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Remapping Labour Rights: The Case of Transitional Lithuania Author(s): Charles Woolfson and Matthias Beck Reviewed work(s): Source: Europe-Asia Studies, Vol. 54, No. 5 (Jul., 2002), pp. 749-769 Published by: Taylor & Francis, Ltd. Stable URL: http://www.jstor.org/stable/826505 . Accessed: 14/12/2011 06:03
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EUROPE-ASIA STUDIES,
Vol. 54, No. 5, 2002, 749-769

e
Il

Carfax Publishing Francis

Taylor& Group

Remapping Labour Rights: The Case of Transitional Lithuania

CHARLES WOOLFSON & MATTHIAS BECK

THE THROUGHOUT MID-1990S Lithuania has competed with its neighbours for foreign

direct investment (FDI). In this context Lithuaniangovernmentsof differing political persuasionhave sought to attractforeign investors partly on account of the country's willing, educated and compliant workforce.1As part of this agenda, the myth of a stable prosperingLithuaniawith few social and economic problemshas been actively promulgatedby the country's press and its political elites. The January2001 edition of EuroBusiness,for instance, contained a special Baltic states supplementwith the title 'New Breeds of Tiger'. Among the specific virtues of Baltic Lithuania,EuroBusiness noted 'aggressive economic liberalisation,privatisations,wily courtship of foreign capital and the painful reorientationof trade away from volatile Russia'. All of these factors were said to 'have underpinneda truly remarkableflourishing of prospects,generatingyear upon year of high yet sustainablegrowth'.2The reportwent on to record that, according to the Wall Street Journal, Lithuania,and its next door neighbour Latvia, preceded only by Estonia, outranked Denmark, Finland and Germanyin the 'league table of economic freedom'.3This rankingwas not accidental, as one of the first actions of the newly elected governmentwas to scrapa capitalgains
tax of 15% in December 2000.4

Lithuania'sattemptto portrayitself to outsiders as a 'neo-liberalparadise', itself, is not untypicalfor the region. Since independence,and even more so since the advent of the Russian crisis, many Centraland EasternEuropean(CEE) countrieshave faced increasinglyincompatiblepolicy objectives. On the one hand, policy actors are driven by an overwhelming desire to attract FDI at virtually any price, including the of circumscription the rights of organisedlabour.On the other hand, for a numberof countriespreparation Europeanaccession imposes clear limitationson their policy for options. Lastly, constraintson the political manoeuvringspace of CEE governments arise from the possibility or actuality of social unrest or political instability. Using the example of changes to Lithuania's labour legislation since 1992, this article aims to map out the developing political economy that has evolved in the context of these conflicting goals. Specifically, our analysis focuses on the question of as to whetherthe desire to attractFDI has led to a potentialmarginalisation labour as an organised and political force, or whether such a development has been halted by compliance with requirementsrelated to future European Union accession. In
ISSN 0966-8136 print; ISSN 1465-3427 online/02/050749-21 ? 2002 University of Glasgow DOI: 10.1080/09668130220147038

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addition, we explore the concrete responses of the trade union sector to attemptsto deregulatethe Lithuanianlabour market. In pursuing this agenda, our article does not attemptto gauge the level of social deprivationthat characteriseslife in Lithuaniatoday, nor do we seek to explore the literally schizophrenicsplit between social reality and the aspirationsof the official and unofficial promoters of inward investment.5Suffice it to say that the Russian crisis, together with a host of domestic problems, has left Lithuaniawith pressing social problems that belie the propagandaof the regional business magazines. For Lithuaniansthese problemsare nonetheless all too obvious. In its review for the year 2000 Lithuanianstate television includeda brief newsreel of a distraughtmiddle-aged man being wrestled to the ground by three police officers before being bundled into the back of a police Lada. The man, who had doused himself in petrol and was about to set himself on fire in front of the presidentialpalace, was shouting 'let me die-I have nothing left to lose'. This incident was a solitary act of desperationby one of several dozens of workers who had been on hunger strike in protest against the The enternon-paymentof wages by defaulting employers at bankruptenterprises.6 prise from which this workerhad come, Litoda, was located in a town in the west of the country and formerlyproducedsynthetic leather. In the new Lithuania,in which Mafia men and their legions of adolescent imitatorsstrut in regulationblack leather, the demandfor its synthetic imitationhad slumped, while export of this producthad proved almost impossible. Although some hungerstrikeslasted for six weeks and saw removed to hospital with probablepermanentphysical damage, the their participants local English-languagepress failed even to mentionthem. The local Lithuanian news, meanwhile, reportedthe savage beating by thugs of a strike leader who headed a markingthe anniversaryof one year of non-paymentof wages protest demonstration owed to workers in a large Kaunas factory. In case the point was missed, the thugs did not bother to steal his wallet. Our analysis is based on two pillars. We commence with an examinationof the frameworkof labour and employment legislation. This is followed by a review of currentliberalisationmeasuresand their public reception.We then attemptto identify what we would call, for lack of a better term, the determininginterests which have of framed,and are framing,the neo-liberaltransformation Lithuania.We come to the tentative conclusion that, although the Lithuanianstate has been remappedso as to accommodate the interests of capital, potentially to the detriment of labour, there remains a possibility for a reassertion of organised labour and a concomitant reorientationof Lithuanianpolitics towards a left-centre consensus.
The izmarch Europe: foreign investment, priivatisation and unemployment to

Since December2000 Lithuaniahas been upgradedto the status of 'negotiatingstate' with the European Union. Barring unforeseen events, its path towards European integrationas one of the 'first wave' of CEE applicantstates seems assured,with an anticipated accession date to the EU of 2004. One possible impediment to this trajectory,however, is the high level of corruptionwhich appears to characterise International rated Lithuaniain 50th place has public life in Lithuania.Transparency with Jamaicaand South Korea. Survey evidence similarly indicates that nearly along

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of three-quarters the Lithuanianpopulation see public officials as corruptor incompetent, compared with only 41% for Lithuania'sBaltic neighbours. Commentingon the fact that average salaries and wages in Lithuaniawere less than 30% of EU average levels, EuroBusinessmeanwhile suggested that 'investorscan be assuredthat despite the threatof graduallevelling out of wages across the EU, it will be some time before wage cost savings are significantly eroded.7This is partly due to the fact that, even in comparisonwith other ex-Soviet Baltic republics, Lithuania has fared less well, with average earningsin 2000 increasingby only 1.2% as against more than 10% in Estonia and 6% in Latvia.8Helping to keep wage costs low are stagnation in the domestic market, strict fiscal policy and an erosion of trade unionism. In addition there is spiralling unemployment especially among young people, which is now estimated at 25%.9Overall reportedunemploymentlevels had grown from 5.9% in 1997 to 6.4% in 1998"'and, accordingto the LithuanianLabour Office, reached 13.1% by 2001.11Estimates from a labour force survey suggest that the real rate of unemploymentis almost double the recordedofficial rate.'2 It is reasonable to assume that these estimates of unemploymentrates mask the presence of a substantialsegment of discouraged workers who have become marginalised as a consequence of a rapid absolute decline in employment.As restructuring and privatisationgathered pace between 1991 and 1998 the number of those employed in the Lithuanian economy decreased by about 241,000, that is, by In approximately13%.13 two years, between 1997 and 1999, as a result of privatisation in Vilnius alone, nearly one-quarterof job positions disappearedin the largest five factories. In the Kaunas industrialregion the numberof jobs in large enterprises decreased by about 40%.14According to a recent analysis, these job losses have affected older workers, the unskilled and women, whose particidisproportionately The process of marginalisation a large group of pation declined from 56% to 50%.15 of workershas been accompanied,as elsewhere in EasternEurope,by a sharpgrowth in income differentials. In 2000 one-third of families with three or more children, representing16% of the population,were said to live below the official poverty line of 50% of the average wage.16Estimates of Lithuania'sblack economy suggest that this sector is employing some 300,000 workersor more than 20% of the total working population.'7All of these workers, needless to say, are by definition excluded from protection with regardto secure employment conditions. Table 1 shows that in 2000 Lithuania's per capita GDP fell below that of its neighbours Poland, Russia and Belarus, but was higher than that of Latvia. Of its to neighbours,Lithuaniaexperiencedthe lowest inflation,which was attributable tight monetarycontrols. Highly unreliableofficially recordedunemploymentrates suggest that Lithuania's unemploymentrate was lower than that of Poland, but higher than that of the other neighbouringcountries. Recorded figures for the minimum wage ranked Lithuania behind Poland and ahead of its other neighbours. The average monthly wage for Lithuaniaof about USD270 was approximately45% lower than that recorded for Poland, and 17% higher than that of Latvia. Lithuanianmonthly average wages in USD, meanwhile, exceeded those of Belarus and Russia by a factor of 4.5. Looking at broaderpoverty indicators,such as populationgrowth and infant mortality rates, Lithuania generally performed much worse than Poland and better than most of its neighbours. Overall, these figures suggest that, in terms of

