FES BRIEFING LITHUANIA Trade Union Monitor July 2023 POLITICAL, ECONOMIC AND SOCIAL FRAMEWORK POLITICAL DEVELOPMENT The 2020 election was won by the centre-right parties, with Homeland Union winning both the popular vote and the highest number of single-member constituency seats in the Parliament(50 seats out of 141). They then formed a coali­tion with two liberal parties – Lithuanian Liberal Movement (12 seats) and Freedom Party(Laisv ė s partija)(11 seats). In 2022 the ruling coalition became more unstable. Fractures between the liberal Freedom Party and the conservative Homeland Union started to emerge. This was caused by the ruling coalition failing to gather support for same-sex part­nerships and decriminalisation of light drugs in the parlia­ment(Seimas). Currently the polls are split with LSDP, Homeland Union and the Democratic Party(a new party established by former Prime Minister Saulius Skvernelis), each leading different polls with only the margin of error separating these three parties. However, certain events in January 2023 might sig­nificantly change this balance of power. The usual political campaigning season was disrupted by the State Prosecu­tor’s Office announcing that a Seimas member from the Homeland Union’s fraction Kristijonas Bartoševi č ius was charged with rape and molestation during his time as a member of parliament. This is the most significant political scandal in Lithuania since its independence in 1990, and might cause a significant drop in the support for the Home­land Union in the coming elections, which could lead to more support for the right-wing populist parties. Lithuania so far managed to avoid those parties being successful at the electoral level. During the parliamentary discussions on the budget for the 2023 fiscal year Freedom Party and several individual mem­bers of the Homeland Union supported the opposition ini­tiatives to maintain the VAT tax exemptions in the catering sector, which almost caused the fall of the ruling coalition. This weakness is creating significant problems for the im­plementation of the government agenda, for example a tax reform, which intends the change from payroll taxes to­wards more capital income taxation. Another item on the agenda in dire straits is the attempt to reform the public administration by giving more powers to the heads of pub­lic institutions and dismantling the traditional“Prussian” style of public administration, which is opposed by trade unions. Late 2022 and the first months of 2023 were dominated by the municipal elections, which took place on March 5, 2023. Municipal politics are dominated by the Lithuanian Social Democratic Party(LSDP)(15 mayors out of 60), with the ma­jor cities all governed by non-party political committees (with the sole exception of capital city Vilnius, which is ruled by a political committee which became the basis for the jun­ior coalition partners of the government – Freedom Party). Politics in 2022 were dominated by the Russian aggression against Ukraine, with the Lithuanian state and its society unanimously supporting Ukraine. The war triggered a wave of refugees from Ukraine, with 70–90 thousand Ukrainian refugees relocating to Lithuania. At the same time, another wave of refugees which began in 2021, with refugees com­ing from mostly Iraq, Syria and Afghanistan, continues, and Lithuania was accused by Amnesty International for apply­ing double standards in the treatment of these refugees op­posed to the ones coming from Ukraine. Lithuania signifi­cantly increased its defence spending with all major political parties agreeing to increase the spending to 2.5 per cent of the GDP. Lithuania was affected by a cost of living crisis. The war coin­cided with the liberalisation of the energy sector, with the ma­jority of Lithuanian households having to choose electricity providers in the summer of 2022. As the country is generally importing electricity, Lithuania’s households were particularly vulnerable to the sudden spike of energy prices, which quad­rupled in early 2022, with the inflation exceeding 20 per cent most of the year. Inflation and high energy prices directly af­fected labour unrest. 1