Latvia: Latest developments in working life Q2 2019
The results of the European Parliament elections, a proposed administrative regional reform, a wage rise for teachers and a general agreement in the construction sector are the main topics of interest in this article. This country update reports on the latest developments in working life in Latvia in the second quarter of 2019.
European Parliament election results hold few surprises
The turnout for the European Parliament elections was 33.51% and five political parties shared Latvia’s eight seats. With European Commission Vice-President Valdis Dombrovskis as the lead candidate, New Unity won two seats. However, Dombrovskis chose to relinquish his seat shortly after the election and maintain his position at the European Commission instead. He was replaced by Inese Vaidere, with Sandra Kalniete taking the second seat.
Former Mayor of Riga Nils Ušakovs and his deputy Andris Ameriks won two seats for the Social Democratic Party ‘Harmony’. The National Alliance ‘All for Latvia!’ also won two seats with long-term Member of the European Parliament Roberts Zīle and Latvia’s Minister of Culture Dace Melbārde. The remaining two seats were won by Development/For! (Ivars Ījabs) and the Latvian Russian Union (Tatjana Ždanoka).
The New Conservative Party and the populist Who owns the state? (KPV LV) party, despite having achieved good results in recent national parliamentary elections, did not surpass the 5% barrier in the European Parliament elections (4.35% and 0.9% respectively).
Regional reform fuels debate
The administrative regional reform was a prominent topic during the second quarter of 2019. On 10 April, the Ministry of Environmental Protection and Regional Development outlined plans to reform local municipal administration by amalgamating the 119 local governments into 35 larger units by 2021.
The proposal drew a strong reaction from the local authorities, with some claiming that the amalgamation would not be logical from a geographical and mobility point of view and others saying that they did not see the need for it. Several local authorities organised public surveys with a view to collecting the opinions of the population.
The ministry promised that the proposed model was open for discussion and that public consultations would be held. However, it also pointed out that the decision of some municipalities to organise a survey breached the powers of local governments as established by law.
On 10 June, Minister of Environmental Protection and Regional Development Juris Pūce said that one of the goals of the reform is to reduce the administrative burden and costs. Stating his opinion that the number of employees in local governments could be reduced by 8,000–9,000 employees as a result of the reform, he stressed that any decision on the number of employees should be taken by the local authorities themselves.
Healthcare reform put on hold
In Q1 2019, the government announced that the two-basket healthcare system (in development since 2017 and due to come into full implementation in 2019) was ineffective and called for it to be replaced. On 13 June 2019, the parliament approved the decision to delay rolling out the new healthcare system until 2021.
Teachers granted promised wage increase
On 18 June, the government agreed to increase the minimum monthly wage of teachers in Latvia by €40 (from €710 to €750) as of 1 September 2019. This decision followed months of uncertainty after the government was initially unable to find sufficient funding in the 2019 budget for the increase and the Latvian Trade Union of Education and Science Employees (LIZDA) announced a strike in response.
While the matter has seemingly been resolved for 2019, the 2020 budget remains undefined. LIZDA has therefore maintained its plan to call a strike in the autumn to offset the possibility that further wage increases are excluded from the 2020 budget.
General agreement signed in construction sector
On 17 April, the general agreement in the construction sector was signed by all involved parties and will enter into force in November 2019. The agreement was originally prepared at the end of 2018, but only became valid when the government adopted amendments to the labour law that set lower pay levels for overtime work. The president approved the amendments on 17 April; following the signing of the general agreement, it was officially published in Latvijas Vēstnesis on 3 May.
Under the terms of the agreement, the minimum wage in the construction sector will be €780 from 4 November (the national minimum wage in 2019 is €430).
Wage growth continues
The journal Kapitāls, in cooperation with CV-Online Latvia, has completed its annual study on wages and salaries for 2019. The main results were published in the mainstream media and Kapitāls. The study provides data about work remuneration by occupation and shows that wages continue on their upward trajectory (the average net wages increased by 6.2% in 2017 and 6% in 2018). The fastest wage growth was in the public sector, with an 11% wage increase in state-owned commercial companies. The highest wages were found in large multinational companies and the lowest in small enterprises.
In the next quarter, the main activities will relate to development of the state budget for 2020. This process will encompass all the areas that are important to social partners, such as taxes, minimum wages, wages in the healthcare and education sectors, and wages in the public sector in general.
Another important activity is the development of the National Development Plan for the next planning period (2021–2027), where social partners will participate in all working groups.