Riga Electric Machine Building Works (RER), Latvia: Comprehensive approach
Riga Electric Machine Building Works (Rigas Elektomašinbuves Rupnica, RER) was established in 1946, evolving from the former Russian-French enterprise ‘Provodnik’, founded in 1888. In 1993, the enterprise was reformed as a joint stock company; in 2002, the company was privatised and is now solely Latvian owned.
The company manufactures traction equipment for electrical trains, light railways and fork lifts, as well as lighting and power supply equipment for passenger coaches. In 2004, it acquired an ISO 9001:200 certificate and recently confirmed its compliance with the standard’s requirements. It is one of the few factories that survived in Riga after the economic transition period, although production volumes have fallen dramatically. Currently, RER employs about 700 workers (compared with approximately 7,000 workers in 1990): today’s figure comprises approximately 250 women and 450 men. Production output is entirely exported to Russia and the Ukraine.
There is no preferred age profile; however, the majority of staff have been employed by RER for a considerable period of time – since the 1980s. The employees benefit from the company’s internal culture and participate in most of the measures described below. Indeed, the issue of an ageing workforce is crucial for RER, and this is one of the primary reasons for establishing an independent trade union and the existing overall personnel policy. As well as individual employer–employee contracts, collective working agreements are also in place, thereby formalising the employer–trade union relationships.
Good practice today
In Latvia, the demand for skilled workers, such as milling-machine operators, joiners and other metalworkers greatly exceeds the numbers available in the labour market; therefore, RER faces a serious staff shortage. Moreover, Latvian colleges currently do not offer specialist courses covering the necessary qualifications, thus making the situation even more difficult.
At the time of interview, the age profile of workers at RER was as follows:
|Age||< 20 years||20–30 years||30–50 years||51–55 years||56–61 years||62–65 years||> 65 years|
|Source: Interview with Alexander Dubanov, RER|
The company’s current human resource (HR) strategy aims at extending a person’s working life to the maximum, and even attracting back to the labour market those who have already retired, by providing incentives to continue employment after reaching pensionable age. The strategy combines active recruiting methods, a range of bonuses and benefits available for older employees, and social support throughout the working process, thus highlighting RER’s competitive HR practices among other employers.
In terms of active recruiting methods, RER uses a variety of measures to attract new employees, such as posting job offers in local newspapers and on the Internet, utilising the State Employment Agency’s (SEA) services and providing jobs to unemployed people, and even launching a large-scale advertising campaign in Rezekne, a region experiencing widespread unemployment. Another specifically targeted recruiting process involves attracting family members and relatives of those who are already working for RER. This increases the sense of responsibility of the persons hired, and promotes a generational approach to work and lifelong employment.
The recruiting measures aim to ensure that applicants possess the necessary qualifications, experience and willingness to work. Age is explicitly described as being of secondary importance, thereby allowing people of retirement and pre-retirement age to join the company on the basis of the above-mentioned HR policies.
Nevertheless, the staff turnover rate is rather high, at a rate of about 30 people per month. This figure, however, is somewhat misleading, as it does not represent a turnover of the core staff – which, due to its specialist nature, remains stable – but rather a general turnover of support staff and unqualified workers who are hired on a short-term basis as required.
Additional benefits available to RER’s senior employees include medical care services; also, RER employees receive a full annual medical check-up and regular vaccinations free of charge. As older employees often suffer from diverse health problems, this service is of great value to them. Moreover, workers employed by RER for 20 and 30 years receive ‘veteran’ and ‘honoured veteran’ statutes, respectively, in addition to a substantial one-off bonus payment, together with corresponding certificates and ID cards. Employees also receive birthday and Christmas presents.
Mentoring is another important aspect of the company’s ageing policy. Senior employees are involved in the training of newcomers, guiding their actions over a three-month period. This raises awareness and respect towards older employees, and also provides valuable on-the-job training. Furthermore, there are material benefits for the mentors: the amount of additional remuneration varies from 20%–25% of the mentor’s monthly salary.
Over time, employees are given advice concerning the state’s social policy in general and of the pension system in particular. At retirement age, people are allowed to receive their salary and also a state pension at the same time. Moreover, as social security tax is being regularly paid, the amount of monthly pension benefit increases with annual indexation. These material benefits effectively discourage people from exiting the labour market and promote lifelong employment in the company.
Development of the case study
Most of these measures form part of the internal company culture, which was inherited by RER, and have been continuously implemented for a long period of time – since the 1970s. Originally, in addition to the measures described above, free sporting grounds were made available to all workers, including older workers after retirement. Living quarters were also offered to non-national workers and to people after retirement, as well as some other measures.
However, during the economic transition period, when RER faced a rapid decline in production volume, the number of workers was reduced from approximately 7,000 to 700 employees, and these measures were partly abandoned due to financial reasons.
Future plans include the possibility of cooperating with the Latvian Disabilities Association and SEA on employment issues, and attracting European Social Fund financing. Increasingly, the ageing of employees is becoming an urgent issue and there is a need to attract more workers to the company. RER is also considering employing workers from abroad (e.g. Belarus and Turkey) to fill available working places, as the Latvian workforce is not considered to be sufficient or even sustainable.
Contact: Alexander Dubanov, email: email@example.com