Trade unions threaten to dissolve parliament over state of economy

At the beginning of October 2007, the Latvian Free Trade Union Confederation announced that it was prepared to organise a referendum on the dissolution of Latvia’s parliament. The trade unions’ protests were prompted by the inability of the government to ensure economic stability, alongside announcements of a possible public sector pay freeze and an unwillingness to consult with the social partners in the process of adopting the 2008 state budget.

Inflationary pressures

Over the past year, increasing macroeconomic instability has heightened tensions in Latvian society. When the August 2007 inflation rate exceeded 10% and the public demanded that the government be more active in reducing inflation, the government responded by announcing a possible public sector pay freeze in 2008, to be applied first to teachers and healthcare workers. The ministers believe that such a move could act as a deflationary measure (LV0703029I).

Before the announcement, trade unions representing teachers, scientists and healthcare employees, in conjunction with the Latvian Free Trade Union Confederation (Latvijas Brīvo Arodbiedrību savienība, LBAS), tried to convince the government that the previously adopted pay rise timetables should be revised upwards because, due to high inflation, they no longer provide the anticipated wage increases (LV0702029I, LV0703019I, LV0707039I).

Government bypasses national tripartite council

Trade unions are therefore rejecting any attempts to freeze wages and reduce employees’ social guarantees, and are seeking to have workers’ guarantees incorporated into the 2008 state budget. On 3 October 2007, the government once again breached the agreement with the social partners on co-participation in the state budget approval process by not submitting the prepared 2008 draft budget to the board of the National Tripartite Cooperation Council (Nacionālā trīspusējā sadarbības padome, NTSP); LBAS as the only national level employee representative body refused to take part in the NTSP board meeting.

At an extraordinary meeting, the LBAS board decided that, if the government failed to implement the trade unions’ demands and ignored their proposals, LBAS would hold a demonstration outside the parliament (Saeima) building and collect signatures for the recall of parliament on 11 October 2007, the day the state budget was scheduled for debate in parliament. The trade unions believe that the government is ignoring social dialogue, failing to abide by the forms of cooperation entailed in the tripartite agreement and failing to respect the procedures for submitting documents for NTSP meetings as enshrined in the NTSP bylaws. Approximately 1,500 people attended the demonstration.

Trade unions initiate chain of events

On 4 October 2007, the LBAS board met Prime Minister Aigars Kalvītis to establish why the social partners had not received the necessary documents and when these would be forthcoming. Prime Minister Kalvītis proposed calling another NTSP meeting on 10 October – immediately after the government approved the budget and a day before the budget was to be considered by parliament – and to adopt a tripartite memorandum covering the points on which agreement was not reached in the 2008 state budget discussions. LBAS promised to continue negotiations with the government but was sceptical that it would be prepared to sign the government’s memorandum.

Also on 4 October, LBAS circulated an open letter to members of parliament and the people of Latvia criticising the government’s failure to bring order to the country, including reducing poverty and emigration.

During October 2007, several meetings were held between LBAS and senior government representatives; however, no satisfactory decisions were reached.

The trade unions met President Vadis Zatlers on 17 October, the United Nations (UN) International Day for the Eradication of Poverty. The president informed the LBAS leaders that all political parties in parliament had expressed their support for the trade unions’ demands, and that work on the state budget would continue.

On 24 October, a second rally was held at the parliament buildings. At that picket, LBAS launched a sign-in campaign for changes in the constitution. These amendments would allow the electorate to initiate the procedure for dissolution of parliament.

LBAS encompasses 24 trade union organisations, representing about 165,000 members. The European Trade Union Confederation (ETUC), as well as Finnish, Lithuanian and Estonian trade union organisations have expressed their support for the measures taken by LBAS.

Commentary

It is likely that the government will be able to reach agreement with the trade unions and that the planned referendum will not take place. Nonetheless, a significant change can be discerned in the trade unions’ activities as they have decided to shift the centre of gravity of negotiations to parliament. The unions believe that parliament rather than the government plays a key role in adopting the country’s budget. If the parliament rejects the draft budget put forward by the government, the government must resign. In this way, the trade unions’ struggle exacerbates the current crisis in the government.

Raita Karnite, Institute of Economics, Latvian Academy of Sciences

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