Lithuania's Public Service reform: smaller staff, centralised selection
Lithuania will have fewer public servants, the selection will be centralized, their employer will be free to set salaries and reduce bonuses, however, they will have more days off and money for good performance, according to the reform initiated by the Interior Ministry that will still need approval from the government and the Seimas.
The public service in Lithuania is currently regulated by procedures approved 15 years ago. The ministry says that the past decade has brought significant changes to the regulation of selection and assessment of employees, however, new shortcomings of legal regulated emerged, preventing proper efficiency of the public service.
"We now see that the public service is excessively large, payment for work remains unclear and based on bonuses, while the responsibility for decisions is vague," Interior Minister Eimutis Misiunas said in a press release.
The Interior Ministry suggests setting an interval of salaries for groups of public servants, with the employer free to choose from six options of monthly pay.
The ministry suggests that persons working in the three top positions would be paid a fixed salary without an interval. According to the press release, this would allow avoiding subjectivity and lack of transparency of remuneration, as well as unwanted negative impact.
The Interior Ministry said the current scheme includes too many bonuses, therefore, may lack transparency. Under the new proposals, bonuses for work experience and qualifications will be integrated in the main salary, with the possibility to pay two types of extra pay only, namely, for temporary performance of another public servant's functions and for deviation of regular working conditions.
The ministry suggests envisaging new motivation measures.
The public servants will also be able to take up to ten days off extra, however, not more than three consecutive days.
Currently, the total number of public servants including statutory officers totals at about 52,6 00 people. In 2016, their average take-home monthly salary stood at 763 euros.
Lithuanian president: Govt-proposed tax reform will raise heating prices, income of rich
Lithuania's President Dalia Grybauskaite says that the government-proposed tax changes should ensure more social justice, while the current proposals will raise heating prices and the new ceiling on social insurance payments will further increase the income of those making the highest salaries.
"For now, we see that the package of proposals still contains increase of heating prices for the population and the 'gift' of Sodra (social insurer) ceiling of 40 million euros who make a lot of money," Grybauskaite said.
Meanwhile, the central Bank of Lithuania says that the government's course of tax changes is mainly correct, however, the proposed revisions are not enough to solve the most relevant problems of taxes and the social system.
"The proposals could be viewed as the start or the introduction. To solve or at least mitigate the main troubles of income inequality, small pensions and insufficient social security, health issues, we should provide more generous financing of many areas. However, we cannot afford this, as the level of revenue we collect and the level of public spending is almost the lowest in Europe, regardless of growing consumption," Vitas Vasiliauskas, the central bank's governor, said in a press release.
Economy Minister Mindaugas Sinkevicius says that a compromise on reduced value-added tax (VAT) for hotels will keep them competitive.
"We have dozens of projects planning to come to the biggest cities and Vilnius," the minister said.
From the start of 2018, a new reduced 15-per cent VAT is proposed for accommodation services, which currently pay a 9-per cent tariff – a rate that was planned to be discarded and replaced by 21per cent tariff.
Stasys Jakeliunas, chairman of the parliamentary Budget and Finance Committee, expressed approval to the majority of the governmentproposed tax reforms, however, does not rule out corrections made during parliamentary discussions.
"I hope that the decisions in the Seimas will largely be in line with what the government proposed, however, we will not avoid temptations of financial populism. Reduced VAT on heating is one of them. The decisions may be modified, however, I support many of them," Jakeliunas told the news conference.
The updated government proposals, which will be presented to the society later on Thursday, envisage keeping a reduced VAT rate for heating and hotels, however, the rate would seek 15 per cent starting 2018.
Until June, a 9-per cent VAT tariff applied to heating, with plans to reintroduce it in early October until the end of the year.
A 5-per cent VAT rate would be applied on books and passenger transport, which currently pay 9 per cent.
The 5-per cent VAT rate should continue on compensated medication and noncompensated prescription medication exceeding 300 euros.