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Lowest earners will see a pay rise next year, pensions will be increased by ten percent, and the rates of other benefits will be higher

Date

2021 12 22

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Lowest earners will see a pay rise next year, pensions will be increased by ten percent, and the rates of other benefits will be higher
Lowest earners will see a pay rise next year, pensions will be increased by ten percent, and the rates of other benefits will be higher

The Seimas – Parliament of the Republic of Lithuania has approved the draft budgets of the state, municipalities and the State Social Insurance Fund Board (Sodra) which will determine how we will live in 2022. Changes in the social security and labour area include an increase in the old-age, lost capacity for work, and widows, widowers and orphans’ pensions, special-purpose compensations for disabled people; more people will receive a single-person benefit; there will be a significant rise in the minimum pay, salaries of lowest-paid employees of institutions financed from the state budget and the base salary level. There will be no changes in tax and contribution rates except those which are related to the minimum monthly pay.
‘We expect that next year the increase in the income of the lowest-wage earners, higher rates of rise in pensions, payment of single-person‘s benefits to all single pensioners and disabled people  and growing social benefits will contribute to the reduction of income inequality, social seclusion and poverty in Lithuania,‘ – says Monika Navickienė, Minister of Social Security and Labour.

Increase in earnings 

MINIMUM MONTHLY WAGE. At the beginning of 2022, the minimum monthly wage (MMW) will increase to EUR 730, i. e. almost  14%. Net income of the lowest wage earners will increase by EUR 62.5. This is one of the most significant MMW rises in the last decade and in the country‘s history in general.  
Research shows that MMW increases contribute to the lowering of unemployment rates as higher pay encourages the long-term unemployed to return to the labour market.
According to the Labour Code, the MMW can only be paid for unqualified work. The MMW increase will be relevant to approx. 127,000 people receiving the MMW or less.
EUR 30.8 million will be required from the state budget for the MMW increase.


SALARIES AT INSTITUTIONS FINANCED FROM THE STATE BUDGET. The government approved of the proposal made by the ministry of social security and labour for increasing the base salary by EUR 4, from EUR 177 to 181, in 2022. The minimum salary coefficients will be raised for the lowest earners in the public sector.
For level  A, B and C employees of institutions financed from the state budget, the minimum salary coefficients will be increased 0.5 % at the beginning of next year. 
Considering the rise in the reference amount and the minimal coefficients, almost 25,000 lowest earners at  budgetary institutions will receive salaries that are over EUR 100 higher compared to the current level. 
With the gap between the pay for qualified work and the MMW maintained, EUR 26.1 million euros will be allotted for the increase of low coefficients at budgetary institutions. 
After the base salary is raised to EUR 181, public servants and employees at such institutions will see a pay rise of EUR 40 on average. This will be relevant to over 200,000 people working in the public sector of Lithuania. since the beginning of 2021, the base salary level increased by EUR 1.
Approximately EUR 86.1 will be required for the increase in the base pay from the state budget. 

Increase in the income of pensioners and disabled people 

PENSIONS. The average old-age pension will increase from EUR 414 to EUR 465 next year, reaching EUR 544 in 2024. In 2020, the average old-age pension for those having the necessary service record will grow from EUR 441 to EUR 489, and in 2024 – to EUR 576. 
The pension increase next year will be funded by additional allocations from the state budget (EUR 680 million and from the Sodra budget (970 million). 
SINGLE-PERSON BENEFIT. Next year the single-person benefit will be granted automatically and paid without a separate application; the number of the benefit recipients will increase almost 5 times. It is estimated that, from the beginning of next year, approx. 280,000 single people – disabled persons and pensioners will receive the benefits of EUR 32.
Since 1 July this year, approx. 60,000 people are entitled to the single person benefit of EUR 28.63: single beneficiaries of social pensions and supplements to low pensions. Sodra has already started paying the first single-person benefits, together with underpayments of single-person benefits if any.
It is estimated that approx. EUR 107.4 million will be allotted for the single-person benefits in 2022.

Higher benefits for children in care 

From next year, the guardianship/care benefit will increase, too. It‘s rate has not changed for two decades. In addition to the increase, the benefit will be differentiated depending on children‘s age and needs: 
• for a child under 6 - EUR 218, 
• from 6 to 12 years – EUR 252,  
• from 12 to 18 years and those for whom a degree of disability has been established – EUR 273, 
• former children in care who are under 24 years of age and who study – EUR 273. 
It is expected that increased support for children in care will improve their daily life and will encourage more families to become guardians.
The Government approved of the proposal to extend payment of the special-purpose supplement to the guardianship/care benefit for former guardians/carers when, on termination of the guardianship/care after the child reaches full age or becomes independent or marries, the latter still lives with the former guardian/carer and is supported while studying at a secondary school, however, only until 23 years of age.
In 2022, an additional amount of approx. EUR 8.5 will be allotted from the state budget for this purpose.

Compensations for heating – for a larger number of people

Next year, the state-supported income (SSI) applied to the calculation of the compensation for home heating expenses will be increase.
As the SSI will be doubled next year, the compensation for the heating of homes will be received by more low-income families.
It is estimated that in 2022 approx. 15,000 will become entitled to the compensation, and the number of residents receiving the compensation will total approx. 110,000.
EUR 16 million will be allotted for the heating compensations next year.

Increased social benefits

As the Government considers draft budgets of the State and municipalities, at the same time reference indicators of social assistance are approved for next year. They determine the benefits paid to residents or their entitlement to social assistance. In 2022, the base social assistance rates will increase.
It is estimated that in 2022, the base social benefit will be EUR 42, base social pension EUR 150, base special-purpose compensation EUR 126, and state-supported income EUR 129.
The estimated minimal consumption needs for next year total EUR 267.