Latvia: Annual Review 2011

  • Observatory: EurWORK
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  • Published on: 28 November 2012


Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

President’s elections, extraordinary Parliament elections, appointment of a new government, phenomenal ability of the Prime Minister to take office for the third term despite general antitrust to the state management system and difficult austerity measures for last several years, were events that overshadowed political and economic life in 2011. Austerity and strict budget discipline was the general economic policy. Organisation and role of social partners did not change. Legal status of collective agreements did not improve. Working conditions deteriorated as compared with 2006. The incidence of protests increased. The general reason for protests was cuts in financing of public services.

1. Political and economic developments (200 words)

In May 2011, short before the president’s election, President in office Valdis Zatlers issued his famous Resolution No 2 that invited nation’s referendum on dissolution of the Latvian Saeima (Parliament). Valdis Zatlers was not elected for the second presidential term. Instead, Andris Bērziņš, representative of the Union of Greens and Farmers (Zaļo un Zemnieku savienība, ZZS) was elected to hold an office of the President of Latvia for four years.

On 23 July 2012, the referendum for dissolution of the Saeima was positive and the Saeima ceased its work. Extraordinary elections of the Saeima took place on 17 September 2011. The largest part of seats was taken by the Political Union “The Concord Centre” (Politisko partiju apvienība “Saskaņas centrs”, SC) (28.36% of votes), the new established Zatler’s Reforms’ Party (Zatlera reformu partija, ZRP) (20.83%). The third was former leading party Unity (Vienotība) (18.83%). Two other elected parties were the National Union “All for Latvia”/For Fatherland and Freedom/LNNK (Nacionālā apvienība “Visu Latvija!”/Tēvzemei un Brīvībai/LNNK, NA) (13.88%), and ZZS (12.12%). The new-elected Saeima approved the new government on 25 October 2011. All ministers were changed however, the Prime Minister Valdis Dombrovskis remained in office for the third term despite his drastic economic policy. The political environment was extremely nervous in 2011 however, the political course remained unchanged.

Regional/local elections were not held in 2011.

Growing activity of non-Latvian population, led by Russian activists, for their political and language rights was other significant political event in 2011. The referendum was initiated for increasing the role of the Russian language so that by changing the Latvian Constitution (Satversme), Russian language would become the second official language in Latvia.

On 18 February 2012, the nation will vote for changes in Satversme (Constitution) that shall award Russian language right of the second official language in Latvia.

Despite drastic austerity measures, Latvia managed to finish 2011 with positive growth indicators. Unemployment indices improved during the first three quarters of 2011. However, the growth figures declined and unemployment increased in end of year amid economic difficulties in main external markets. The expected economic growth around 2.5% in 2012 will only slightly improve employment.

Remarkable changes in policy on employment and industrial relations are not expected. Austerity and fiscal discipline will determine economic policy. Only these measures that fall into governments budget expectations or are financed by international donors will be possible. Slowdown in economic development will cause even more austerity, which plays out in increasing emigration and decreasing working population.

2. Legislative developments (300 words)

Changes in tax and social legislation were introduced from 1 January 2011 ():

  • the rate of social contribution was increased to 35.09%, of which employer should pay 24.09%, and employee – 11%;
  • the rate of contribution to the state mandatory funded pension system was reduced to 2% ,
  • it was established that an individual is ensured for pension provision if employer has actually paid social contribution. If employer has not paid social contribution, an individual may pay it from his/her own resources,
  • it was established that the tax administration is eligible to recover social contribution for 3 month period if unregistered employment was detected (before – 1 month period);
  • indexation of pensions and some social benefits will be frozen up to 2013;
  • the payments of unemployment benefits were adjusted to the principles of social insurance regarding last five or three months: for unemployed with length of insurance 1-9 years, the following payments will be established during the last five month: two months – 45 LVL per months but not more than 75% of the total amount of the unemployment benefit; last three month – 45 LVL per month but not more than 50% of the total amount of the unemployment benefit;
  • the national minimum wage was increased to 200 LVL per month.

Some organisational changes were also introduced.

Several Sections of Labour law were amended in order to introduce in details legal regulation regarding temporary work and services of temporary work organisations. These amendments explain the status of temporary work agency (employer regarding people who become employed temporary with its assistance), rights of temporary workers regarding working conditions, information and consultation, and special rights of a person who is employed with assistance of temporary employment agency.

In order to stabilize spending in the public sector five amendments were adopted in the Law on remuneration of officials and employees of state and self-government authorities, adopted on 1 December 2009, valid since 18 December 2009.