TABLE 1
SOCIO-ECONOMIC STATISTICS FOR LITHUANIA AND ITS NEIGHBOURS

Lithuania GDP per capita (USD, purchasingpower parity)* Inflation(%)* Labourforce (million)* Unemployment(officially recorded)(%)* Monthly minimumwage (USD, currentexchange)** Monthly average wage (USD, currentexchange)** Populationgrowth (per thousand)* Infant mortality(per thousand)* Note: Figures are for the year 2000. Sources: *CIA, WorldFact Book (www.cia.gov). ** US Departmentof State (www.state.gov). 7300 1 2 10.8 100 267 - 0.27 14.5

Belarus 7500 200 4.8 21 3 60 -0.15 14.38

Latvia 7200 2.5-3 1.4 7.8 70 229 -0.81 15.34

Po

85

1 4 -

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socio-economic development indicators,Lithuaniamay be broadly comparableto its neighbour Latvia, while being considerably weaker than Poland, Hungary or the Czech Republic. According to the OECD, the share of FDI in the gross fixed capital formationin Lithuania has increased considerably since 1995, which highlights the increasing significance of FDI for the economic developmentof the country.FDI net inflows as a percentageof GDP, in 1998, were 10.6%for Estonia, 3.5% for Latvia and 8.6% for Lithuania.This compares to 0.4% for Russia and 4.5% for Poland-traditionally the favouredsite for foreign investmentin Centraland EasternEurope.l8CumulativeFDI in Lithuaniahas risen from USD8 million in 1991 to USD 2307 million in the third quarter of 1999.19 Lithuania, outranked only by Estonia as a site for foreign investment, has maintaineda leading position in FDI in terms of dollars per capita among the 13 countries of EasternEurope.20 Survey evidence suggests that this investment position is attributable,at least in part,to the country's liberalisationefforts. Thus, an analysis of investmentconditions in 27 post-communistcountriesconductedby the Wall StreetJournal Europe in 2000 ranked Lithuania seventh in terms of governmental efforts to create a favourable climate for foreign investors.21 Despite this overall positioning, about two-thirds of Lithuania's FDI is accounted for by only five countries, of which the two most importantare the comparatively small economic players of Denmark (18.2%) and Sweden (17.5%). These are followed by the United States (13.4%), Finland (10.6%)
and Germany (7.7%).22 OECD analysts have suggested that 'the moderate wage costs

and skilled workforce, together with growing market potential, geographic location and economic and political stability' have created incentives for FDI in Lithuania.23 Today Lithuania seeks to entice potential investors with so-called 'free economic zones' which offer a string of tax breaks such as exemptions from corporationtax for five years for investments worth over 1 million euros, customs exemptions and road, property and VAT exemptions.24Foreign multinationals that have invested in Lithuaniainclude Motorola, Mars, Siemens, Telia/Sonera, Philips, Statoil, Shell, In Kraft Food International, Philip Morris, SEB, Carlsbergand Toleram.25 terms of which sectors, the largest share of FDI is accounted for by manufacturing, industry 31.81%, followed by wholesale and retail trade and repair services at comprises 24.53%, telecommunicationsat 17.94%and financialservices at 13.65%.26 The major areas of manufacturinginvestments have been in food, beverages and tobacco, textiles, the leather industry, petroleum refining and chemicals. Future areas of lucrative foreign investment are likely to be related to the exploration of the substantialdeposits of oil known to lie just off Lithuania's Baltic coast, as well as industrieswhich will participatein the next phase of privatisation,such as utilities and energy producers. A reportissued by the US Embassy in Vilnius comments that 'most US businesses in Lithuania rate the business environment as among the best to be found in the countries of the former Soviet Union.27This viewpoint is underscoredby a publication of the Lithuanian Ministry of the Economy which boasts that the average statistical employee in Lithuaniaproduces, per one dollar earned, almost three times relations On more outputthan their US counterpart.28 the issue of labour-management the US Embassy report, moreover, notes that 'labour unions are relatively

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uninfluential' and that 'Lithuania has not seen any major industrial strikes since regaining independence'.2 The race to the bottom Past researchhas arguedthat the desire to attractforeign investment, in competition with other provinces, can lead to a 'race to the bottom', especially where the success of key policy makers is associated with their ability to attractsuch investment.30 In the case of Lithuaniathere is credible evidence of the preconditionsfor a 'race to the bottom'. Internationally, CEE states are regularly assessed and ranked according to their ability to attractforeign investment.Equally, a cursory reading of the national media would suggest that the success of local and nationalpoliticians in Lithuaniais foreign investmentto their actions. frequentlyassociated with their ability to attribute Lastly, within East European political elites, there is arguably the perception that weak legislative supportfor tradeunions, together with a laxity in labourlegislation, is at least a partial contributorto foreign direct investment. The presence of these factors. One preconditions,however, must be balancedagainstpotentialcounteracting of the most obvious of these factors is Lithuania'sdesire to adoptthe social acquis,31 which could make the adoption of some neo-liberal policies costly in terms of damaging prospects for EuropeanUnion accession. The following two sections, which representthe core of this article,attemptto map out, first in the context of tradeunion and employmentlegislation, then in the context of current liberalisationmeasures, how Lithuaniahas coped with these conflicting policy demands. Our focus is on the strategic responses governing elites have formulated,both to the challenges of economic competitionand to the need to present a palatabledomestic policy agenda. Trade union legislation Industrialrelations in Lithuaniaare governed by two principalpieces of legislation. The first is the 'Law on TradeUnions' of 1991. The second is the 'Law on Collective Disputes' of 1992. The 'Law on Trade Unions' was passed in parallel with comparable legislation in other newly established post-Soviet countries and was meant to formally embrace United Nations standardson labour rights, as enshrined in the Conventionsof the International LabourOrganisation. Four months after the adoption of the 'Law on Trade Unions' a supplementaryact, the 'Law on the Regulation of Collective Disputes', was adopted, which provided for the interpretationof the seemingly casual insertionof liability provisions for strike actions in the 1991 'Law on Trade Unions'. Owing to the linkage between these two laws, a political analysis of Lithuaniantrade union legislation requires the joint analysis of both pieces of legislation. The law on trade unions (1991) Under the Soviet system, insofar as workers were deemed to be the owners of the means of production,strikes were thought to be self-defeating, since workers were effectively striking against themselves. Trade unions thereforewere expected not to

