Industrial relations in the public sector – Latvia

  • Observatory: EurWORK
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  • Published on: 10 Diciembre 2008



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This report presents an overview of industrial relations in the central government and public sector in Latvia.

Structure of the public sector in Latvia

The definition of the public sector commonly accepted and used

A single definition of the public sector does not exist. Rather a functional approach is applied for identification of the public sector.

According to this approach, the public sector is composed of the state and local government institutions and other organisations that are subjects of public rights (public entities).

Public entities are defined and public rights are prescribed by the Law on the Order of Public Governance (adopted on 21 June 2002, valid since 1 January 2003) and complementing legislation.

Public entities are the Republic of Latvia being incipient legal person of public rights, and derivative public entities, that operate in accordance with principles of public rights. Derivative public entities are local governments or other public entities that are established on the basis of law or in accordance with law. Derivative public entity has autonomy that is set by law, including its own budget and property.

Central government and local governments are 100% public entities. Other sectors (health sector, education, culture and others) include public and private entities, therefore their attribution to the public sector is not clear (sometimes yes, sometimes no, depending on purpose of action).

The public sector (the totality of public entities) is a hierarchical organisation, build on the principle of subordination in governance. In this aspect, public sector includes entities of direct governance and entities of mediated (indirect) governance.

Direct governance means institutions and officials of the Republic of Latvia as an incipient public entity, or, in other words, central government.

Mediated governance relates to institutions and officials of derivative public entities (agencies, schools, hospitals). Agencies may be of different nature (for instance, state research institute operates in the status of agency, but also there is State Road Agency. Traffic control agency etc. ).

The definition of the central government sector commonly accepted and used

In this way, central government is the highest executive institution in the state management system, organisation of direct governance.

The Central government is represented by the Cabinet of Ministers. The Cabinet of Ministers imply subordination over the organisation of the state management (institutional subordination) and implementation of the state governance functions (functional subordination).

Operation of the Cabinet of Ministers is prescribed by the Law on the Order of the Cabinet of Ministers (adopted on 15 July 1993), as well as by the Law on the Order of Public Governance. The Cabinet of Ministers includes President of Ministers and 12 ministers (members of the Cabinet of Ministers): defence, foreign affairs, economics, finances, internal affairs, education and science, agriculture, communication, welfare, legal affairs, environment protection and regional development, culture.

President of Ministers may invite as a full right member of the Cabinet of Ministers one associate and one or several ministers for special affairs. President of Ministers may assign state minister in the particular field within the sectors that are governed by ministers. State minister governs the specific field within the ministry under subordination of minister who is responsible for the relevant sector. Parliamentary secretary provides contacts with other ministries and Saeima (Parliament).

Ministry is the highest management institution of the particular state governance sector. Ministry is subordinated to minister. Each ministry is administrated by its state secretary.

State Chancellery (Valts Kanceleja, VK) is established with the Cabinet of Ministers.

Table 1. Employment and population, thsd people
Year Central government* Public sector Total Employees (all economy) Total Population***
Men Women Men Women Men Women Men Women

2003

35

32

37.2**

 

517

490

1073

1258

2004

40

33

35.3**

 

522

496

1068

1251

2005

45

37

n.a.

 

534

502

1063

1244

* Public administration and defence; compulsory social security sector (NACE L)

** Total employed in public sector in percent of employees at the main job, including Latvian residents who actually work in other countries but whose main job attachment is in Latvia.

*** At the beginning of year.

Table 2. Central government employment (Information is not available)
Year Open-ended of which part-time Fixed-term of which part-time
Men Women Men Women Men Women Men Women

2003

               

2004

               

2005

               

Fixed-term employment and part-time work are typical of certain organisational areas in the central government sector or group of workers

In general, the employment in the public sector is based on the open-end contracts. There are not clear distinguishable organisational areas in the central government sector (for instance, lower-level occupations), where fixed-term employment and part-time work would be typical (advisors might be exclusion). In areas, where it is connected with specifics of a particular job, employment relations are fixed term (elected persons for the term of election, chiefs of institutions for 5 years etc), but this is general practice – valid also in private sector.

Also we can not identify clear groups of workers (such as employees approaching retirement, new recruits, women, technicians, and the like) where fixed-term employment and part-time work would be typical.

The presence and quantitative relevance of non-standard employment relationships in the central government sector, and especially of temporary agency work and service contracts with individuals or other non-standard contractual relationships that are important in Latvia.

Non-standard employment relationships in the central government sector exist. Civil servants (in same cases also officials who are not civil servants) are employed on the basis of appointment – without work contract. In this way they are not subjected to the Labour Law.

