministry to the Ministry of Economy, which would be restyled as the Ministry of Innovation, Business and Labor. Jankauskas told the Ambassador that that plan still existed, but had been delayed because of the economic crisis. "The Labor Exchange now is dealing with social problems," he said. "But the Ministry of Economy will take over long-term planning." Families, equal opportunities -------------- ¶7. (C) Jankauskas said the shift of labor issues to another ministry would allow his staff to focus more energy on supporting families. He cited the 2008 adoption by the Seimas of the "State Concept of a Family," which defined a family as "a community of closely related persons, created on the basis of the marriage of a man and a woman." He said Lithuania must "more intensively support families by supporting work and study and encouraging young couples to have families and children and to stay in Lithuania, because our demographic outlook is not very bright." ¶8. (C) The Ambassador said she would like to work with the ministry on issues of equal opportunity and nondiscrimination, and she congratulated the minister on the recent opening in Vilnius of the European Institute for Gender Equality, an EU body. She said she hoped to establish a good relationship with the institute and help foster equal opportunities for all. She also said she hoped to welcome President Obama's new Ambassador for Global Women's Issues to visit Lithuania for discussions on equal opportunity and other women's issues. DERSE