Labour relations difficult in R & D sector

The research and development (R&D) sector in Latvia is unique in terms of labour relations. The sector encompasses different types of organisations, including higher education institutions, and state and private research organisations. The labour law regulates labour relations in all of these areas. However, these organisations are also subject to specific legislation regulating R&D activities, such as requirements for longer holidays and leave for creative work, as well as in terms of financing. Conflicting legislation exists in certain aspects, which makes labour relations in the R&D sector difficult and sometimes even illegal.

Background information

According to national statistics, some 303 institutions and enterprises carried out research and development (R&D) in Latvia in 2004. Based on the equivalent of a full day’s work, these bodies employed a total of 3,324 scientific workers.

In general, the availability and scale of funding significantly affects scientific work. Since 1991, research in Latvia has been funded following the project allocation principle. Resources are allocated for particular research projects on the basis of tenders submitted by scientists and the groups of researchers they lead. Their performance is reviewed on an annual basis and, if the Latvian Council of Science (Latvijas Zinatnes Padome, LZP) believes that a scientist has not fulfilled the project, funding can be terminated.

Up to January 2006, there was no direct funding for research organisations in Latvia. Research organisations obtained funding only by attracting scientists who had been granted state support for their proposed projects, as well as by participating in commercial or international projects.

Division of responsibilities regarding labour legislation

Since the early 1990s, the activities of research organisations have been regulated by two legislative spheres: general legislation that governs the organisations’ activities, such as the Commercial Law, Labour Law and social legislation; and special legislation that governs scientific work, namely the Scientific Activities Law and the Universities Law.

However, difficulties arise in implementing the legal requirements relating to labour relations due to the specific circumstances of research funding. The law on scientific activities defines funding to scientists as a loan made to an individual, thereby making an individual – the scientist – responsible for its expenditure. On the other hand, in order to obtain funding, scientists must hand over administration of the funding to scientific organisations registered with the State Scientific Institutions Register, which meets set requirements.

As the holder of the loan, the individual scientist has the sole right to decide about its expenditure. Moreover, the LZP concludes a contract for the fulfilment of scientific work with the scientist rather than the organisation entrusted with administering the funding. Nevertheless, the scientist who receives the research funding is not responsible for adhering to labour legislation with regard to the workers employed to perform the scientific work. Instead, it is left to the scientific organisation – with no rights to decide on the funding of scientific work – to adhere to the legal provisions in relation to labour relations with both the scientist and the workers involved in the research project.

This dilemma of divided responsibilities is usually resolved by mutual agreement. However, in the case of restricted and irregular funding, the legislation from the two spheres borders on illegality even when small complications arise. In such cases, the worker is generally the one to bear the consequences. Thus, the more labour legislation protects the rights of workers, the harder it is for scientific organisations to observe it, in relation to both remuneration and working hours.

Furthermore, legislation on scientific activities stipulates additional rights for scientists. Employees with doctoral degrees are entitled to eight weeks of paid annual leave and to a paid sabbatical of 26 calendar weeks every six years. Scientific organisations usually do not have the resources to cover the costs of sabbaticals, meaning that scientists cannot enjoy their rights as set out by law.

Difficulties over funding arrangements

Even greater contradictions in the R&D sector arise from the Commercial Law and implementing the new science law. The Commercial Law abolished the status of non-profit organisation in Latvia, under which the majority of state and private research institutions had operated before then. Research organisations had various options with regard to re-registering their activities in relation to the legislative changes: becoming state or local government agencies, state or private profit-making commercial associations, societies or foundations. However, none of the stated forms complies with the essence of what research organisations do or with other international models.

On the other hand, the new Scientific Activities Law introduced two new principles for funding research organisations – base funding and state research programmes. The procedures for granting base funding are set out in special cabinet regulations. Both principles have been in force since January 2006 and their implementation has led to a significant funding increase for research organisations. Nevertheless, research organisations received the funding only after a long delay. Unfortunately, the primary source for compensating a delay in funding is employees’ wages, which constitutes an infringement of labour legislation.

Regardless of the steady course towards a market economy and the proven advantages of public-private partnerships, private research institutions in Latvia encounter severe difficulties. They do not have the right to receive base funding from the state budget, while their owners cannot or do not want to provide primary funding to the extent provided to state scientific organisations. Since primary funding is granted from the state science budget, the funds available for other research are diminishing. As a result, it is becoming more difficult to access funding for private institutions.

At the same time, in order to be eligible for scientific organisation status and state funding for research projects, private organisations must also employ a set number of qualified scientific doctoral staff and fulfil obligations toward them as mandated by law, i.e. they must fund vacations and sabbaticals. Existing legislation is thus contributing to infringe the labour rights of scientists both in relation to other workers and depending on whether the scientist wants to work for a private or public organisation.

Raita Karnite, Institute of Economics, Latvian Academy of Sciences