More often applied form of other non-standard relationships are service contracts with individuals. Other non-standard contractual relationships are not important.

The use of temporary agency work services is not usual practice.

Employment regulation

Public sector vs. private sectorDo (certain) public sector employees enjoy special status compared with private sector employees?

Employed persons in the public sector as a whole may be divided into 4 main categories: elected persons, civil servants, workers in special services (police, firemen, and border-guards, judiciary, prosecutors, other workers in courts and public prosecutor’s office, and other), and workers.

Some categories of public sector employees enjoy special status compared with private sector employees. These are elected persons, officials (who are not civil servants), civil servants, workers of special services, and to some extent, also workers in the central government sector.

The status of elected persons is decided by the relevant decision-making body. The status of civil servants is prescribed by the State Civil Service Law (adopted on 7 September 2000, valid since 1 January 2001), and large number of particular laws (on special services and on particular fields). Workers are divided into ones doing intellectual work and others doing physical work.

More employees with special status may be found at the highest level of the state administration system (direct governance institutions). In indirect governance institutions (state companies, public service undertakings like schools, museums) the status of employed status is almost the same as in the private sector. In local governments only elected people have different status.

Do all public sector employees have the same status or are there differences between different groups of employees

There are differences between civil servants, workers of special services, clerical employees, workers and between workers, depending on their status, as it was mentioned before. Again more differences may be found at the highest levels of state administration.

The distinctive features of public sector employment status,

There is wide variety of statuses and distinctive features that are described in several laws and regulations. Description of distinctive features would make this report remarkable out of limited amount therefore it is advised to look in the relevant laws.

Public sector workers have rights of association; bargaining collectively; strike, except civil servants and armed special services (like police).

The requirements that must be fulfilled to gain such special status

The requirements that must be fulfilled to gain special status depend on the status. Civil servants must meet certain requirements: citizen of the Republic of Latvia; fluent Latvian language skills; higher education; not reached pension age; not punished; not fired from the civil servants because of involvement in criminal case; not recognised as being out of legal capability; not being involved in foreign states security services; not a member of prohibited organisations; not relative of manager of direct subordination.

Civil servants are hired through tender; their relevance to the position is examined by the commission.

Requirement on certain tenure in the position is applied, but it is more important in building further career within the organisation.

Requirements in terms of nationality are not applied.

Central government. Please indicate whether and how this special employment status regulation applies to central government employees.

The central government has the widest variety of statuses. Therefore all before mentioned explanations relate first and foremost to the central government

Additionally to before mentioned four categories there are also very specific statuses in particular institutions.

For instance, Member of the Cabinet of Ministers may hire consultant officials and workers and establish his/her office within the ministry. Member of the Cabinet of Ministers concludes work contract with consultant officials and workers on the time of his/her mandate. After expiration of the work contract consultant officials and workers are eligible for continuation of their pay during time that is concluded in the work contract, but not more than three month.

Table 3. Status of central government employees, thsd people
Year Total employees*, Civil servants Civil servants in general civil service Civil servants in special civil service
Men Women Men Women Men Women

2003

67

10.8

17.7

2.5

4.1

15.3

6.6

2004

73

10.4

18.4

2.4

4.3

15.5

6,7

2005

82

**

**

2.3

4.6

15.1

6.5

* Public administration and defence; compulsory social security sector (NACE L)

** Total number of civil servants is 28.5 thousand people.

In institutions that belong to civil service institutions relation between civil servants and workers is as follows: in general civil service – 52% are civil servants and 48% are workers, in special civil services 86% are civil servants and 14% are workers. The situation will change in 1 January 2007, when police will be excommunicate from the state civil service.

Please indicate the elements of the employment relationship of central government employees which are regulated by:

Specific legislation.

The elements of the employment relationship of central government employees which are regulated by specific legislation include:

  • recruitment and hiring procedures, responsibilities, rights, service consecution, management and some social guarantees in the general state civil service (State Civil Service Law),
  • about the same for special services (elements depend on the specifics of special service) (special laws and regulations),
  • classification of positions in direct governance institutions (established and subordinated to the Cabinet of Ministers) (Regulation of the Cabinet of Ministers Nr. 310),
  • pay levels of civil servants, workers and officials of the direct governance institutions (established and subordinated to the Cabinet of Ministers) (Regulations of the Cabinet of Ministers Nr 995),
  • some general norms (mainly regarding subordination, hiring and firing, responsibilities and other (Law on the Order of State Governance and the Law on the Order of the Cabinet of Ministers).

