Emigration of Latvian workers continues to increase

Since Latvia’s accession to the European Union, Latvian businesses and workers have been making use of the provisions of the four freedoms, i.e. free movement of goods, services, persons and capital within the EU. This has had both positive and negative effects. While Latvian workers have proved to be competitive in the labour markets of other European countries, this has raised concerns among local trade unions. Meanwhile, Latvian employers are starting to witness labour force deficits due to the increasing levels of emigration.

Increased movement of working population

The emigration of Latvians to other European countries has increased following Latvia’s accession to the EU. At the same time, Latvian businesses are making use of possibilities provided for by the free market and are seeking to provide services from abroad.

Figures provided by the Ministry of Economics show that about 40,000-50,000 Latvians work in other EU Member States. This information was obtained by analysing the data from the Office of Citizenship and Migration Affairs (Pilsonības un migrācijas lietu pārvalde), the Central Statistical Bureau (Centrālā Statistikas pārvalde, CSP), the Ministry of Foreign Affairs, as well as foreign and other institutions such as those that were issued with work permits, social insurance numbers and other information. The actual number of emigrants may be even higher than this figure, as family members usually accompany jobseekers and illegal employment is also possible.

According to data from the Ministry of Economics, the majority of Latvian emigrants work in Ireland. Altogether, it is estimated that some 15,000-20,000 Latvians, or according to another source about 35,000 Latvians, live and work in Ireland. In addition, approximately 15,000-20,000 Latvian people work in the United Kingdom (UK), 1,500 in Norway and Germany, 1,055 in Denmark, less than 1,000 in Sweden and about 400 in other EU countries. Latvians are assisted in finding a job abroad by private companies. Also, the state employment agency, Nodarbinātības Valsts aģentūra (NVA) provides information about job vacancies abroad. Comments have been made in the media that the NVA is more concerned with finding jobs for people abroad than in Latvia.

The main reasons for emigration are low salaries, and a sense of hopelessness and lack of future vision. People leave for a short period of time, initially to earn money, but after having adapted to a new country many do not want to return. Moreover, in countries with more emigrants, Latvian schools and associations, as well as stores, are being established. While abroad, Latvians mainly engage in blue-collar work; however, this does not necessarily mean that only unskilled professions leave to work abroad. The differences in wages are so extreme that people can earn significantly more by doing unskilled work abroad than in a qualified job in Latvia.

Emigration has resulted in a labour force deficit and in an increase in salary levels in the country, which in turn has led to a corresponding rise in inflation. During 2005, the average net monthly wages and salaries have increased by 16.5%, 16.2% and 17.7% respectively, in comparison with the same periods in 2004. The real wage and salary index has also increased by 9.2%, 9.1% and 10.5% respectively. Despite the relatively improved working conditions in Latvia, emigration has continued to increase and there are no signs of this stopping. At the same time, employers are becoming increasingly interested in bringing in employees from the Ukraine, Belarus, and Russia. This is a particularly frequent practice in the construction industry. The lack of unskilled manpower in Latvia has resulted from emigration and from the fact that more Latvian people want to educate themselves and to look for 'intelligent workplaces'.

According to Latvian legislation, a person coming from a third country should be paid at least the average salary and an additional monthly duty of EUR 50. These conditions have, so far, deterred employers from taking in employees from abroad in large numbers.

Disquiet in Swedish and Irish labour markets

Immigrants from Latvia are willing to work for lower wages and temporary living conditions; they are not choosy about the type of work they engage in, nor do they insist on strict adherence to labour legislation with regard to work and rest hours. As a result, employers in EU countries are very willing to hire these workers. Reports on visiting workers from Latvia are very favorable in all countries. Latvians are also able to take advantage of opportunities for qualification improvement abroad.

This has raised concerns among trade unions, as they fear that immigrants are depriving local people of work and that their employment is leading to a decrease in salary levels. A case in point is the scandal regarding the construction company, Laval&Partneri, which was engaged in construction work at the Vaxholm municipality in Sweden (LV0506101N, SE0505104N, LV0501101F). Swedish trade unions blocked the Latvian builders from working and went on to achieve a complete termination of operations of the company in Sweden. The Swedish trade unions’ position on this matter was also supported by the Swedish government. The boycott caused substantial losses to the company, which subsequently sued the organiser of the boycott, the Swedish Building Workers’ Union (Svenska Byggarbetareförbundet). The case was then referred to the Swedish Labour Court (Arbetsdomstolen), and subsequently to the Court of the European Communities, where it is still ongoing.

While the court is considering its decision, events concerning Laval&Partneri have continued. Swedish employer organisations showed their support for Laval&Partneri when they funded the labour court’s procedural costs. In response, in mid-June 2005, the Swedish Minister for Economic Affairs called for the withdrawal of state-owned enterprises from the Association of Swedish Entrepreneurs (Svenskt Näringsliv). However, in November 2005, the leader of the Swedish builders’ trade union admitted that the union had acted incorrectly by blocking works at the school built by Laval&Partneri, as procedural errors have been admitted in negotiations with Latvian builders.

