EIRO 2005 ANNUAL REVIEW, LATVIA

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Political data

Regional/local elections in 2005

Local government election was held in March 2005. Political party New Era (Jaunais Laiks, JL) took majority of places in local governments in Riga and several other local governments.

In some local governments (Rezekne, Jurmala) election results were rejected or disputed due to discovered facts of corruption and buying of votes.

Significant political events in 2005

The government that took office in the end of 2004 after resignation of the government led by Einars Repse (JL) managed to conciliate coalition that has split up during the government changes and completed its mission during the whole year.

In May the president of RL Vaira Vike Freiberga attended celebration of the Day of Victory in Moscow. A day before president of USA George Buss visited Latvia on his way to the same celebration.

In June Latvian Saeima ratified the Constitution for Europe (for - 71 votes out of 100)

In November minister of internal affairs Eriks Jekabsons (Latvia’s First Party (Latvijas Pirma partija, LPP)) left his position after several attempts to increase wages of policeman. The formal reason of his resignation was secret meeting with entrepreneur from England Boriss Berezovskis. The Saeima approved Dzintars Jaundzeikars (LPP) in this position.

In December 2005, NATO Council decided to held NATO summit in 2006 in Riga.

In December minister of defense Einars Repse (JL) left his position after a scandal connected with his financial deals. The Saeima approved Linda Murniece (JL) in this position.

Emigration of population increases.

Forthcoming national or important regional/local elections or significant political events

Saeima (Parliament) elections will be held in October.

NATO summit 2006 will be held in November 14-15.

Collective bargaining update

Details of collective agreements in 2005 and trends/shifts between levels of bargaining

Statistical information about collective agreements in 2005 will be available in end of March 2006.

The intensity of collective bargaining has not changed. The Health and Social Care Workers Trade Union (Latvijas Veselibas un socialas aprupes darbinieku arodbiedriba, LVSADA) tried to set general agreement but did not succeed because they could not find the partner in the government.

The content of collective bargaining differs by sectors. Information about content of collective agreements is not available. It is difficult to identify major topics and trends without generalization. It is known that major themes in collective bargaining are pay, working and leisure time, training, bonuses and social guaranties (pensions).

Further answers concern general developments and discussion at the national level.

Collective bargaining developments concerning the following specific themes:

Pay

Major discussion was about increase of minimum wage and non-taxable minimum. The government decided to increase monthly minimum wage from EUR 114 to 128 (LV0512101N), and to increase non-taxable minimum from EUR 32 to 45 in 2006. Free Trade Union Confederation of Latvia (Latvijas Brivo Arodbiedribu savieniba, LBAS) has raised question about low wage level and poverty, but the government did not consider this question important due to remarkable growth in wages and salaries during 2006.

Working time

The question was not discussed in the framework of the National Tripartite Council (Nacionalas trispusejas sadarbibas padome, NTSP), but social partners could participate separately in elaboration of laws. Several legislative acts were adopted.

Job security

The question was not discussed in the framework of the NTSP, but social partners could participate separately in elaboration of laws. Several Regulations of the Cabinet of Ministers were adopted in the field of job security.

Equal opportunities and diversity issues, including efforts to close pay inequalities

The problem is not popular item of collective bargaining.

Training and skills development

Latvia hosted EU DG EMPL Mutual Learning Program Peer Review meeting on policy: Supporting of lifelong learning through the development of guidance services in Latvia on 24-25 November 2005, in which social dialogue partners were invited to present their opinion and role in development of human resources and career building.

The working group was established with the office of prime minister aimed at development of a new concept on development of guidance services. National level social partner organizations are included in the group.

Legislative developments

Legislative developments in 2005 not mentioned in the other sections

Trade unions, minister of economics and his political party JL tried to introduce reduced VAT rates for food products (from 18% to 5%), but Saeima did not support these changes.

The Government prepared plan for elimination of inflation, but this also was not introduced.

Monthly minimum wage was increased to EUR 128 from January 1, 2006.

Non-taxable minimum was increased to EUR 45 for employed and to EUR 32 for dependants from January 1, 2006.