3. Organisation and role of the social partners (300 words)

The organisation and role of social partners did not change in 2011. Social dialogue framework and structures at national level remained unchanged. National Tripartite Cooperation Council (Nacionālās trīspusējās sadarbības padome, NTSP) forms the framework for the social dialogue. Employers are represented by the Free Trade Union Confederation of Latvia (Latvijas Brīvo Arodbiedrību savienība, LBAS), and employers are represented by Latvian Employers’ Confederation (Latvijas Darba Devēju konfederācija, LDDK) in the NTSP.

In 2011, the cooperation among of social partners – LDDK, LBAS and the Latvian Association of Local and Regional Governments (Latvijas Pašvaldību savienība, LPS), strengthened. Agreement on tripartite cooperation among the government, LBAS and LDDK is valid since 2004. Cooperation agreement among LBAS, LDDK and LPS is valid since May 2006. In June 2011, LDDK increased cooperation with local governments by signing cooperation agreement with the Latvian association of large cities (Latvijas lielo pilsētu asociācija, LLPA). On 1 August 2011, LBAS signed new Agreement on cooperation with LDDK.

In 2011, number of LBAS members reduced to 20. These trade unions united 99284 members (102698 members in 2010). Membership reduced by 3.3% (3414 members). 31.5% of members belonged to the Latvian Education and Science Employees Trade Union (Latvijas Izglītības un zinātnes darbinieku arodbiedrība, LIZDA). One of LBAS members – metal workers trade union was incorporated in the Latvian Industrial Workers Trade Union (Latvijas industriālo nozaru arodbiedrība, LIA) (also member of LBAS).

Statistical data on the membership of employers’ organisations is not available.

4. Developments in collective bargaining and social dialogue (350 words)

Statistical data on trade unions’ activities and collective agreements negotiated in 2011, and consequently, comparisons with numbers of agreements negotiated in 2010 shall be available in end of March 2012. Statistical data on social dialogue activities in employers’ organisations specifically regarding industrial relations is not being collected and reported.

From the internal resources of social partners it is known that LBAS and LDDK have put major efforts in balancing of tripartite interests in preparing of the state budget, in particular regarding changes in pay and social legislation. Regarding pay, the major issue was the minimum wage and non-taxable minimum. In social legislation, social partners protected rights of young parents for family benefits. Changes in the pension system were also discussed.

Sector level dialogue did not improve, and shifts between levels of bargaining did not occur. Collective agreements were ignored in the public sector, consequently the role of collective agreements lessened also in the private sector. It is not possible to assess change in bargaining coverage without statistical data, but it declines according to the long-term trend and there have not been favourable conditions for it to improve in 2011.

There is not precise statistical data available in order to assess to what extent there were derogations from collective agreements. Collective agreements in the public sector were frozen. Derogations in private sector are not investigated - data is not available for public use about this process.

Bipartite or tripartite initiatives at national level dealt specifically with the economic situation.

5. Responses to the economic situation (200 words)

Social partners could participate in formation of economic policy and legislation, yet their ability to impact the process was limited. The economic policy was determined in negotiations with the international donors.

Before extraordinary elections of Saeima, LDDK, LBAS and LPS published Guidelines for structural reforms. Partners suggested that implementation of the proposed measures would allow Latvia to reach in 2017 the EU average development level. Partners expected that political parties - candidates for electing in the Saeima extraordinary elections, will back their programs on these guidelines and implement them after elections.

Latter LDDK produced an Appeal to political parties and their associations that were elected in 11th Saeima and to the new Cabinet of Ministers. The Appeal was based on incentives of the Europe 2020 Strategy and provided proposals for three coming years in order to implement vision on Latvia in 2020. The major parts of the Appeal are: national economy, financial policy, responsible development of infrastructure, labour market and employment, education and research, social security, health and demography, and state governance.

On 2 December 2011, on its anniversary meeting, LBAS adopted several Resolutions that were further submitted to the Saeima and discussed among politicians and trade unionists.

In 2011 the State Employment service continued intensive assistance to unemployed people. LPS warned the government about the increasing benefit dependency, when people do not strive to find or to create jobs because social benefits are sufficient for their survival (LV1112019I).

6 Developments in working conditions (550 words)

Recently more research is provided on working conditions issues. The work has been promoted by financial support from the EU Structural funds.

Three organisations –LDDK, Inspecta Prevention Ltd. and TNS Latvia, Ltd. have prepared the second national survey on Working conditions and risks in Latvia 2009 – 2010. The research provides investigation of the working conditions and risks in dynamics, compares current situation with the situation observed in the previous research on the same topic for the period 2005 – 2006 and analyses implementation of proposals elaborated in the previous research.