At the end of 2005, another scandal concerning Latvian workers occurred in Ireland, when the country’s national ferry company, Irish Ferries (IF), took a decision to replace half of its workforce with a cheaper workforce from countries in eastern Europe, including Latvia. Irish trade unions protested against the decision. The scandal also crossed the Irish borders and was echoed at EU level when Irish MEPs, referring to the Swedish experience and to the Irish Ferries case, initiated a discussion regarding the directive permitting the provision of services in other EU countries, subject to the laws of the country of origin. In December 2005, Irish trade unions were joined by Welsh trade unions in solidarity protests. The trade unions did not call for a ban on foreign workers; instead they called for fairer conditions for the entire labour market.

View of Latvian trade unions

The Free Trade Union Confederation of Latvia (Latvijas Brīvo Arodbiedrību savienība, LBAS) has called on the government to take action in order to improve the country’s social situation. The increasing emigration is one of the arguments the LBAS uses to justify its demands.

At the same time, Latvian trade unions continue to cooperate with the trade unions of other countries that are opposed to Latvian immigrants. For example, at the end of 2005, LBAS signed a cooperation agreement with the Swedish trade unions (SE0511101N). Representatives of Laval&Partneri believe that, by concluding the agreement with Swedish trade unions, LBAS has sided with the Swedes and admitted that Latvian employees should not work for remuneration lower than the average wage earned by Swedish workers. The chairman of LBAS, Pēteris Krīgers, does not agree with such a conclusion. He considers that Swedish trade unions are strong and consistent in their demands and that Latvian trade unions can benefit from the experience. Pēteris Krīgers stresses that placing restrictions on Latvian employees in other countries does not harm either the employees or the country, as the more people that stay in Latvia, the less the country will need to take in other workers from abroad.

Government’s attitude towards increasing emigration

The government insists that emigration facilitates the improvement of labour force quality, as emigrants can learn a language, master skills, earn money and return home more economically better-off. The fact that many emigrants engage in unskilled jobs that frequently do not correspond to their level of education, and that they do not wish to return home, has never been addressed by the government.

Only recently, thanks to pressure from the social partners, has the government made an attempt to address the scale of emigration. Nevertheless, the government does not intend to place any limits on emigration; on the contrary, it financially supports the establishment of Latvian schools and associations abroad, while the NVA supports job-seeking abroad.

In December 2005, when information on the scale of emigration provided by the Ministry of Economics was discussed at the Joint Strategy and Development Council for National Economy, the Prime Minister, Aigars Kalvītis, stated that the labour force drain will continue for another five to ten years. He indicated that practical measures could be taken to limit emigration, for example: by making the public and municipal procurement law stricter, through the introduction of more restricted evaluation criteria for companies; and by evaluating the taxes these companies have paid on their employees. The NVA representative, Ilze Hāberlinga, has also admitted that Latvian employers should consider attracting employees to their companies through legal and regular salaries, bonuses, health insurance, vacations and other benefits. She stresses that many employers are still reluctant to pay adequate salaries to employees and are evading legal employment.

On the other hand, the government supports the position of Laval&Partneri in their dispute with Swedish trade unions. At the beginning of 2005, the Prime Minister submitted a request to the President of the European Commission, Jose Manuel Barroso, to evaluate compliance with the EU law in Sweden where Latvian construction companies were being blocked. The Commission had planned to take a decision on the case of Laval&Partneri by June 2005, however, Latvia did not receive any information until September 2005.

On 5 September 2005, during a meeting between MEPs and the European Commissioner for Internal Market and Services, Charlie McCreevy, the Latvian MEP Valdis Dombrovskis reminded the Commissioner about the case of Laval&Partneri and asked how he planned to ensure proper functioning of the free service market in the EU and how restrictions on businesses from the new Member States would be prevented. On 4 October 2005, Valdis Dombrovskis sent an official letter to Jose Manuel Barroso, in order to clarify the case of Laval&Partneri at the Commission and any further action planned by the Commission. The letter was signed by 40 MEPs, who requested that the Commission’s President not only decide on the case, but also provide for the free movement of services within the EU market and end the discrimination against companies from the new Member States.

Commentary

The problem of emigration in Latvia is far more serious than the Latvian government cares to admit. Each action, either direct or indirect, to reduce emigration should be supported.

According to recent news in Latvia, the EU is currently avoiding discussion about the conflict or relating it to former unsuccessful attempts of the new Member States to exercise free movement of services and labour force within the EU. Meanwhile, EU representatives insist that the EU is based on the principle that employees from other countries should be employed under the same conditions as native employees, as this prevents social dumping. At the same time, trade unions are calling for fair conditions in the labour market and for the renewal of the directive regulating minimum requirements for ship crews, which was rejected several years ago.

In this respect, the actions of EU institutions and trade unions could prove favourable for Latvia, as they would increase competition in foreign labour markets and possibly prevent Latvians from emigrating. The process could also influence equalisation of salary levels within the EU’s economic landscape, including in Latvia. (Raita Karnite, Institute of Economics, Latvian Academy of Sciences)

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