Non-taxable pension was increased to EUR 156 from January 1, 2006.

Laws and Regulations of the Cabinet of Ministers:

• amendments in the law On trade Unions,

• several amendments in the Regulations of the Cabinet of Ministers concerning job security,

• several amendments in pension law,

• several amendments in taxes legislation, including implementation of personal income tax relief for disabled persons,

• regulations of the Cabinet of Ministers Regulations on kinds of the state’ provided legal aid, maximum hours, amount and procedure of pay,

• regulations and several amendments to regulations of the Cabinet of Ministers regarding pay issues in special services - diplomatic and consular institutions, military servants and military servants in international operations, health workers and specialists of social work, theatre actors that are financed from the state budget, employed in court and prosecuting offices, civil servants, convicted persons in prisons,

• program for wage increase in education for 2006.- 2010.,

• concept on unified pay system of people employed in the public sector,

• law On Convention of 26 October 1996 about working time of seaman and formation of ship crew,

• regulations on organisation, observation and reporting of work time of transport workers,

• amendments in the Regulations of the Cabinet of Ministers Regulations on guaranteed minimum income and allowance in order to provide guaranteed minimum income,

• regulation of the Cabinet of Ministers Regulations on work permissions for foreigners,

• amandments of the Regulation of the Cabinet of Ministers regarding elimination of illegal work.

The government decided to allocate EUR 92 million for 89 measures aimed at facilitation of employment in order to reach EU Lisboan indicators.

The government has introduced income declaration - as from 2007 all population will be required to declare annual income.

Tax regime for small enterprises was discussed - several versions included reduction of population income tax and calculation of the personal income tax as a percent of turnover.

The organization and role of the social partners

Changes in the organization and role of the social partners during 2005

There have not been changes in the structure and role of the social partners during 2005.

Social dialogue has weakened due to reserved attitude of the government. The government neglected participation of social partners in decisions of important questions concerning budget policy and others.

The LBAS has increased efforts to intensify social dialogue. It organized several meetings with high government officials aimed at renewing the social dialogue. Trade union put ultimate requirement to observe the interests of social partners.

Industrial action

Major strikes and industrial action during 2005

In February tram company Tramvaju un trolejbusu parvalde (Tramvaju un trolejbusu parvalde, TTP) which serves passenger transportation in Riga city warned about strake because of amalgamation of two passenger transportation enterprises. The strike did not occur.

In April farmers from Limbazu region expressed readiness to strike because this region was not included in the most favorable conditions and farmers could loose EU funding due to this reason. The strike did not occur.

In June theatre actors and national Opera soloists complained about the low wages in theatres. Opera soloists were ready for strike in the way that they stay in hatcheck room during an important opera performance if they do not receive promises to increase wages (LV0507101N). The strike did not occur, but prime minister promised to increase wages of performance actors within coming years.

In July authorized judiciaries warned about rejecting participation in legal enforcement in some causes where debt-collector was not eligible to cover costs of enforcement and these were not covered by any other income. Other justiciaries also have claimed the government to increase salaries. Their requests were supported by the Ministry of Justice, and wages were increased.

In August policeman organized picket of protest because of low wages and unequal social guarantees compared to other civil servants (LV0510101N). Several hundred people participated in the picket.

The LBAS activated efforts to restore social dialogue. Several activities were held - meetings, conferences, round tables. In October the LBAS organized action of protest We against poverty. Several thousand people participated in this action.

The Education and Science Workers Trade Union (Latvijas Izglitibas un zinatnes darbinieku arodbiedriba, LIZDA) kept active strike warnings due to whole year because the government did not observe wage increase scheme that was agreed in 2004. Strikes did not occur, as temporary compromise was reached.

Employee participation

Laws providing employee information and consultation are adopted in Latvia. Items like employee information and consultation and concerning other forms of participation (ex. financial participation) were not discussed.

There have not been any developments related to the implementation of the European Company Statute or the Directive on national information and consultation rights, or any debate on these issues.

There were not significant developments connected with European Works Councils. It is known that the process is active in the foreign owned companies. Local companies do not belong to area of this topic.

