Awareness-raising campaigns, Latvia

About

Country: 
Latvia
Target Groups: 
workers/suppliersemployers/purchasers

A campaign to explain the importance of the employment contract and the consequences of undeclared work was one of the measures planned under the key principles ‘Measures for the prevention of illegal employment’. Since the adoption of the principles in 2004, the social partners have carried out a number of awareness-raising campaigns. In addition, the State Labour Inspectorate and the State Revenue Service have established free telephone hotlines.

Background

In Latvia, two terms are used – illegal employment and undeclared work. Illegal employment is understood as employing workers without written employment contracts and employing foreigners without establishing legal employment relations. Undeclared work is understood as employment with the intentional violation of labour and financial laws, such as tax evasion, undeclared wages, the non-payment of bonuses, work without a written employment contract and failure to provide employment data to state authorities.

Latvian employment policy, legislation and the activities of the state authorities and social partners are all directed at the overall problem – illegal employment – which includes undeclared work.

Campaigns to highlight the importance of the employment contract and the consequences of undeclared work are one of the measures planned under the key principles Measures for the prevention of illegal employment and the accompanying legislative documentation. Since the adoption of the key principles in 2004, several extensive awareness campaigns have been conducted, attracting public attention.

Objectives

The aim of the awareness-raising campaigns is to explain to employed persons the importance of the employment contract and the consequences of undeclared work, as well as to foster people’s commitment to legality in employment relations.

The target group of the campaigns is employed people; however, the organisers are also trying to involve employers. Two basic principles are considered in organising the campaigns:

  • participation – both the employers and the employees engage in the process of limiting illegal employment. Therefore, the campaigns are often organised together with the Latvian Employers’ Confederation (Latvijas Darba devēju konfederācija, LDDK);
  • state assistance – the state supports those trying to curtail illegal employment; the campaigns are conducted by the state authorities.

Specific measures

Awareness campaign on employment contracts

The State Labour Inspectorate (Valsts Darba Inspekcija, VDI) launched an awareness-raising campaign in the spring of 2006 and repeated it in 2007. The aim of the campaign, entitled ‘The employment contract works!’, was to explain the labour law to employed people, as well as the importance of the employment contract, the procedure of concluding an employment contract and the consequences of illegal or undeclared work.

Letters requesting salary increases

In June 2006, the State Revenue Service (Valsts ieņēmumu dienests, VID) dispatched almost 9,000 letters in which it asked entrepreneurs to increase the salaries of their employees. The campaign was based on the observation that, in companies with low salary levels, part of the wages were paid illegally in order to evade taxes. The VID letters urged the companies to reassess their employment affairs – such as the arrangement of legal employment relations and tax calculations – and listed the possible punitive measures should the entrepreneur fail to provide an economic basis for the risk factors discovered by the VID study. In 3,000 letters, companies were requested to provide explanations regarding the detected shortcomings and to eliminate these failings by a certain deadline.

Risks of undeclared wages

In April 2007, VID launched an extensive campaign aiming to attract the public’s attention to the risks and negative consequences when wages are received ‘under the table’ – that is, without paying tax or social contributions. VID sought to change the public attitude towards undeclared income. The campaign included direct communication with the population: over a period of two weeks, 100,000 Latvians received black envelopes in the mail, with the heading ‘All that is under the table is not gold’. The envelope contained a card with Latvian proverbs urging the population to reflect and explaining what a person loses when receiving undeclared wages.

In 2008, VID launched another extensive awareness campaign against the non-payment of taxes. This campaign was also based on the conviction that, in companies declaring low salaries – usually the minimum wage – illegal payments are made. During the campaign, VID explained the consequences of undeclared wages, such as restrictions on getting loans, ineligibility for unemployment benefit and other social safety allowances, and a smaller pension. During the campaign, advertisements were to be developed with storylines of people who had received undeclared wages telling about the consequences of the shadow economy. These were to be broadcast by mass media and displayed in frequently visited public places.

