Low salaries lead to illegal payments in healthcare sector

Widespread public debate has centred on the issue of illegal payments in the healthcare sector, such as ‘thank-you payments’ paid by patients to medical workers. The Latvian Health and Social Care Workers’ Trade Union argues that the extent of illegal payments in healthcare can only be curbed by making the salaries of healthcare workers more competitive. Plans were underway for a cooperation agreement between the Ministry of Health and the trade union in June 2007.

Background

At the end of May and beginning of June 2007, extensive public debate took place regarding the issue of illegal payments in the healthcare sector. The discussion was triggered by media reports that the new President of Latvia, Valdis Zatlers, who previously worked as a director and doctor at a state hospital, had received ‘thank-you payments’ from his patients.

Thank-you payments are such a widespread phenomenon in the state healthcare system that the majority of people deem them acceptable, in the belief the salaries of healthcare workers are too low. As a result of their dissatisfaction with low salaries, many healthcare workers leave the sector to work in other fields or emigrate.

Wage increase falls short of workers’ demands

A couple of years ago, following protests by healthcare workers, the Latvian government promised to improve the salaries of those working at the state’s healthcare institutions (LV0502101F). Such a provision is stipulated under the national programme approved in 2006, entitled Development of human resources in healthcare for the years 2006–2015.

However, at a conference organised by the Health and Social Care Workers’ Trade Union (Latvijas Veselības un sociālās aprūpes darbinieku arodbiedrība, LVSADA), held on 15 May 2007, it was concluded that ‘the government has permitted several unjustified deviations from the programme’. For instance, the annual indexation of healthcare workers’ salaries – based on the average wages in the national economy, as stipulated by legislative acts – has not been provided for. In January 2007, the salaries of medical workers were increased according to the increase in average wages forecast that announced in September by Latvia’s Ministry of Finance (Latvijas Republikas Finanšu ministrija, FM). However, the actual increase in average wages turned out to be 5% higher than was expected. This meant that the monthly salaries of doctors in 2007 were around €70 lower than they could have been.

Wage and salary levels

In the first quarter of 2007, average gross wages and salaries in the health and social work sector (NACE N) were between €520 and €522 in the public sector and €516 on average in the private sector. These wage and salary levels were about 2.5% higher than the average gross national wage and salary (€508), albeit 8.9% lower than the average level in the public sector (€573) and 8.7% higher than the average gross national wage and salary in the private sector (€475) (Monthly Bulletin of Latvian Statistics, 2006/2007, Central Statistical Bureau of Latvia (Latvijas Statistika).

Negotiations between trade union and government

LVSADA invited the Ministry of Health (Latvijas Republikas Veselības ministrija, VM) to index the salaries of healthcare workers, as of 1 July 2007, in accordance with actual average wage levels in 2006. However, the Minister for Health, Vinets Veldre, when meeting the trade union administration, announced that the salaries of healthcare workers could not be changed in 2007 and that the forecast error would be corrected when indexing the salaries for 2008. On the other hand, the Head of LVSADA, Valdis Keris, argued that the extent of illegal payments in healthcare can only be reduced by making the salaries of healthcare workers more competitive.

Nevertheless, in May 2007, LVSADA and the government agreed that, as of 2008, healthcare workers would receive payment for overtime work and that ambulance and emergency workers would receive several social guarantees. Due to the lack of staff, every doctor and nurse in Latvia provides, on average, the equivalent of 1.4 full-time jobs in exchange for a salary equivalent to a single full-time job. According to the government programme, the social guarantees were due to be provided for in 2006–2007.

Trade union dissatisfaction

LVSADA considers that the government’s failure to fulfil its promises repeatedly raises concerns about the serious shortage of workers in the sector. The planned agreement was not concluded because the trade union and VM entered into conflict on the issue of wage negotiations. Currently, the threat of a strike looms, unless the ministry can meet LVSADA’s demand to change the basis for wage negotiations. The ministry is using the forecasted level of the reference salary (forecasted country average) as the basis for wage increase plans, while the trade union is demanding that the actual level be used as the basis for wage increases in the sector.

Commentary

The government’s reluctance to increase the salaries of healthcare workers is related to the decision contained in its inflation reduction plan to adhere to a strict state budget and to ensure a budget surplus within the coming years. The average net salary in the public sector is 12% higher than the overall average salary level in the national economy, while the increase in salary levels is somewhat faster than the average level in the national economy: in 2006, the average net monthly salary in the national economy grew by 23.1% compared with 23.3% in the public sector. In the first quarter of 2007, salaries grew by 33.4% in the national economy, but by 35% in the public sector. Nevertheless, the average salary level in the healthcare sector is still 9% lower than the overall average in the public sector and 25% lower than that in the public administration and defence sector. Therefore, it is likely that the trade union will continue to fight for an increase in the salaries of healthcare workers.

Raita Karnite, Institute of Economics, Latvian Academy of Sciences

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