Labour migration

Labour migration has been discussed at all levels during 2005. There is not clear statistics on the magnitude of emigration (LV0512104F). The estimated amount of emigrants to EU countries is about 40 - 50 thousand people. The main destinations are Ireland and Great Britain.

The emigration problem was raised by mass media, and it escalated in end of year when mass media started to produce regular reports about people living and working in Ireland. The first reaction of the government was neutral. There was opinion that migration is a temporary problem, it will stop by itself. The government representatives argued that emigration has more positive than negative impact - people will obtain language and professional skills and return home.

Employers argue that emigration impact availability of work force, and claim necessity to import workforce. Recent Eurochambers (Eurochambers) survey indicates employers’ intention to attract workforce from Far East countries.

In end of 2005, a working group was established within the framework of the Strategic Analysis Commission, established after initiative of president of RL Vaira Vike Freiberga in 2004. The working group was expected to clarify reasons and conditions that encourage people to leave Latvia, and conditions that could eliminate migration and facilitate return of emigrants. The results of the research will be presented on 18 January 2006.

Latvia has prepared position towards the service directive. It is based on the principle that Latvia is the service exporter, and that several Latvian companies (Laval&partneri (Laval&partneri), R.O.K.(R.O.K.)) have negative experience. Therefore Latvia argues for clear and non-discriminatory legal framework for all service providers, as well as implementation of the free movement principles in the service market and development of the local market. There are several positions in which Latvia is not ready to provide full implementation of the principles of the free movement of services, and these must be improved. The country position indicates several improvements that would be desirable in the Directive project (to exclude health care, social services, gambling, legal services that belong to the court system from the sphere of Directive, to stress significance of the country of origin principle).

The EU services Directive has been discussed at the meeting organized by EU deputy Gundars Krasts on 4 October 2005, with participation of Mr. Charlie Mc Creevy, EU commissioner on internal market and services, Minister of Welfare of the RL Dagnija Stake, several international experts and involved people from Latvia. Participants of the meeting supported the development of the EU internal market in the service sector. It provides good challenges for Latvian companies to expand markets. Yet the first experiences are far from expected. The experience of Latvian building company Laval&Partners in Sweden indicates difficulties to match requirements of trade unions on pay issues (LV0506101N.LV0501101F,LV0512104F). This encouraged Latvian company LEC (LEC) (building of energy systems) to give up plans to operate in Sweden.

Corporate social responsibility

The principle of corporate social responsibility is discussed at the academic level and in business meetings and conferences. Practical implementation of the principle might be found in large industrial companies and service sector companies. Small industrial and construction companies do not pay attention to this principle.

New forms of work

New forms of work are not topical issue in the sphere of social dialogue. These forms develop in business enterprises, very often in enterprises where trade unions are not established (trade, construction).

Part time work and fixed term contracts are normal phenomenon in employment. Part time work is reported in Labour Force Surveys, last issue reports 2004. In this year, about 10.4% of employed were part-time employees, 62.5% of these were females.

This source does not provide information about fixed-term contracts.

Some kind of temporary work through agencies activates in connection with emigration, but not in a typical way. Agencies help to find jobs abroad, but they do not conclude employment contracts with clients and do not care about these people.

Teleworking and on-call working is possible, but not popular in Latvia. There are attempts to implement these forms of work for disabled people.

Outlook

It is likely that in the coming year (the year of Saeima election) activities on the basis of social issues will increase. Involved parties (trade unions) will try to get support of main political parties in escalation of social development and restoration of social dialogue. In conditions of high inflation, employers’ organizations will be reserved to further increase of labour costs.

Immigration may increase. Wages will increase in private sector and this will encourage civil servants to continue fighting for higher wages in the public sector. Inflation will increase and population income differences will increase. These conditions will sharpen industrial relations and lead to increasing activity in the field of industrial relations.

There are no signs that thematic range of social dialogue may change. At his stage of economic and social development basic social development problems are important - concerning income, poverty, income disparities.

Because of these reasons, specific problems that are popular in developed EU countries will be formally tackled in Latvia. The very important task will be implementation of adopted social legislation.