Employers demand changes to labour laws

Employers in Latvia have been debating possible changes to labour legislation that would impact on employment conditions, such as dismissal from work, responsibility for concluding work contracts, work safety issues and opportunities for introducing new forms of work. The Employers’ Confederation of Latvia considers it essential to create a model of industrial relations that is both highly flexible and ensures work security and employee rights.

In its plan for 2006, the Employers’ Confederation of Latvia (Latvijas Darba deveju konfederacija, LDDK) has put forward various proposals for changes to the labour law.

LDDK considers that the Latvian labour legislation is too strict and hence reduces the possibility for employers to introduce new forms of work. This viewpoint was also expressed in the World Bank’s report, ‘Doing business in 2006’. It placed Latvia on a ranking of 103 out of 155 countries based on industrial relations regulations and reforms. This was in spite of the fact that the overall business climate was judged as favourable, with Latvia ranked 26 out of the 155 nations.

Proposed changes

In an effort to revitalise the business environment, the Latvian Ministry of Economy had earlier proposed changes to the labour law that would ease restrictions on recruitment and dismissal of employees, but the Ministry of Welfare refused to support this proposal. The Ministry of Welfare considered that any changes to labour rights should be adopted through social partner agreements. However, this is a complex task, since employers consider flexible labour legislation to be the main issue of concern, while trade unions are concerned about employment security.

Up to now, only a few specific proposals have been made regarding changes to labour legislation. Employers have more recently recommended extending the probationary period for new employment contracts, which currently covers three months, as well as reviewing the bonus system for employees. They believe that bonuses for overtime work and night shifts are unjustifiably high, and therefore many employers refuse to award them.

Finally, employers have suggested that employees must also take responsibility for work contracts not being concluded. However, trade unions believe that only employers should be held responsible for not concluding work contracts, and that no changes in this area of the legislation should be allowed.

Additional demands

Vocational training

Labour legislation in Latvia does not stipulate who should pay for employees’ vocational training: the state, the employer or the employee. Employers’ costs for educating and training employees are taxed, except in specific circumstances. Therefore, employers emphasise that they are reluctant to invest in education since they have no guarantee that those employees benefiting from further education will continue working for them. If education costs were at least free of social tax, which represents 33.09% of wages, this would encourage employers to further educate their workforce.

New forms of work

On 30 November 2005, LDDK held a seminar in which employers, sectoral organisations, trade unions and representatives from the Ministry of Welfare and the parliament’s Social and Employment Committee took part. At the seminar, LDDK presented information on introducing flexible forms of work in enterprises. The participants discussed the type of amendments to laws and regulations required in order to implement and develop such new forms of work. LDDK also provided information for debate on telework or distance work.

Regulatory context of work safety

In the context of the development of labour protection regulations, LDDK considers that demands regarding the work environment and related costs must be balanced.

In 2005, the procedures for investigating workplace accidents were changed. As a result, the costs of workplace accident investigations conducted by the State Labour Inspectorate (Valsts Darba Inspekcija, VDI) will no longer be borne by the employer, but by the VDI itself.

It is anticipated that, in 2006, employers will suggest several amendments to legislation and regulations providing for workplace safety, for example regulations covering mandatory health checks and the use of work equipment.

Commentary

LDDK’s activities in seeking amendments to labour legislation are aimed at protecting employers’ interests. Some of the initiatives have transferred obligations and expenses onto the state when in fact they should be the responsibility of employers, such as costs that arise in the case of work accident investigations.

There is an apparent imbalance in Latvia between the fields of activity and levels of power of trade unions and employers. While unions continue to carry out their traditional activities on behalf of their members, employers are getting more involved in new fields that increase their bargaining power and through which they are able to irreversibly influence areas of activity affecting trade unions. Therefore, there are doubts as to whether, despite a strict labour legislation, the interests of employees are as well protected in Latvia as those of employers.

On the other hand, any changes introduced in labour legislation that reduce unjustified costs and facilitate the smoother implementation of adopted laws and regulations are in the interests of employees.

Raita Karnite, Institute of Economics, Latvian Academy of Sciences

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