Latvia: Latest working life developments – Q2 2016

Radical changes in the State Revenue Service targeted at fighting corruption and the shadow economy, the battle by education and healthcare unions for better pay, and the publication of several important research reports are the main topics of interest in this article. This country update reports on the latest developments in working life in Latvia in the second quarter of 2016.

State Revenue Service hit by fight against corruption and shadow economy

Some 39 officials from the State Revenue Service (VID), including its vice general director, were moved to other positions or other organisations in order to break up ‘corruptive networks’. This led to

  • the resignation of the General Director of VID, Inara Petersone;
  • doubts about the lawfulness of the changes;
  • a court case on the ‘alleged' unlawful dismissal of the Vice-General Director;
  • the presentation of some effective cases of illegal operations discovered by VID structural units.

However, a reduction in the shadow economy and corruption in Latvia is expected.

Construction sector considers reference wages and collective wage agreement

In May 2016, for the first time in the history of industrial relations in Latvia, the social partners in the construction sector initiated discussions on introducing reference wages or a sector-level wage agreement. Numerous studies have revealed that the shadow economy is particularly prevalent in the construction sector. It is expected that reference wages or sector-level wage agreements will help to avoid these hidden wage payments.

Pay rises agreed in education and healthcare sectors

Negotiations on the proposed ‘new model’ for teachers’ pay, which had started in spring 2014, continued during the whole of the second quarter in 2016. The proposals were finally agreed by the social partners at the end of June after several amendments – as well as strike threats and public protests from the Latvian Trade Union of Education and Science Employees (LIZDA). The new model was approved at a meeting of the Cabinet of Ministers on 5 July and will become valid on 1 September 2016.

The new model provides for a pay rise for teachers in general, vocational and interest education (music, arts and sports schools) and for pre-school education workers. It is estimated the agreement will lead to increases in the lowest salaries in the education sector, from €420 to €680 per month, but these increases will not be across the board. Teachers’ workloads are also to change. The new model will also encourage further reforms in the education system, which is expected to result in the closure of smaller schools.

In the healthcare sector, the Latvian Trade Union of Health and Social Care Employees (LVSADA) also battled for wage increases, which were achieved by reducing funding in other sectors. The union repeatedly threatened protest action unless funding in the sector was increased, but stopped short of taking action. Employer organisations, such as the Latvian Family Physicians Association, claimed that activities by the Minister of Health were leading to a general deterioration in the sector, and, unlike LVSADA, continued protesting until the minister resigned.

New research results

According to research by Associate Professor Dr Arnis Sauka of the Stockholm School of Economics in Riga, the shadow economy in Latvia decreased by 2.2% between 2014 and 2015 (from 23.5% to 21.3%).

The greatest challenges facing the Latvian people are low wages, a lack of jobs and a lack of social guarantees, according to research by the National Defence Academy of Latvia (NDA). Its study, Risks of destabilisation of population in Latvia – potential threat to national security, was published at the end of June. Similar trends were revealed in a survey by independent research company SKDS; 81% of respondents to a questionnaire chose ‘economic problems’ as a top priority to be tackled, with only 18% choosing ‘morality problems’.

report on youth employment, published by the Ministry of Welfare, focused on the progress in implementing the Youth Guarantee Programme. It shows that the number of young people aged 15–24 who were not in employment or training (NEETs) had decreased by 13% – approximately 7,000 less than the previous year. The report concluded that, in general, youth employment is improving. However, at the end of 2015, 13% of all registered young unemployed people were long-term unemployed.

A survey published in April by SKDS on attitudes towards asylum seekers found that 76.6% of respondents had a negative attitude towards hosting asylum seekers in Latvia (45% ‘certainly would not take’ and 31.6% ‘probably would not take’). Just 2.7% of respondents indicated strong support for hosting asylum seekers (compared with 1.6% in December 2015), with 16.8% of respondents more or less supporting the idea.

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