EurWORK European Observatory of Working Life

Emerol, Latvia: Comprehensive approach

About

Case study name: 
Ageing workforce
Organisation Size: 
Small
Sectors: 
Construction and woodworking
Target Groups: 
Skilled Manual
Initiative Types: 
Comprehensive approach
Scope: 
Old

 

Organisational background

 

Many small and medium-sized enterprises in Latvia were established in the immediate aftermath of the collapse of the Soviet Union, when many entrepreneurs seized the opportunity to form their own businesses in the new market economy. In 1992, three entrepreneurs Vladimir Mirsky, Oleg Himichev and Alexander Kurepin founded a new company called Emerol. The primary activity of the company involved the purchasing of fuel and petrochemical products in Russia and their resale at much higher prices in Latvia. The company also had petrol stations in various parts of the country. However, there was a significant change in business direction after the Russian crisis in 1998 when the company lost a significant amount of its financial resources to fund its expansion and investment activities. As a result, the company was forced to change its business direction, and now Emerol is engaged in two other business areas, namely real estate and construction.

Currently, Emerol employs 54 employees, which represents a 60% drop in the number of workers employed when the company was first established. Today, some 26 employees are of retirement or pre-retirement age, but this does not pose any problems for the successful functioning of the company. Young employees acknowledge and understand that they have to learn from their older colleagues, and the company’s management facilitates this practice.

Good practice today

Working practices with respect to the ageing workforce are rather unique in this company, and not many Latvian companies have implemented such policies. The majority of employees of retirement and pre-retirement age were employed when the company was first established in 1992, which means that they have already worked for many years with Emerol. The average salary of employees is around LVL 300 (€430) per month. The company has never considered substituting employees of pre-retirement age with a younger workforce, a factor that is mainly attributed to the company culture, which has developed a special attitude towards its older workers.

Although there are many good practices in place with respect to the ageing workforce, among the most noteworthy initiatives are the implementation of change procedures, flexible working practices, and health and well-being policies.

From a management perspective, it is a well-known fact that initiating and implementing change is difficult, as it is often accompanied by substantial resistance from employees. According to the labour law, employees who work in Latvian enterprises should possess some knowledge of the Latvian language. This constituted a significant problem for many enterprises in the early 1990s, as employees who did not pass the exam certifying their knowledge of Latvian subsequently lost their job. Given that the majority of Emerol’s employees are Russian, the company was also confronted with this problem. The lack of knowledge of the Latvian language was a particular problem for older people since only a few of them were in fact Latvian. Moreover, the management decided that it would be unfair to force the older employees to attend courses and obtain a proficiency certificate as soon as possible, since workers of pre-retirement and retirement age were extremely reluctant to learn a new language. Its argument was that, given their age, their learning abilities were slower and that learning a new language by attending courses would require a lot of time and effort.

From a management perspective, the crucial point was to show older employees that knowledge of Latvian was not a prerequisite to be employed by the company but would rather enhance their lives in Latvia for various reasons: first, it would enable them to become more integrated in Latvian social life and second, it would help them to be more competitive in their job. The company devised a staff rotation policy to help employees learn Latvian. Russian-speaking employees were placed in departments with Latvian-speaking employees. This, in fact, proved to be a much better method for helping employees learn Latvian quicker, by communicating with colleagues within the department, rather than attending language classes. Employees who were willing to attend the language courses were offered this option free of charge. Moreover, they were allowed to attend courses at any time suitable for them, which was certainly not the case in many companies in which employees were only allowed to attend courses either at weekends or after work.

The company also introduced a system of flexible working practices to facilitate its ageing workforce. In 2004, the management decided to introduce the practice of flexible working hours for employees of pre-retirement age, but for certain positions only, such as designers, architects or those employees who were not relying on the assistance of other employees to perform their jobs. However, to the management’s surprise, many employees of retirement and pre-retirement age were not willing to accept such practices because they were used to starting their working day at 09.00 and finishing it at 17.00. According to the human resource (HR) manager, this option is still available to older employees holding certain positions, and it is entirely up to these employees to decide whether or not to work flexible hours.

A health and well-being policy has also been put in place by the company’s management. This policy offers medical insurance to every employee free of charge. Moreover, on an annual basis, workers are allowed to purchase medicine at a cost of up to LVL 200 (€285), which will be refunded to them by the company at the end of the year. Free dental visits are also offered to employees and if they require further treatment, such costs will be covered by the company. Company representative Vladimir Ljvovskij stated: ‘We are very concerned with the well-being of our employees because we think that healthy employees determine the success of our business.’

Development of the case study

Although there are no policies specifically aimed at the recruitment of older employees, Emerol’s practices are rather unique in the sense that few companies in Latvia offer such options to employees of retirement and pre-retirement age. Although the workforce is ageing, Emerol’s management does not consider a high proportion of older employees to represent a problem for the company’s competitiveness and prospects for the future. On the contrary, young employees realise that there are substantial benefits to be gained from learning from their older and more experienced colleagues. With respect to future prospects, the company’s policy is to allow its older workers to decide themselves when to leave the company. Moreover, the company wants to pursue a lifelong approach to employment; thus, by providing employee benefits, the company shows young employees that it is beneficial both for the company and the employees to stay with Emerol for many years. The logic behind this policy is to motivate and encourage young workers to stay with the company for a long time and by thus developing policies for older employees. Emerol is unusual in this respect, as most Latvian companies believe that spending money on motivating older employees offers no advantages and is therefore not worth the effort.

Further information

Contact: Vladimir Ljvovskij, email: vladimir@speks.lv

 

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