LFMI hosted a prominent French economist

On November 26, 2004 the Lithuanian Free Market Institute (LFMI) held an Annual Meeting to mark the beginning of the fifteenth year of work and to host distinguished guest speaker prof. Pascal Salin from France. The event drew together LFMI‘s supporters, media representatives, politicians, friends, and fellow thinkers.

LFMI was delighted to present Prof. Pascal Salin, one of the most prominent contemporary thinkers of economic liberalism and perhaps the most outstanding French economist. The topic of his speech was „How monopolies work in the private sector and competition in the public sector.“ In his speech Prof. Pascal covered the most important economic problems and facilitated discussion on such issues as what the best monetary policy is, how monopolies jeopardise a free market, what governments should do to curb monopolies, and how governments should perform market oversight…

Ugnius Trumpa Re-appointed LFMI President

On November 24, 2004 a general meeting of LFMI partners re-elected Mr. Ugnius Trumpa as LFMI’s President for another three-year term of office. Mr. Trumpa has been in this position since November 2001 when he replaced the institute’s former president and founder Elena Leontjeva upon her resignation.

Upon joining LFMI in 1996 as LFMI’s Vice-president, Mr. Trumpa initiated and led the institute's work on eliminating business constraints and reducing bureaucracy. Over time this initiative has grown into a business deregulation programme and has garnered broad-based support from the public and government. Currently, Mr. Trumpa is also responsible for LFMI anti-corruption initiatives. He holds a M.A. in philosophy from Moscow Lomonosov University and a diploma in economics from Vilnius University.

Under his leadership, LFMI has been awarded a prize of the Templeton Freedom Awards Program given in the category of Institute Excellence. Over 140 institutes from more than 50 countries took part in the Templeton Freedom Awards Program. Also, LFMI held the first think-tank school for NGOs from European countries in Vilnius in the autumn of 2004.

LFMI’s project on Lisbon Agenda and labour market regulations

In December 2004 LFMI started a project on the Lisbon Agenda and regulation of the labour market. The Lisbon Strategy is facing serious challenges in its implementation: there is significant tension among the Lisbon’s incompatible goals, ambitious plans and a desire to maintain unsustainable social structures in the EU. One of the most challenging aspects of the Lisbon Strategy is the so-called Europe’s social model, and labour market regulation in particular as one of its aspects.

The goal of the project is to show the impact the regulation of the labour market has on the competitiveness among EU member-states as well as on the implementation of the Lisbon Strategy, illustrated by examples in Lithuania and the United Kingdom. LFMI will prepare a position paper on the Lisbon Agenda and labour market regulation, which will be presented during the round table discussion on January 19th, 2005.

Lithuanian and U.K. government representatives, economists and policy analysts, along with representatives from the media and business have been invited to join the discussion to analyse the affect the regulation of the labour market has on the competitiveness between EU member-states and on the implementation of the Lisbon Strategy. Participants will also discuss possible policy-positions of Lithuania on the issue of the Lisbon Strategy and labour market regulation.

LFMI will analyse how to enhance the legal climate for NGOs in Lithuania

In January 2005 LFMI launched a project aimed at strengthening the legal basis in Lithuania for work and development of NGOs. The goal of the project is to identify problems related to, and to promote and facilitate public debate about, legal environment for NGO’s in Lithuania.

Two studies will be conducted within the framework of this project. First, LFMI will make analysis of the Law of Lobbying Activities in Lithuania to identify possible conflicts with the actual specifics of NGO activities. The study will be based on the analysis of the said law and relevant legal documents, comparing them afterwards with legal regulation of relations between the government and NGOs abroad. The second study will focus on regulation of NGOs financial accounting, and problems related to a general lack of knowledge about procedures relevant to NGO financial accounting.

The results of the project will be introduced to the public and government officials in the spring 2005.

Market participants predict steady, but moderate, economic growth in 2005

In October 2004 LFMI presented the 14th survey of the Lithuanian economy, based on market participants’ forecasts for 2004 (updated) and for 2005. According to the survey of market participants conducted by LFMI in July-August 2004, the economic situation in Lithuania should remain stable in the near future. The economy is still growing rapidly, the financial situation of Lithuanian companies is improving, the unemployment rates are declining, and the average salaries are rising. On the other hand, the survey shows that the shadow economy has not been shrinking for several years and will remain so, while the tax burden was forecast to increase. In the previous survey, inspired by high expectations of the upcoming membership of the European Union, the market participants voiced very optimistic prognoses in almost all sectors. However, during this survey their forecasts were more moderate.

A summary of the survey results is posted online: http://www.freema.org/Projects/Survey14.phtml.

LFMI presented research findings and proposed tools to boost competitiveness and welfare

On October 20, 2004 LFMI held a round table discussion which was focused on changes that are needed to boost Lithuania’s competitiveness and people’s well-being. The goal of the event was to present LFMI’s most recent studies – a comparative analysis of taxation applied to income from labour in EU countries, and a research of economic impact of employment regulations.

LFMI believes that these issues are among the most important ones seeking to promote the country’s investment climate and welfare for a growing number of people.

Staged at the Lithuanian Ministry of Economy, the event drew specialists and policy analysts from relevant ministries, business associations, banks as well as journalists. The-then Minster of Economy Pranas Cesna delivered an opening speech at the discussion.

The analysis of taxation of income made by LFMI dispelled the myth that income tax is one of the lowest taxes in the EU. It showed that Lithuania imposes a much higher burden on income from labour, as compared to other European countries. Also, the study presents arguments that progressive taxes are becoming unpopular in other countries and that Lithuania should not even debate over the introduction of this defective system of taxation. In the study, LFMI’s policy analysts propose a reduction of personal income tax from 33 percent to 15 percent and calls for applying a uniform tax rate instead of the existing two.

The study of employment regulations revealed that a number of labour-related rules are more rigid and meticulous than the requirements of the European Union. LFMI pointed out that it is indispensable not just to lower income taxes but also to liberalise the rules and soften the requirements levied on hiring, duration of work, working overtime, collective agreements, minimum wage, etc. LFMI argues that these serve a primary drag on business growth which undermines entrepreneurs’ opportunities to create new and retain well-paid jobs, diminishes companies’ competitiveness, and increases unemployment.

LFMI will submit its research findings and proposals to the incoming government and new members of parliament as well.

LFMI held the first training courses for think tanks from CEE

In the autumn of 2005 LFMI organized the first training school for think-tanks from Eastern and Central Europe “Strengthening think tanks in Eastern and Central Europe: Exchanging good practices” which took place on 11-14 November 2004 in Vilnius, the capital of Lithuania.

The goal of this project was to strengthen professional skills of thinks tanks from Central and Eastern European (CEE) countries by providing them with an opportunity to exchange examples of good practice. The training covered a broad scope of topics crucial in every-day life of think tanks: methods of research and analysis, project management, fundraising, and government and public relations.

The project was funded by the Open Society Fund Lithuania.

More about the training school please read in an article “Think-tanks on the Move“ in this issue.