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resort to strike action but rather to act, according to Leninist principles, as a 'transmission belt' between the party and the masses.32 Despite their favourable attitude to strikes towards the end of the Soviet era, many newly independent CEE nations adopted a less than welcoming attitude to the idea of free trade unions engaging in strike action when they enacted their trade union legislation in the 1990s. Lithuania's 'Law on Trade Unions' of November 1991. as one of the first post-independence legislative acts, nonetheless seemingly embraced the idea of Western-style legal protection for trade unions.33 Article 1 provided for 'the right to freely join trade unions and take part in their activities'; included under this protection were also police, armed forces and state security personnel. Article 3 noted that In the Republic of Lithuania,trade unions shall function freely and independently.They shall have the right to preparethe regulationsand rules of their activities, to freely choose their representatives,to organise their apparatusand activities, and to shape the programme of their activities. State bodies, employers and their authorisedrepresentatives,managing bodies of enterprises,institutions,organisations,the administration, officials, political parties and other public organisationsshall be prohibitedfrom interferingwith the internalaffairs of trade unions. This formal proclamation in favour of trade union independence was underpinned by more specific entitlements. Thus Article 10 prohibited employers 'from making employment or retention of job conditional upon the employee's consent to refrain from joining or to withdraw from a trade union'. In addition, the same article explicitly enjoined trade unions to 'defend labour, as well as social-economic rights and interests of their members'. Article 12, lastly, gave trade unions the right to conclude collective agreements on wages and conditions with employers or their associations. Of specific interest with regard to future EU accession was Chapter 4, 'Trade Unions and State Bodies', Article 14, 'The Rights of Trade Unions in Issuing Standard Acts'. This section gave trade unions and their associations the right 'to submit proposals to bodies of state power and governance concerning the adoption, amendment or annulment of standard acts on labour, economic and social issues' or, in other words, created a formal reference to a tripartite governance system for the Lithuanian labour market. Article 21 embodied clauses for the protection of individual trade union members. These included safeguards against victimisation and arbitrary dismissal of individual trade union members, which prohibit employers from terminating 'the employment contract with an employee who is a trade union member without the prior consent of a body of the trade union of which that person is a member'. Employees who are elected onto trade union committees are also explicitly protected from dismissal 'without the prior consent of the trade union body'.34 On the potentially sensitive issue of the right to strike the 'Law on Trade Unions' can again only be described as permissive. Thus Article 23, 'The Right of Trade Unions to Organise Rallies or Demonstrations, or to Stage Strikes', notes that 'trade unions shall have the right to hold meetings, as well as to organise rallies, demonstrations and other mass events in the manner established by law. While defending the

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rights of their members, trade unions shall have the right to stage strikes according to the procedureestablished by law'. While this legislation appears largely unremarkable, Article 25, tacked on at the end of the act, takes an entirely different approachto the issue of industrialaction, effectively revoking the right to unencumbered strike activity. This revocation which states that 'a trade union which inflicts damage initially involves a paragraph on the state, or naturalor legal persons by its unlawful actions, shall be liable to compensatethereforefrom its propertyin accordancewith the procedureestablished by law'. This statementultimatelyredefinesthe relative position of organisedlabour in Lithuania,irrespectiveof the relatively progressivestatementmade in the 'Law on Trade Unions'. It does so subtly by restrictingthe key source of power for trade to It unions, namely the right to strike.35 also createstangiblecontradictions the earlier paragraphsof the Law, which, without further clarification, would have invited conflicting views on the rights of unions. These potential conflicts were, however, eliminatedby a second piece of legislation which, enacted one year after the 'Law on Trade Unions', interpretedthe liability provision for strike action in some detail.
The lawl on the regulation of collective disputes (1992)

The firstten Articles of the 'Law on the Regulationof Collective Disputes' are largely unexceptionable.Under Article 2 the 'right to make demands of the employer' is vested in collectives of employees and tradeunions.36 Article 3 states that tradeunion demandsmay be 'formulatedand approvedduringtheir (employees) generalmeetings (conferences)' and that employers shall not have the right 'to prevent the collective of employees from gatheringoutside of business hours'. Decisions of such meetings are to be by majorityvote or by a two-thirdsmajorityof delegates to a conference. Article 5 outlines the proceduresfor the considerationof demands,stipulatingthat the employer must considerthe demandsand informemployees of his decision in writing within seven calendar days of the submission of demands. Articles 7 and 8 outline variousproceduresfor conflict resolution,includingthe formationof a 'reconciliation commission' the decisions of which may be binding,or if thereis still failureto agree, further recourse to a Labour Arbitration committee and eventually a Court of Arbitration. of these bodies are chargedwith meeting in a timely and appropriate All manner. Article 9 envisages that, in the end, there may still be the possibility of withdrawalof labour or strike action by employees. Chapter 3 of the law, 'Regulation of Collective Disputes by Strike', includes Article 9, 'Strike', which states that 'in the event that a collective disputehas not been settled, or in the event that the employer does not carry out the decision of the reconciliationcommittee (LabourArbitrationand the Court of Arbitration),a strike may be declaredin accordancewith the procedureset forth in Article 10 of this Law'. The conduct of a strike is further elaborated upon in Article 10, 'Declaration of Strikes'. We quote extensively from this section because of its relevanceto the ability of unions to conduct effective industrialaction: mustbe informed writingaboutthe beginning future in of strikeswithinseven Employers calendar in with the days of the strikeby sendingthemthe decisionadopted accordance

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established manner(prescribedabove). Only those demands which have not been regulated during the reconciliation proceduremay be brought up upon declaring a strike. Strikesmay be precededby a warning(limited) strike,which may not last longer than two hours. The employer must be warned about the said strike no later than 24 hours before its beginning. The seven day notice to employers of impending industrial action is a general provision. In certain industries this increases to 21 days. Again, we quote Article 10, 'Declaration of Strikes'. The employer shall be sent a written warning no later than 21 calendar days prior to the beginning of the strike, upon the adoption of a decision concerning a strike (as well as a warning strike) in railway, city public transport,civil aviation, communicationsand power engineering enterprises (with the exception of electric power enterprises), as well as in medical and pharmaceuticalinstitutions,food, water, sewerage and waste disposal and oil productionand other types whose processing enterprises,and in enterprisesof uninterrupted stoppage may result in difficult or dangerousconsequences to society or the health and lives of humans. The general prescription of a seven-day notice period before strike action, by Western standards, can be deemed somewhat oppressive, as notice periods, where they exist, are typically much shorter. Needless to say, this applies even more so to the 21 day period of warning which applies to the broad range of specified industries listed above. To fully assess the ramifications of this provision, it must be understood that it gives employers ample opportunity to put in place alternative arrangements to keep production at the enterprise going, or to embark upon legal manoeuvring in the courts to further frustrate trade union action. Even where employers do not engage in such tactics, what is certainly removed is the element of surprise, which can be a powerful persuader or bargaining counter in the successful pursuit of a strike. The specification of transport and utilities, oil processing (presumably the important Mazeikiu Nafta refinery) and 'enterprises of uninterrupted production', moreover, places a significant number of employees under the 21-day rule. While it would perhaps be too speculative to argue that these provisions effectively undermine the right to achieve a union goal through strike action, it is obvious that they have at least the potential to do so. Implicitly, in adopting these provisions, the 'Law on the Regulation of Collective Disputes' fails to recognise that the effectiveness of industrial action often rests on the potential harm that it causes to the employers' interests. That industrial conflict is a normal, indeed inevitable and perhaps necessary, consequence of the organisation of the labour market on capitalist lines was apparently not recognised by the emerging class of Lithuanian elites. However, we must keep in mind that stoppages that do not at least threaten to 'result in difficult consequences' for the employer, if not for 'society', may be ultimately ineffective. In this sense the rhetoric in Article 10 of the 'Law on the Regulation of Collective Disputes', censuring stoppages which can be deemed 'dangerous' to society or 'the health and lives of humans', fails to recognise the fact that strikes are meant to inconvenience, even potentially damage the