Collective bargaining.

Collective bargaining has very limited impact on regulation of employment relationships in the central government, because:

  • civil servants (and armed services) are not employed on the basis of work contract and therefore are not subordinated to the Labour Law that regulates collective bargaining (practically are not eligible for collective bargaining not only for this reason, but also based on the morality and loyalty considerations),
  • others have rights to participate in collective bargaining, but there is not large space for negotiations, since all main issues concerning employment in the central government institutions are prescribed by laws and regulations.
  • In organisations (ministries) where bargaining exist, the topics of negotiation are some aspects of working time, work organisation, job security and employment protections.

Please, briefly illustrate whether and how reform of employment regulation in the central government sector since the 1990s has affected:

The status of workers.

The formation of the employment regulation in the central government has been and continues as a process of gradual changes, and many of these imply changes of the status of workers.

Two innovations may be classified as reforms: implementation of the state civil service in 1994 and implementation of the first unified pay system in 2002. Other changes are related to particular groups (for instance police, firemen and border-guards have been included into state civil service in 2000, and will be excluded from 1 January 2007).

The balance between legislation and collective bargaining in regulating the various dimensions of the employment relationships.

The balance between legislation and collective bargaining in regulating the various dimensions of the employment relationships has been affected in the way that more regulations are included in every new law or regulation thus eliminating space for collective bargaining.

Other relevant industrial relations dimensions, such as representation, conflict and its regulation.

Representation, conflict and its regulations are not priorities in legislation regulating employment relations for employees with special status. Others are subordinated to general legislation.

Please, briefly illustrate whether and how reorganisation and restructuring in the central government sector since the 1990s, for instance through the establishment of special agencies or the separation of specific bodies and offices, has affected:

The status of significant groups of workers.

There have been several reorganisations and restructuring cases in the central government sector, for instance, organisation of state enterprises for fulfilling of some administration functions (road traffic control, road administration, maritime administration, administration of electromagnetic frequencies and others) that were later transformed into state agencies or state capital companies, as well as establishing of new institutions (for instance, the State Bureau for Fighting Corruption, the State Bureau for Civil rights etc.).

These changes imply changes of the status of workers. The forming of the central government system is never ended process.

The balance between legislation and collective bargaining in regulating the various dimensions of the employment relationships.

The balance changes with change of the status of employed regarding special laws and regulations on one side and Labour law on other.

Other relevant industrial relations dimensions, such as representation, conflict and its regulation.

See answers to 4, 5, 6.5.

Pay levels and determination

The presence and relevance of collective bargaining on pay in the central government sector.

Collective bargaining on pay is allowed in the central government institutions (except for civil servants). However, pay is determined in legislation (Regulations of the Cabinet of Ministers Nr. 310 and Nr. 995), therefore there is very limited space for collective bargaining on pay issues.

The number and scope of bargaining units on pay within the central government sector.

There is very limited scope of bargaining units (see 4.1).

Do minimum wage levels vary across the different bargaining units within the central government sector? Are there common minimum wage levels in the whole public sector?

There are not comparable examples. In general, pay levels and differences are determined by regulations.

Minimum wage level (national minimum wage) is the same in all sectors, including public sector.

Is there a single job classification system for the whole central government sector?

Yes, there is a single job classification system for the whole central government sector (Regulations of the Cabinet of Ministers Nr. 310).

Wage levels and wage increases in the central government and private sectors since 2000 (table 4).

Wage levels in public sector for civil servants, workers and officials of the direct governance institutions (established and subordinated to the Cabinet of Ministers) are set in Regulations of the Cabinet of Ministers Nr. 995.

Some institutions (inst.: The State Bureau for Fighting Corruption (Korupcijas Novēršanas un Apkarošanas birojs, KNAB) is not subordinated to the unified system.

Table 4. Central government and private sector: wage levels and increases since 2000 (average) - Gross
Year Central government* Private sector
Level € Annual increase % Level € Annual increase %

2000

352

 

243

 

2001

368

4.5

259

6.6

2002

396

7.6

266

2.7

2003

414

4.5

267

0.4

2004

443

7.0

286

7.1

2005

501

13.0

319

11.5

* In public administration and defence; compulsory social security (NACE L) - public sector

The presence and relevance of variable performance-related pay in the central government sector.

Variable performance-related pay in the central government sector is envisaged in the Regulations of the Cabinet of Ministers Nr. 995. Regulations include algorithms for annual wage adjustment according with performance factors.

For organisations that are not subjects of these Regulations, performance related pay is established in their own way. In many services, performance-related pay adjustments are important.

