Creative workers receiving royalties under authorship agreement should be provided with obligatory social cover. The state could support this process by creating favourable tax conditions for employers of creative workers.

The Board of the Lithuanian Union of Journalists urges the Government and the Seimas to make a prompt decision concerning a system of obligatory social insurance for creative workers. It is no secret that today more and more long-lived creative workers retire and have to apply for various benefits or allowances instead of receiving well-earned pensions.

“It isn’t normal that the state has failed so far to develop an effectively functioning social insurance system for creative workers and they are forced to go begging or ask for allowances later on, instead of having had paid social insurance contributions from their royalties”, comments on this initiative Mr. Dainius Radzevicius, chairman of the Lithuanian Union of Journalists.

At the meeting of 13 October, the Board of the LUJ represented by all regions and clubs of Lithuania resolved to urge the Government and the Seimas to introduce social insurance contributions for creative people working under authorship agreements. Today, employees working under employment contracts and their employers have to pay income tax and social insurance contribution. Create workers may exercise the so-called privilege and pay reduced income tax in the amount of 15%. However, no social insurance contributions are payable in addition to the mentioned tax. For this reasons, all creative workers are deprived of all social guarantees (e.g., sickness benefits, pensions, etc.). In critical cases the state assigns minimum allowances or compensations for such people thus nearly putting them in one line with socially disadvantaged or even asocial people. “It is unjust and unfair. Individuals who have rendered their creative potential to other people must have a right to social guarantees, while the today’s situation with creative workers is obviously the worst among all participants of the labour market”, says D. Radzevicius.

In view of the above-mentioned, the Lithuanian Union of Journalists urges the Board of the Seimas to form a work group from the representatives of creative workers’ trade unions, established artist associations, and employers, the Ministry of Culture, the Ministry of Finance and the Ministry of Social Security and Labour. This work group should draft necessary amendments to the laws defining the methods and procedure of payment of social insurance contributions from royalties of creative workers.

To this respect, the LUJ offers to consider two possible models. According to the first one, the system of authorship fees (royalties) would be tantamount to employment relations, i.e., taxes/contributions and other guarantees would be adequate. However, today such guarantees may be quite irrelevant for people whose incomes from creative activities are very low (e.g., payments to schoolchildren for press articles, etc.). Therefore, payment of social insurance contributions should be due only for those individuals who receive royalties in the amount of one minimum monthly wage or more. Practice of other EU Member States could serve as a basis to create a model enhancing employers to employ creative people. In this case, creative workers would have to pay social contribution premiums in addition to the 15% income tax, while the remaining burden of social insurance taxes would be shared by employers and the state in equal parts. This would enable to withdraw from other existing privileges for creative workers and to develop a clear and effective system. Furthermore, this would lead to additional inflow in the social insurance system and likely decrease of this tax burden in future.

For further information contact the Lithuanian Union of Journalists: +370 8 5 2122805