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employer, and equally that, on occasion, strikes can also hurt the interests of innocent bystanders or the general public. While provisions requiring early notice of a planned industrial action may still be taken as reflecting an overly cautious attitude to strikes, Section 7 of Article 10 slips seamlessly from the regressive to the outright draconian. Here, by Western standards, an excessive array of industries is categorically excluded from the right to strike. It shall be prohibitedto call a strike within the structures internalaffairs,nationaldefence of and nationalsecurityas well as in enterprisesof electric power, centralisedsupply of heating and gas, and services of immediate medical aid. The demands of the employees of such services and enterprisesshall be consideredby the Governmentof the Republicof Lithuania. The limitation of strikes may be provided for in the special laws of other services (institutions). By prohibiting strike action by police officers, members of the armed forces and state security services this paragraph effectively revokes provisions of the 'Law on Trades Unions'. Conceptually, this must be seen as more than a technical mistake. Once the right to free trade union action is established in a society, it cannot be revoked without a credible justification that balances the rights of strikers against other social demands and needs. For Lithuanian trade union law to fail to do so brings into question the country's commitment to the legal protection of trade unions. In Lithuania the ban on strikes by police officers has taken on repeated political significance. As recently as February 2001 police officers in a number of localities throughout Lithuania threatened industrial action in protest against budgetary cuts imposed by local authorities. Consideration of their demands by the government, as stipulated in Article 10, is still awaited with interest. Restrictions on strikes according to special laws for other services and institutions, meanwhile, have remained an unrealised but significant possibility. The hesitancy of Lithuanian legislators to allow strikes to run their course, and to become means of determining the outcome of an industrial dispute, is further apparent in passages of the 'Law on the Regulation of Collective Disputes'. Article 12, 'The Course of a Strike', for instance, does provide for the right of employees to picket their place of work, but excludes special industries from these provisions. Such special industries include the railways, city public transport, civil aviation, communications and power engineering enterprises (with the exception of electric power enterprises, where strikes are outlawed entirely), medical and pharmaceutical institutions, food, water, sewerage and waste disposal, oil processing enterprises, and enterprises of 'uninterrupted production' and 'other types' (sic) (see Section 6 of Article 10). If a strike takes place at enterprises specified in Section 6 of Article 10, then the law requires that 'the execution of the minimum amount of conditions (services) necessary to satisfy the immediate (vital) needs of society shall be ensured by the body leading a strike'. This means that following the commencement of a lawful strike after the 21 days notice has passed, trade unions may still be required to allow for the provision of such services as 'satisfy the immediate (vital) needs of society'. As regards the requirement that trade unions conduct their activities in such a way

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as to satisfy 'the vital needs of society', Article 13, 'Lawfulness of a Strike', brings further restrictions: ... the court shall declare a strike unlawful if its goals contradictthe Constitutionof the Republic of Lithuania and other laws, if it has been called without compliance with the proceduresset forth in this Law or has been called in services and enterprisesindicated in Section 7 of Article 10 thereof, or if its declarationviolates Section 8 of Article 10 thereof. Upon declaringa strike unlawful, it must be terminatedon the day of the enforcementof the court decision. In the event that there are particularly importantreasons, the court shall have the right to postpone a strike which has not yet startedfor a period of 30 days, or to stop, for the same period, a strike which has already started. As we have pointed out in our discussion of Section 7 of Article 10, structures of internal affairs, national defence and national security as well as enterprises of electric power, the centralised supply of heating and gas, and services of immediate medical aid can be excluded from the right to strike. Under Article 13, which theoretically applies to all industries, moreover, the state may postpone a strike for 30 days before it begins, or stop it for 30 days if it has already begun if it feels that there are 'particularly important reasons'. Taken together, both of these provisions give the Lithuanian state far greater powers to intervene in a strike action than is customary in Western democracies. Chapter 4 of the 'Law on the Regulation of Collective Disputes' further limits the right to industrial action by imposing a selective liability on trade unions for damages to the employer as a result of 'unlawful' industrial action. We have already seen that the category 'unlawful' covers an extensive array of actions and industrial sectors. Article 17, 'Liability of Trade Unions', of the 'Law on the Regulation of Collective Disputes' specifies the details of the employer's right to recover any losses incurred from an 'unlawful' strike from the trade union itself: Trade unions must compensate the employer for losses resulting from strikes which have been declared unlawful, if they were the organisers or leaders of the said strike. If the financial resources and propertyof a trade union are insufficient to compensate for losses, the regulations set forth in Sections 2 and 3 of Article 19 thereof may be applied. Sections 2 and 3 further state that, 'in order to compensate for losses, the employer may, at his own discretion, use the funds which have been allocated in accordance with a collective agreement to pay supplementary wages to the members of a collective of employees, as well as for other privileges and compensations ...' (Article 19, Section 2).37 These regulations empower the employer to seize portions of the wages fund if s/he cannot receive compensation from the trade unions. Effectively, this gives employers the right to impose a collective financial penalty on the workforce itself. The effects of this regulation on striking workers are potentially devastating, as it must be remembered that in any industrial dispute workers will already have lost wages since many Lithuanian trade unions, moreover, have limited resources to provide strike pay to workers. Without doubt these provisions must present a disincentive for workers to commence or continue a strike action. This threat is underscored in Section 3 of the same Article, which notes that 'in cases when the employer is not compensated

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for all losses, the strikers may be subject to material liability in accordance with labour laws'. When assessing the political ramifications of these provisions it is important to note that the properties and funds of most of the Lithuanian trade unions were sequestrated by the government immediately after independence, on the grounds that the old trade unions were essentially communist party organs. Trade union assets seized in the first years of post-communist rule are not scheduled for return until at least 2006. The generally much smaller and weaker new independent trade unions, meanwhile, do not have sufficient funds to meet any claims by employers for damages. The burden for recompense can therefore quickly fall on individual workers themselves. A 'spontaneous' stoppage of the workforce over unpaid wages, such as has occurred in a number of major enterprises in Lithuania, might well be deemed to be the result of unlawful trade union action. In such a case, employees who were successful in forcing the employer to pay wages owed to them for work done, in theory at least, can be subjected to deductions from those payments by an employer who seeks to recover wages as compensation for losses incurred by the strike (to secure payment of wages). While there is no evidence that such steps were actually taken, the mere existence of this possibility is an indication of the degree to which the Lithuanian state has opted for a radical neo-liberal agenda. The legal disenfranchisement of Lithuanian unions is compounded by their own internal fragmentation. Today, the Lithuanian trade union movement is split into four different confederations each competing with the others for members. These confederations are allied to Social Democrats, Reformed Communists, Christian Democrats or Conservatives. The fact that prominent trade union leaders continue to serve as members of the parliament, meanwhile, has fostered the illusion that unions have a considerable weight in the political process. This situation has affected attempts to create broader inclusive bipartite and tripartite structures with the main social actors in line with the so-called 'European social model'. At national level a new Tripartite Council was introduced in 1995, as a consequence of EU criticisms regarding deficiencies in 'social dialogue'.38 This Council has been endorsed by the four main trade union centres and the two main employers' organisations; however, it only received a permanent secretariat in 1998. The Lithuanian Human Development Report 1997 noted with respect to current tripartite initiatives to create social 'partnership': Social partnershipis often developed 'from above' due to an insufficient level of worker participation.The role of social partnershipin Lithuania differs from Western European because of their countries, where workers are more empowered through social partnership active participation.On a regional level there are neither large enough employers nor workers organisations. The main trade unions are passive and employers not socially active.39 Indeed the faltering and half-hearted nature of social dialogue in Lithuania has been underscored by several studies, including the European Commission's 2000 Regular Report: Social dialogue is still in an early stage, particularly on the employers' side, where considerableefforts are still needed to set up appropriate structures and organisations.In the field of social dialogue, there is a predominanceof tripartitestructures,where the govern-

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ment still plays a ratherlarge role. Bipartitesocial dialogue is a lot less developed, one of the problems being the low unionisationof workers (6-10%) and the fact that trade unions are not always recognised by new privatisedcompanies. Collective bargainingon issues of labour relations at sectoral level is not widespread,while it is more common at the lower (company) level. The government administrativecapacity on social dialogue should be reinforced to better motivate and follow autonomous social dialogue, for instance through the encouragementof appropriate structures sectorallevel, and throughregularregistering, at analysis and monitoring of collective agreements and their contents, both at sectoral and enterpriselevels.4? With overall estimates of trade union density in Lithuania ranging anywhere from 30% to as low as 5% of the working population (as against 95% in the immediate post-independence period41), there is evidence that labour has increasingly become a silent bystander in Lithuania's capitalist transformation. Just how shallow the roots of social dialogue proved to be was forcibly brought home to the trade unions as the government ratcheted up the neo-liberal agenda with a renewed attempt to undermine residual labour protections.