Variable pay is not related to the bargaining process, as explained before.

Are there any form of “benchmarking” of wage dynamics in the central government sector with other public sectors or with the private sector?

In the central government sector wages are arranged in the system and wage levels are strictly regulated by Regulations. Any changes in the wage levels of the system imply changes in the state budget and therefore decided by the Parliament. Industrial relations actors are not involved in benchmarking activity.

There are some entities and sub-sectors in the public sector where wages or other payments are established on the basis of average wage, but not in the central government. These are Parliament, education. In sub-sectors (health care, education) industrial relation actors are essential partners in benchmarking.

Union Presence and density

Trade unions which are present in the various bargaining units of the central government sector, their number, affiliation, representational domain, membership, and the sectoral union density (data by gender).

Trade union organisations are established in some ministries and direct governance state institutions.

Some local trade union organisations are members of Trade Union of Employees of State Institutions, Self-governments and Financial Employers (Latvijas Valsts iestāžu, Pašvaldību, Uzņēmumu un Finanšu darbinieku arodbiedrība, LVPUFDA). It can be seen from the title or organisation, that it involves other sectors too. Trade Union is a member of national level social partner organisation – Free Trade Union Confederation of Latvia (Latvijas Brīvo arodbiedrību savienība, LBAS)

Table 5. Trade unions
Union Affiliation Representational domain (group of workers represented) Bargaining units where the trade union is present Membership (2004)
Women Men

Trade Union of Employees of State Institutions, Self-governments and Financial. Employers.

Free Trade Union Confederation of Latvia

Employees of state institutions, self-governments, financial sector

None

3650

1050

Total

-

-

-

   

Sectoral union density

-

-

-

   

Total number of members in 2005 – 4965 working members and 55 non-working members.

Please provide information on the diffusion within the central government sector of craft unions, professional unions, or unions which are not affiliated to peak associations.

Trade union system in the central government is not observed, information is not available. Even the State Civil Service Agency (Valsts Civildienesta pāvalde) can not give precise information about existence, size and activities of local (in ministries and state institutions) trade union organisations without special investigation.

There union of civil servants is not possible.

Are there any formal procedures or rules which aim to assess the representativeness of the various unions?

Union representations and industrial relation activities are organised in compliance with general legislation.

Employer representation

Who does represent the central government at the bargaining table? Are there specific independent bodies, such as agencies, or negotiations are carried out under the responsibility of political actors, such as ministers?

Employer representation exists at the level of institutions (ministries, agencies) - employers are represented by administration of the institution.

Central government as a whole is not represented by a single employer’s representative.

If negotiations are carried out by specific independent bodies, please indicate how they are organised.

Negotiations are not carried out by specific independent bodies.

If negotiations are carried under the direct responsibility of political actors, please indicate how they are organised.

Negotiations occur only in institutions (ministries, agencies) and follow general rules of collective bargaining.

Do collective agreements in the central government sector have to pass an ex-post “validation” procedure

Collective agreements in the central government sector have meet budget constraints. Each decision that needs to be financed may be implemented only after adoption of amendments of the state budget (political process).

Collective bargaining and conflict in central government

The structure of collective bargaining

See answers in previous questions regarding industrial relations.

The duration of agreements and the presence and content of peace obligations.

Information is not available.

The main issues of collective bargaining by referring to the latest renewals.

Precise information is not available. Usually collective bargaining refers to issues that are not in regulations, for instance, security at work.

Levels and recent trends in conflict.

A unique case in this regard was observed in police service, when pay issue in connection with status of workers was raised in end of 2004. By using all legal means, police workers achieved rights to establish trade union and now are struggling for collective agreement, in which they expect to negotiate on pay issues.

The presence and main features of forms of regulation of labour conflict and collective dispute resolution procedures.

Forms of regulation of labour conflict depend on status of employed. Civil servants apply for conflict resolution in the State Civil Service Agency (Valsts Civildienesta pārvalde), or court. Employees who are employed on the basis of work contract act in compliance with general rules.

Commentary by the NC

All issues are connected with perfection of the wage system and implementation of the Regulations of the Cabinet of Ministers Nr. 310 and 995.

Industrial relations in the central government are weak, because major issues are regulated by legislation acts. The employment structure is complicate. Implementation of new Regulations will help to harmonise wage system that was the major problem of employment relations in the central government sector.

It has to be mentioned that industrial relations in other sub-sectors of the public sector (ex. education, health care) are very active, professional and productive.

Kriss Karnitis, Institute of Economics Latvian Academy of Sciences

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