Remapping Labour Rights: The Case of Transitional Lithuania

Abstract

THROUGHOUT THE MID-1990S Lithuania has competed with its neighbours for foreign direct investment (FDI). In this context Lithuanian governments of differing political persuasion have sought to attract foreign investors partly on account of the country's willing, educated and compliant workforce.1 As part of this agenda, the myth of a stable prospering Lithuania with few social and economic problems has been actively promulgated by the country's press and its political elites. The January 2001 edition of EuroBusiness, for instance, contained a special Baltic states supplement with 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 reorientation of trade away from volatile Russia'. All of these factors were said to 'have underpinned a truly remarkable flourishing of prospects, generating year upon year of high yet sustainable growth'.2 The report went 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 Germany in the 'league table of economic freedom'.3 This ranking was not accidental, as one of the first actions of the newly elected government was to scrap a capital gains tax of 15% in December 2000.4 Lithuania's attempt to portray itself to outsiders as a 'neo-liberal paradise', itself, is not untypical for the region. Since independence, and even more so since the advent of the Russian crisis, many Central and Eastern European (CEE) countries have faced increasingly incompatible policy objectives. On the one hand, policy actors are driven by an overwhelming desire to attract FDI at virtually any price, including the circumscription of the rights of organised labour. On the other hand, for a number of countries preparation for European accession imposes clear limitations on their policy options. Lastly, constraints on the political manoeuvring space 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 as to whether the desire to attract FDI has led to a potential marginalisation of labour as an organised and political force, or whether such a development has been halted by compliance with requirements related to future European Union accession. In