The current liberalisation agenda and public protests After a period of left-led government in the earlier part of the 1990s, a Conservative government took power in Lithuania in the late 1990s. This Conservative government was routed at the polls in October 2000, in the backwash of renewed disillusion with privatisation and falling living standards. In the run-up to that election fierce public controversy over the sale of one-third of the state-owned Mazeikiu Nafta oil refinery to the US Williams oil company had the seemingly perverse effect of restoring some of Lithuania's national pride in the achievements of Soviet-built industry.42 However, the election did not see the Left regain power, even though the Social Democrats won the largest number of seats in the Seimas (parliament). Instead, a coalition of Liberals and the New Union (Social Liberals) assumed office with a radical programme of business-friendly proposals. Within weeks of gaining office the new government published a resolution spelling out its intentions.43 Under the heading of 'Liberalisation of Labour Relations', this resolution proposed a number of changes to trade union and employment laws which were to become part of the new government's action plan for its first 100 days. These proposed changes included: 1) an approved typical form of employment contract to be recommended but not compulsory; 2) all restrictions on concluding any type of civil contracts between natural persons as well as between natural and legal persons to be lifted; restrictions on temporary employment contracts to be gradually phased out; 3) 4) statutory requirements for an employer to inform the social insurance commission (Sodra) on the employment of a person on the same day and dismissal from employment within three working days to be no longer applicable; 5) mandatory working time records no longer to be kept;

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that employees have employmentidentificationdocumentsto be 6) the requirement waived; 7) compensationfor public servants and other employees as provided by existing legislation to be reduced in amount; 8) employers no longer required to consult trade unions before making workers redundant,where the worker is a member of a trade union; to 9) if there is an interruption productionand the employer wishes to temporarily a workerbut the employee refuses to accept redeployment,the employer redeploy is obliged to pay only one-third of the minimum wage rate instead of the full statutoryminimum rate; 10) workers who receive training at their employer's expense to compensate the employer if they change employment. The proposedmeasures,officially aimed at 'reducingunemploymentin Lithuania', were partof a concertedattemptto create labourmarket'flexibility', which must have appearedas a majorthreatto existing tradeunions. Indeed, following the publication of these proposals,the four tradeunion confederations,united for the first time since Articles on employee rights independence,threatenednationwideindustrialaction.44 and conditions began to appear in the Lithuanianpress, one of which asked 'Who imprisonedwork in Lithuania?'45 the early spring of 2001 the prospect of trade By union opposition led to a postponementof the plannedliberalisationpackage. On 23 March,nonetheless,the Seimas passednew liberalisation legislationthatamendedinter alia the 'Law on EmploymentContracts',the 'Law on Wages', the 'Law on Holidays' and the 'Law on TradeUnions'. The typical labourcontractwas duly abolished,with a new non-compulsory'sample' labourcontractbeing includedas an Appendixto the 'Law on EmploymentContracts'. Amongst other items, the new amendmentsto the 'Law on EmploymentContracts' also reducedpay-offs for dismissedemployees. Underthe previouslegislation a person employed by a company for at least a year had been entitled to six months compensationat the average rate of pay if dismissed. The amount of severance pay increased, depending on the amount of service, up to a maximum of three years compensationif an employee had worked for 20 years in the same workplace.Under the new rules, an employee with up to five years service would receive only four months pay in compensation,and up to a maximumof 12 months pay for 20 years service. This meant that those employees with five-ten years service would receive six average monthly payments, instead of the previous 18, while those with 10-20 years service would receive eight average monthly payments instead of the previous 24. Workerswith over 20 years service would be granted12 averagemonthlypayments instead of the previous 36.46 During spring 2001 protest pickets were formed outside the homes of Liberal and New Union MP's, while over a hundredtrade unionists from throughoutLithuania attendedas 'silent witness' at the plenarydebateon the new legislationin the Seimas.47 Some newspapersclaimed the pickets of workers outside the homes of MPs caused a fatal heart attack to one MP's mother and denounced the intimidationof families and innocentchildren.OppositionSocial DemocraticcoalitionMPs, who sponsoredthe trade unions' 'silent witness' in parliament,called on the Presidentnot to ratify the

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new law. Presidentialratification,however, duly followed, with tradeunion representatives 'threatening'to boycott future TripartiteCouncil discussions, on the grounds that no prior discussion of these crucial measures had taken place in the Council. During the dispute, overt protest on the part of the trade unions created public relationsrisks for them.Protestactionwas occasionallydirectedagainstindividualMPs who supportedthe liberalisationmeasures. In most instances these protests involved small quiet pickets of perhapsa dozen or so smartlydressedmen and women, standing with placardsin dignified order outside MPs' homes. The wife of one MP was seen on the television news arriving in a Mitsubishi four-wheel drive unmolested by the 'pickets'. The direct 'personalisation'of the protestagainstthe liberalisationmeasures was easily construed by a hostile media as 'intimidatory'. The linguistic 'flux' of social opinion was captured,to some extent, in television These broadcastsprovideda condensed and semanticallyloaded telegrabroadcasts.48 of protest.One placardbegan almost cosily, only to end with the stinging rebuke: phy 'Dear Neighbours-We elected your neighbourRolandaPavilionis but he voted in the Seimas for measuresthatwill make you a slave withoutrights'. On otherplacardsthere was an even more bald accusatory tone: 'We did not elect you to vote for our enslavement' and 'We did not elect you to vote to remove our rights and jobs'. The personalisationof 'you' in the slogans implied a real human identity as its referent. The 'you' is named, it is someone known to and presentin the community,albeit that In s/he is a memberof parliament. an attemptto claim the moralhigh ground,the Social Democratictradeunion federationtook out a full-page advertin the daily press headed 'Warningto LithuanianMembersof Parliamentand the electors' explaining the basis of their opposition to the new measures. The names of those 40, mainly Social Democrat, MPs who voted against liberalisationwere listed above those of the 50 or so Liberal and New Liberals who voted for.49 In a new democracy,where politicians are supposedto representthe interestsof the people in a way that they never did under the previous regime, the sense of betrayal was palpably conveyed by such personalised admonishments.One protest placard displayed a message asking a memberof parliament,'Do you know what an autocracy at work means G. Dalinkevicius?'.Anotherbannercontaineda cartoonrepresentation in one corner of a boss aggressively pointing a finger at the figure before him of a workeron his knees. Such keywordsas 'autocracy'(savivale) and 'slave' (vergas) may seem quaint to outsiders,but they are imbued with accusatory,potentially explosive, reborn,but now the forces meaning.Lithuaniais meantto have emergeddemocratically of the free market seem to underminethat democracy. The 'Panorama'evening news review programme Lithuania'snationaltelevision on Channel 1 on 23 March 2001 invited viewers to email the station website with their opinion of the consequencesof the liberalisationlaw in responseto four assertionsthat had all been aired by various spokespersonsin the 'debate' on liberalisationearlierin the broadcast.These were: 1) 2) 3) 4) social and economic rights will be reduced; the power of employers will be increased; there will be a decrease in trade union members; the business environmentwill be improved.