Free of charge advice and anonymous hotlines

VDI has established a free of charge consultancy telephone line (371 680 080 04) and a free anonymous hotline (371 673 121 76). VID has also set up a special free hotline.

Naming offenders

In 2007, VDI started to publish on its website the names of companies in which illegally employed persons were detected. The labour inspectorate thus hopes that concern for their reputation will urge employers to avoid illegal employment; it also considers that workers have the right to know which companies disregard their employees’ rights.

Trade union initiatives

In 2005, using financing from the EU Structural Funds and the framework of social dialogue, the Free Trade Union Confederation of Latvia (Latvijas Brīvo arodbiedrību savienība, LBAS) held a series of seminars on the ‘Strengthening of legal employment relations’ in the capital city, Rīga, and Latvia’s regions. In May 2006, LBAS organised a campaign ‘With axes – for your labour rights’, during which two tramcars decorated with the LBAS logo and campaign slogans drove through Rīga, while one tramcar drove through the western city of Liepāja and one through the southeastern city of Daugavpils.

Evaluation and outcome

Achievement of objectives

Awareness campaigns improve employee understanding about the employment contract and the consequences of illegal employment. However, they do not yield immediate results, because undeclared work is supported not only by employers but also by employees who agree to undertake illegal employment or receive undeclared income.

Obstacles and problems

There are no obstacles for the organisation of awareness campaigns. The campaigns organised by VID are aggressive and sometimes annoy the public.

Impact indicators

The impact of the awareness campaigns in limiting illegal employment cannot be separated from the impact of other factors. The number of awareness campaign participants is not registered.

VID regularly reports in the press on the results of prevention efforts regarding illegal employment, citing the number of newly registered employees and unexpected tax revenue in the state budget. For example, in June 2008, VID announced that – as a result of its activities – 38,000 employees were newly registered in 2007.

Transferability

Any experience in limiting illegal employment is useful for other countries.

Contacts

  • Ministry of Welfare (Labklājības ministrija, LM)
  • State Labour Inspectorate (Valsts Darba Inspekcija, VDI)
  • State Revenue Service (Valsts ieņēmumu dienests, VID)
  • Free Trade Union Confederation of Latvia (Latvijas Brīvo arodbiedrību savienība, LBAS)
  • Employers’ Confederation of Latvia (Latvijas Darba devēju konfederācija, LDDK)

Bibliography

Latvian government, Key principles: Measures for the prevention of illegal employment (Informative part), Republic of Latvia Cabinet Order No. 60, 29 January 2004, available online (in Latvian) at: http://lm.gov.lv/upload/darba_tirgus/darba_attiecibas_socialais_dialogs/lmpamn_kops2.doc.

Latvian government, Action Plan 2005–2009 for increasing the VDI administrative capacity in relation to reducing illegal employment, Republic of Latvia Cabinet Order No. 836, 2 November 2004, available online (in Latvian) at: http://lm.gov.lv/upload/darba_tirgus/darba_attiecibas_socialais_dialogs/vdi_271004_kops2.doc.

Latvian government, Amendments to the RL Cabinet Order No. 60 ‘Regarding the key principles: Measures for the prevention of illegal employment’, Republic of Latvia Cabinet Order No. 52, 26 January 2005.

Ministry of Finance, Measures by the Ministry of Finance, financial supervision and taxation policy to reduce illegal employment (in Latvian).

State Labour Inspectorate (VDI), Annual report of the State Labour Inspectorate, Rīga, 2007, available online (in Latvian) at: http://www.vdi.gov.lv/admin/files/dokumenti/VDI_2007.parskats.pdf.

VDI, State Labour Inspectorate’s experience of reducing illegal employment, Presentation of the Head of the Labour Law Department at VDI, Vilnis Virza, 10 November 2006, available online (in Latvian) at: http://www.vdi.lv/admin/files/dokumenti/Vilnis_Virza.ppt.

University of Latvia, Nereģistrētās nodarbinātības novērtējums, Rīga, 2007.

Raita Karnite, Institute of Economics, Latvian Academy of Sciences

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