Government decides on next year's minimum wage increase

Lithuania's government has approved an 8% increase in the minimum monthly wage (MMA), raising it to 1245 euros gross from July 1, 2027. This decision overrides a prior agreement reached by the Tripartite Council, which comprised employer and trade union representatives, who had proposed a more modest 7.19% increase to 1235.9 euros.

The government's plan also excludes a simultaneous increase in the basic non-taxable income (NPD). While employers and unions had sought a 4% rise in the NPD to 777 euros, the government rejected this, arguing that the NPD is already high in Lithuania. They pointed to an upcoming additional NPD for parents raising children, which will take effect in 2027, and the significant cost of increasing the general NPD, estimated at 40 million euros annually.

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I think this issue needs to be finished and closed. This 8% compromise, in my opinion, is truly rational. The NPD in Lithuania is already very high, and I don't think it should be increased at this time. Especially knowing that the state budget is very tight – large funding for defense and social needs. The NPD can certainly wait a little.

Acting Finance Minister Kristupas Vaitiekūnas defended the government's compromise, calling it "completely rational." He emphasized that Lithuania's NPD is already substantial and that the state budget faces pressure from increased defense and social spending. Vaitiekūnas also noted that Lithuania's proposed wage increase is significantly higher than in countries like Poland, where the minimum wage is set to rise by only 3% next year, suggesting further acceleration is unnecessary and costly for the state.

Approximately 145,000 employees in Lithuania currently earn the minimum wage or less, with about 21,600 working in public institutions. The government estimates that the MMA increase will boost the monthly income of these workers by around 56 euros after taxes, bringing their earnings to at least 902 euros. The additional funds required for the MMA hike are projected at 29.2 million euros for 2027, with an estimated 35.1 million euros needed in subsequent years.

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We have really fast and high income growth. Many like to compare us with Poland, and there the MMA will increase by only 3% from next year… Is it worth accelerating this further, contributing from the state's pocket? I don't think so.