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The minister of labour and social affairs, Vilija Blinkevicuite, reassuredviewers that 'Lithuaniawill abide by the EuropeanCharteron social rights and will guarantee these rights whatever the government'. At the same time, the chairman of the Committee for Labour and Social Affairs commented: 'We cut comparliamentary pensation for dismissal by three times ... if employers have to pay out 20,000 Litas [?3500] for each dismissal, companies go bankrupt'.Speaking for the trade unions, the prominenttrade unionist and Social Democrat MP, Roma Dovydeniene, spelled out the opposing view: 'tradeunion power will be reduced and the numberof trade unions will decline. Employersdo not want tradeunions inside their companies.If the employer wants, the worker can now be easily dismissed'.50 Given the magnitudeof the threatposed by the new liberalisationlegislation, it can be arguedthat the tradeunions acted with restraint.This restraintwas most probably a mark of their overall weakness and, perhaps, a recognition that, in Lithuania, concerted worker protests could be met by the full force of the state. Nonetheless, vigorous collective actions have taken place in Lithuaniathroughoutthe year. Within a week of the liberalisationmeasures being passed, over 600 Marijampolecounty farmers together with workers from the local sugar beet factory, joined by several hundredfarmersfrom the Suvalkijaregion, created what almost became a localised insurrection. Protesters blocked the main road and subsequently the forest tracks leading to the Polish border. The protest was sparkedoff by fear of closure of the MarijampoleCukrus sugar factory and the subsequent destruction of the regional sugar beet growing industry.Fuelling the protesters'anger was the fear that the local sugar beet industrywas being subject to unfair competitionfrom the Danish foreign investor Danisco Sugar.51 The blockade culminated in violent confrontation and A sustainedclashes involving police special forces and the demonstrators. reflective article on these events noted that 'we are step by step approachingsocial unrest ... although the conflict soon died down, there was a smell of gunpowderin the air'.52 That ambivalencetowardsforeign investmentexists at a popularlevel in Lithuania is beyond dispute. The Marijampolefarmers, like their counterpartselsewhere in Lithuania, not only fear for the future of local industry but also object to the possibility of the sale of agriculturalland to foreign investors. Symptomaticof this wider unease regardingforeign investment, a recent commentaryin the influential
Lithuanian Business Review observed: There is no use in abstracttalk, such as Westerninvestmentis good because it createsjobs,

revenues so on. Theaverage and Lithuanian wouldonly laughin my face. bringsadditional 'I'm nobody'sfool', he wouldsay ... Whenin theirhome country people see only the side and reverse of investment Westerners comingherewhenhanded thingson a plate, only
it gets on their nerves. Naturally,the agitatedmind then revives communisticstereotypesof Western exploiters that were hammeredin for 50 years.53 Outlook

When the unstablecoalition of Liberalsand New Liberalsfinally collapsed in disarray in June 2001 this opened the way for the formerCommunistPartyfirst secretary,then Presidentbetween 1993 and 1998 and now chairmanof the newly strengthened Social Democratic Party, Algirdas Brazauskas, to become Prime Minister. Brazauskas,

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pro-NATO and pro-EU and an admirerof Tony Blair's 'ThirdWay' and the 'social market economy', had long since shed all vestiges of his uncertainpast to become Lithuania's most popular politician.54His new governmentof Social Democrats, in alliance with Liberals, has remained committed to an agenda of privatisation. Brazauskas,for example, was quoted as asking the outgoing Finnish ambassadorto facilitate attracting investors from his home country, to whom he promised an The new governmentalso retainedBlinkevicuitefrom climate'.55 'investment-friendly as the previous administration ministerof labourand social affairs. Blinkeviciute, for her part, said that the incumbentgovernmenthad 'no intention of initiating amendments in laws regulatingthe labourmarket'.More ominously, Blinkeviciute signalled that the governmenthad more importantthings to do, such as draftinga new Labour Code.56Roma Dovydeniene, the Social Democrat MP and aspiring cabinet minister, who was backed by the trade union constituency and could have made some restitutionof labourrights, was instead given the portfolio of minister of culture.No surprisethen that the leadershipof the Social Democrats ultimately had little to say about reversing the previous government's liberalisationmeasures. Meanwhile, the Danish ministerof foreign affairs, Mogens Lyddetoft,in a letter of reply to a Danish trade unionist, gave a daunting condemnation of Lithuania's industrial relations system, stating that 'the legislative amendmentsdescribedabove are measureswhich diverge considerably from general European standardsin the field of trade union
rights' .57 Conclusion

Lithuanian authorities, like those in many neighbouring countries, have viewed deregulationas an importanttool for attractingforeign investment.Currently,deregulatory measures are being implicitly justified by the argumentthat, in cash-strapped Lithuania,government officials have no other option than to forego regulating and taxing business, in order to regain some form of political manoeuvringspace. This argument is being supplementedby the proposition that business-friendlytax and regulatory frameworks have been adopted as a temporary measure only. If the 'temporary'commitmentto deregulationallowed the captureof a significantshare of foreign investment, which set in motion an upgradingof living standards,it could, moreover, be argued that Lithuania will have created the preconditions for a reconsolidationof a social contract at a later stage. Notwithstanding current exigencies, the argument of a temporary sacrifice of standardsfor the benefit of future generations faces at least two conceptual limitations. Firstly, given the innate power imbalancesin a capitalisteconomy, it should be feared that a radical shift of state policy towards measures that explicitly favour the interests of capital will destroy, perhaps permanently,the neutrality of that state, conceived within the limits of the bourgeois state per se.58The resultantworst case outcome would be the mutation of the existing state into a puppet regime which predominantlyserves the interestsof an alliance of foreign and domestic capital, and whose sole legitimacy rests on its ability to facilitate exploitation.59Such a state would, in the long run, risk underminingthe fabric of civil society, not only in terms of its own ability to rule legitimately but even more so in terms of providing

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effectively the basic material needs of its citizens (at least for the generations affected).60 Secondly, even if it were politically feasible to carry out a radical neo-liberal agenda on a temporary basis, the very question of its justifiability would rest not only on the narrow issue of intergenerational equity but also, more importantly, on its reversibility.61 As concerns reversibility, past experience would however indicate that promises of a future re-equalisation are usually hard to keep-if only because the respective political economy has been remapped.62 Our analysis of Lithuanian industrial relations suggests that the political process has been heavily weighted towards the interests of capital, leading to outcomes which, in spirit if not in the actual letter of the law, are contrary to the major ILO Conventions and to EU perspectives on social partnership and social dialogue. We have argued that the key driving force for these developments has been the desire of the new Lithuanian elites to create a business-friendly regulatory environment that is attractive to foreign investors. In the short term these elites may have succeeded in this project. In the longer term the price, in terms of social dislocation, may prove too high. Public protests already indicate widespread dissatisfaction with those government policies which are blatantly aimed at placating the fears and meeting the expectations of actual or potential foreign investors. While some of this dissatisfaction seems to have been kept in check by the dwindling legacy of post-independence nationalistic optimism, it is unlikely that this will be the case in the future.63 Currently, Lithuania may have blocked many of the requisite channels for the articulation of working class interests against those of capital. This may have led to short-term gains with regard to limiting the scale of strike activity and organised social unrest. However, given ongoing protests, it is doubtful whether neo-liberal initiatives will be sustainable in Lithuania in the long run, if only because the benefits from these actions remain obscure. In a best case scenario, the full recognition of the requirements associated with accession to the European Union, together with an acknowledgement of the domestic necessity of the unrepressed articulation of organised labour, will lead to the adoption of a tripartite policy which reassesses the costs associated with haphazard neo-liberal initiatives. In a worst case scenario, the continuation of neo-liberal policies will lead Lithuania to achieve neither its goal of European accession nor social stability. University of Glasgow Glasgow Caledonian University
l The authors would like to express particularthanks to Viktorija Kairaitiene,Audrius CarolineHunter,Bob Arnotand John Lowenhardt their advice, assistanceand for Sceponavicius, The wish to acknowledge generoussupport a BritishAcademyLarger the of encouragement. authors

Research Grant,Visiting Exchange to the Lithuanian Academy of Sciences and a Caledonian Research

Woolfson. Society of Edinburgh Foundation/Royal VisitingEuropean Fellowshipto Dr Charles 2

EuroBusiness, 2, 8, January 2001, Special Report, Baltic States, p. 69.
I3 bid., p. 70. 4Financial Times, 20 December 2000, p. 15.

5A. Aasland & G. Tyldum, Better or Worse? Living Conditions and Developments in Estonia, Latvia and Lithuania 1994-1999, Fafo-report 334 (Oslo, Norway, 2000). This three-nation survey of the ex-Soviet Baltic republics ranks Lithuania as the poorest country on the basis of the percentage of households in relative income poverty (lower than 50% of median income). The respective rates are 15% for Lithuania, 11% for Latvia and 10% for Estonia (p. 6). Only 46% of households in Lithuania have income from wages, compared with 56% for Latvia and Estonia (p. 7). For an academic view on

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Lithuania's currentprospects see M. Taljunaite, R. Blom & H. Melin, Streaming towards Social Stability (Vilnius, LithuanianInstitute of Philosophy and Sociology, and Tampere, Departmentof Sociology and Social Psychology, University of Tampere, 2000). 6 20% of Lithuanian employees reportedexperiencing delays in the payment of wages during 1999 (compared with 15% for Latvia and 14% for Estonia). Delays of longer than two months were reported by 6% of Lithuanian employees compared with 3% for Latvia and for Estonia (Aasland & Tyldum, p. 17). 7 EuroBusiness, 2, 8, January 2001, p. 8; see also Eurostat News Release, No. 48/2000, 18 April 2000. Lithuanianofficial sources stress the wage cost advantage of investing in the Lithuanianeconomy, and rank the 'Availability of Well-Trained, Low-Cost Labour Force' (with wages being one-tenth of industrialised countries, including those in the EU, and 20-50% lower than those in CEE states) only behind its advantageous geographical location between CIS and EU. See 'Ten Reasons to Invest in Lithuania', Lithuanian Development Agency, at http://www.lda.lt/. 8 See O.G. Rakuaskiene, 'Employment and Prerequisities for its Growth', The Survey of the Lithuanian Economy May 2001, Ministry of Economy and Lithuanian Statistics Department (Vilnius, 2001), p. 145. 9 Figures for 1998 from UN Lithuanian Human Development Report, 1999, p. 69. See also note 13 below. 10UN Lithuanian Human Development Report, 1999, p. 69. 11 Reuters, 'LithuanianJan Jobless Hits 13.1 pct, 10-yr High', 3 February2001; see also Lithuania Labour Exchange, at http://www.ldb.lt/eng/sit.htm. The highest unemployment rates on 1 January2001 were registered in Druskininkai (27%), Akmene (24%) and Pasvalys (22.8%). An unemployment rate of more than 20% was registered in seven territories and of more than 15% in six of ten regions. 12An unemployment survey conducted in line with EU norms by the Lithuanian Statistics Department indicated worse results for May 2001, compared with those previously announced by the Lithuanian Labour Exchange, ELTA and BNS news services (14 August 2001). The survey suggested that the unemployment level in May 2001 was 16.6%, 1.1% higher than in May 2000, with the number of unemployed persons having increased from 280,100 to 284,000. The Labour Exchange had earlier reported that the May 2001 unemployment rate was 12.3%, an increase of 1.2% over the same period the previous year. Many unemployed do not bother to register at the Labour Exchange since benefits only accrue to those with at least 36 months contributions. Moreover, the prospects of a job placement are regarded as remote by many. The Statistics Department survey was based on 7,300 persons above the age of 15 and included not only persons registering as unemployed at labour offices but also those who had applied to private employment agencies. The unemployment rate for men (19.3%) was higher than that for women (13.9%). The numberof long-term unemployed almost doubled during the year 2000 and the employed population contracted by 4% (see Rakuaskiene, p. 140). 13 With liberalisation of the labourmarketand bankruptcylaw high on the political agenda for 2001, most observers have predicted even sharper rises in unemployment in the coming period as further restructuringtakes place (see Rakuaskiene, p. 140). Following an increase in the number of companies declaring bankruptcyunder the terms of the existing Lithuanian Law on the Bankruptcy of Enterprises, and having financial difficulties in paying their workers, an urgent decree of the government, passed on 1 September 1997, temporarily established a fund to meet the demands of the workers of enterprises currently undergoing or having experienced bankruptcy. During the year 1998 a total of 31.7 million LTL of repayable financial assistance was granted to 21 enterprises under this Fund for Bankrupt Enterprises. See Ministry of Social Affairs and Labour, Social Report, 1998 (Vilnius, 1999), pp. 8 and 25. Employer opposition to this fund (0.02% of their contribution to the national social security budget) has been sustained and compulsory contributionshave been much resented. Remarkably,official sources continue to emphasise the employability of the highly educated Lithuanian workforce, of which 17.9% possess university degrees and 44.1% a specialised education (i.e. technical certificates) (Lithuanian Development Agency, A Practical Guide for Investors in Lithuania, at http://www.lda.lt). 14 UN Lithuanian Human Development Report, 1999, p. 64. 15R. Dovydeniene, 'Trade Union Responses to Globalization in Lithuania', InternationalLabour Organisation, Institute for Labour Studies, Labour and Society Programme, 2000, at http://www.ilo.org/ 1/index.htm#intro. public/bureau/inst/papers/1999/dp 11 16 Lithuanian Department of Statistics 2000 Yearbook (Vilnius, 2000). The expenditure on food amongst the wealthiest 10% was 3.8 times greater than that of the poorest 10%. The private share of Lithuania's GDP increased from just under 40% in 1992 to over 70% in 1998. 17R. Bagdzeciciene & G. Belazriene, 'Shadow Economy in Lithuania', Lithuanian Business Review, 2001, 8, pp. 25-28, suggest that the black economy might have made up about 23% of GDP in 2000. This figure is based on an analysis by the Lithuanian Free Market Institute, A Survey of Macroeconomic Variables in Lithuania 2000/2001 (Vilnius, 2000), p. 143, which states that 'the shadow

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economy accounts for 23% of GDP, unrecordedimports for about 20% of total imports, and unrecorded exports for about 12% of total exports'. 18OECD, 'Foreign Direct Investment Impact and Policy Analysis-Lithuania', OECD Working Papers, VIII, 2000, No. 92, p. 12. 19Lithuanian Department of Statistics (Vilnius, 1999). 20 FDI amountedto 388 dollars per capita for Estonia, 256 for Lithuaniaand 113 for Hungary,whilst the Ukraine received only 14 and Russia 7 dollars per capita. 21 Apart from its two Baltic neighbours, Lithuania only came behind front runners for EU enlargement such as Hungary, Slovenia, Poland and the Czech Republic (cited in A. Valionis, 'Investment Yields Returns', Lithuania in the World, 9, 4, 2001, p. 34). 22 OECD, p. 17. 23 Ibid., p. 9. 24 Lithuanian Development Agency. 25 Of the 1893 joint ventures and companies with foreign capital, Germany occupies first place with 371 companies, followed by the United States with 157 companies and Sweden with 133 (OECD, p. 17). 26 Ibid., p. 20. 27 US Embassy, 1998 Country Commercial Guide: Lithuania (Vilnius, 1988). 28 Rakuaskiene, p. 145. 29 US Embassy, 1998 Country Commercial Guide: Lithuania. 30 The notions of a 'race to the bottom' or 'races to laxity', to which our argument bears close resemblance, are well developed in the US literature on state environmental legislation. For a review of this literaturesee for example P. Swire, 'The Race to Laxity and the Race to Undesirability:Explaining Failures in Competition Among Jurisdictions in US Law', Yale Journal on Regulation, 14, 67, 1996. 31 The social acquis requires negotiating states to demonstrate compliance with the spirit of the European Social Charter,as well as a numberof EU Directives pertainingto issues such as occupational health and safety, collective bargaining and consultation rights. 32 See Lenin on Trade Unions (Moscow, Progress Publishers, nd); I. Deutscher, Soviet Trade Unions: Their Place in Soviet Labour Policy (London, Oxford University Press, 1950); Alex Pravda & Blair A. Ruble (eds), Trade Unions in CommunistStates (Boston, Allen & Unwin, 1986); Blair A Ruble, Soviet Trade Unions: TheirDevelopment in the 1970s (Cambridgeand New York, CambridgeUniversity Press, 1981). 33 Republic of Lithuania, 'Law on Trade Unions', 21 November 1991, No. 1-2018. English version at http://www.litlex.lt/Litlex/Eng/Frames/Laws/Documents/60.HTM. 4 Both of these rights are affirmedin the Lithuanian 'Law on Employment Contracts', first adopted in 1991, whereby employers 'may not discharge an employee on their own initiative or will without the consent of the elective trade union body whereto the employee has been elected'. 35 The crude historical parallel to this provision is the 1901 House of Lords ruling which allowed the Taft Vale Railway Company to sue the Amalgamated Society of Railway Servants for losses incurred during a strike. The ruling exposed trade unions to the risk of being sued for industrial action up until 1906, when the Liberal Government passed the Trade Disputes Act that removed trade union liability for strike losses. 36 Republic of Lithuania, 'Law on the Regulation of Collective Disputes', 17 March 1992, No. 1-2386. English version at http://www3.1rs.lt/c-bin/eng 37 By referringto 'supplementarywages' the law is unclear as to whether employers can seize basic wages as well. However, the successive broad references to 'other privileges' imply that this is, at least in theory, possible. What the law seems to suggest is that, in seeking damages from employees, an employer would first seize any funds for any supplementary or exceptional wage payments and then, if these were insufficient, seize portions of the wage proper. 38 See UN Human Development Report Lithuania, 1997, chapter 4; see also Lithuanian Secretariat of TripartiteBoard at http://www.socmin.lt/trisale/index.html 3 Ibid. 40 See European Commission, 2000 Regular Report on Lithuania's Progress Towards Accession, chapter 13 (Brussels, 2000), pp. 62-23, at http://europa.eu.int/comm/enlargement/report11 00/index.htm#Reports; G. Casale (ed.), Social Dialogue in Central and Eastern Europe (Budapest, InternationalLabour Office, 1999); J. Due, M. Mailanda & V. Makarov, 'Social Dialogue in the Baltic Countries', reportfor the 'Seminar on Social Dialogue in the Baltic Sea Region', Warsaw, 25-26 October 2000 (University of Copenhagen, Employment Relations Research Centre, 2000). 41R. Dovydeniene & G. Casale, 'IndustrialRelations and Tripartismin Lithuania', in Casale (ed.), p. 230, suggest that about 20-25% of the working population are union members but note that not all unions provide accurate figures. Aasland & Tyldum, p. 17, suggest that tradeunion membership extends to only 5% of the workforce (as against 8% in Estonia and 10% in Latvia).

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42 Joel Blocker, 'Lithuania:Crisis Reflects New Eastern Skepticism', RFE/RL WeeklyReports, 21 October 1999, comments that 'public concern over the Williams deal is a sign of rapidly changing attitudes toward Western investment'. See also I. Pasukeviciute & M. Roe, 'The Politics of Oil in Lithuania: Strategies after Transition', Energy Policy, 29, 5, April 2001, pp. 383-397. 43 Seimas of the Republic of Lithuania, Resolution on the Programme of the Government of the Republic of Lithuania for 2000-2004, 9 November 2000, No. IX-20, Vilnius. 44 See Dovydeniene, 2000. 45 Romas Lazutka, 'Kas Lietuvoje ikalino darba?', Lietuva, December 2000. Even before liberalisation Lithuania had the highest comparative proportion of employees on temporary contracts in the Baltic states. See Aasland & Tyldum, p. 17. 46 'Labour Relations Liberalised', Lithuanian Seimas, Parliamentary Mirror, 3, 43, January2001, pp. 13-14. 47 See Lietuvos Respublikos Seima Antroji Sesija, 2001 m, kovo 22d.8 (59), 9(60) posedziai stenog. 35 pp. 3-18. 48 See V.N. Voloshinov, Marxism and the Philosophy of Language (The Hague, Mouton, 1972). 49 'LSDPS Profesinis solidarumas', Respublika, 22 March 2001. 50 Perhaps emboldened by liberalisation measures, employers in the public sector issued a circular to their staff in the Ministry of Health in August 2001 noting that under the Law on Civil Servants 'any employee who wishes to take part in trade union activity in the course of his or her daily work should inform their head of department'. Lietuvos Respublikos Sveikatos Apsaugos Ministerija, Del Valstybes Tarnybos [Statymo 20 Straipsnio] Nr 12, 6 August 2001. 51Danisco controls three out of the four national sugar factories, leaving the restructuring indigenous sugar industry at a severe and probably terminal disadvantage. 52 L. Gadiekis, 'Subsistence Farming-No Way to New Economy', Lithuanian Business Review, 2000, 4, April, p. 13. 53 R. Valtaka, 'Fear of Investment-Escalated Myth', Lithuanian Business Review, 2000, 4, April, pp. 11-12. 54 Brazauskas was to receive the ultimate accolade from EU enlargement commissioner Verheugen by way of an assurance that Brussels 'had full confidence in his reformist credentials'. By contrast to the former communist premier of Slovakia whose recent returnto office was said to threatenSlovakia's progress in accession talks', Brazauskas was described as a 'successful former president' who had initiated Lithuania's drive for integration into the EU. See A. Lobjakas, 'Lithuania: Verheugen Hints At First-Wave EU Membership', RFE/RL Weekly Reports, 24 July 2001. 55ELTA News Service, 'Lithuanian PM Pledges Investor Friendly Climate to Finnish Entrepreneurs', 29 August 2001. 56Kauno Diena, 6 September 2001. 57 Letter from Mogens Lykketoft, Danish foreign minister, in answer to a letter from Poul Winckler, FOA, Denmark, 8 June 2001. 58 Orthodox Marxist analysis would, of course, argue that all legal initiatives of capitalist states are aimed at strengthening or 'preserving the ideological basis of capitalism'. See for example R. Quinney, Critique of Legal Order (Boston, Little and Brown, 1973), pp. 55-56. 9 This is the well known argument on the political implications of foreign investment formulated by Baran & Sweezy in the mid-1960s (see P. Baran & P. Sweezy, 'Notes on the Theory of Imperialism', Monthly Review, 17, 10, 1966). 60 The structural limits of neo-liberal rule have been discussed by, inter alia, R. Griffiths, 'Capitalist Crisis: A Vindication of Marxist Political Economy', Communist Review, 27, 1998. 61 This issue has received some, albeit superficial, analytical treatment in L. Thurow, Generating Inequality (New York, Basic Books, 1975). 62 Practical examples of this abound, ranging from the experience of post-Thatcher Britain to the 'post-neo-liberal' Latin American regimes of Chile, Brazil or Argentina. 63 Potential levels of workforce dissatisfaction may be gauged by surveys which suggest that nearly two- thirds (60%) of Lithuanian employees expect to lose their jobs in the next two years, compared with 56% in Latvia and 42% in Estonia (see Aasland & Tyldum, p. 16).