LBAS has conducted the survey “The study of labour rights core problems in case of undeclared employment and the strategy of action modelling for defence of labour rights” in cooperation with research company “Baltic Institute of Social Science” (LV1109019I). The survey provides the current view of undeclared employment forms, incidence and public attitude as well as gives proposals by experts how to decrease the role and incidence of undeclared employment.

LBAS also continued its population surveys on working conditions. The population survey is one of the activities undertaken by the LBAS as part of European Social Fund project „The practical implementation in economic spheres and enterprises of regulations regarding working conditions and safety at work,” which began in 2008. The goal of the survey is to ascertain society’s viewpoint on specific issues regarding working conditions. The market and social research centre SKDS conducts surveys three times a year. Each survey has a specific theme. For instance, the seventh survey researched: workers’ self-assessment of their psycho-emotional state, use of their annual vacation, frequency of overtime work and its remuneration, and the existence and effectiveness of a collective agreement.

Working conditions’ survey showed conflicting results (LV1112029I). It indicates that working conditions have improved regarding working environment and safety at work. Compared with 2006, in 2010 more workers were very satisfied (24% in 2010 compared with 18% in 2006) and about the same part of workers (59% and 60% respectively) were satisfied with working environment and working conditions. In total, 83.6% were very satisfied or satisfied with working environment and working conditions in 2010, compared with 77.2% in 2006. The reson of the improvement is that the share of branches were workers usually are not satisfied with working conditions, such as construction, fishing, food production) have has reduced. At the same time, the survey indicated that working conditions also deteriorated in some aspects. Typical features are: tax avoiding by “undertable” payments, growing number of hidden accidents at work and professional diseases, insufficient knowledge about work protection. The survey showed that low pay is the most important cause of dissatisfaction with the current work. Regarding working conditions and environment, hard work is the first reason for dissatisfaction, but the share of respondents who have mentioned this reason was 2.5 times less than those who mentioned low pay and remarkable less than those who mentioned instability in employment as important reasons.

Despite increasing research, there is not sufficient evidence of developments regarding career development. The working conditions’ survey shows that lack of stability, irregular pay was the second most important reason for dissatisfaction with the current work.

LBAS survey showed that psycho-emotional state of employees is critical – many feel tired, stressed, overworked, and hopeless; they also dislike their jobs. More than half of all employed persons work overtime, but many of them do not receive additional pay. Although fewer than half of all employers conclude collective agreements, the majority of workers who have such an agreement regard it favourably – that fact confirms the effectiveness of collective agreements (LV1102019I, LV1105019I).

It is likely that the health and well-being of workers has not improved.

Access to skills and competences has improved by using programs of the State Employment Agency (Nodarbinātības Valsts aģentūra, NVA) for unemployed.

According to experts observation from her research and media discourse, issues regarding work-life balance, such as working time, time management at work and social infrastructures were less important in 2011 compared with other aspects of working conditions, of which the primary concern is legality of the employment versus undeclared work, and legal salary versus “envelope” pay. The importance of information, consultation and participation have increased for companies undergoing restructuring, because it helped to avoid conflicts and thus to make restructuring process less harmful.

7. Industrial action (200 words)

Real industrial actions did not occur in 2011 however growing threat to loose work and income or to loose essential public services caused several protests.

On 8 February the United Police Trade Union of Latvia (Latvijas Apvienotā policistu arodbiedrība, LAPA) organised meeting of protest because the Minister for Internal Affairs has announced increasing control over the operation of police organisations after tragic events when four police workers were involved in the criminal attack on the gambling room. The trade union also protested against the decision to reduce interrupted working time for policemen to 12 hours instead of 24 hours as it was before. Around 50 people attended the meeting (LV1104019I).

In February several protest actions occurred against reducing of financing of higher education.

On 24 March 2011, around 1000 people protested against increasing tariffs for electrical energy. The protest twisted with the protest action of people (workers, as well as managers and NGOs) involved in the passenger transportation. Within this action, some 200 trucks slowly passed the Presidents castle. This action was response on the invitation of the Latvian Passenger Transport Association (Latvijas Pasažieru pārvadātāju asociācija, LPPA) to protest against cuts in financing of the passenger transport. Of 31 regional passengers’ transportation organisations, 24 participated in the action. On 4 May 2011 protest against high tariffs was repeated.

In March, LAPA approached Social and Labour Commission in Latvian Saeima with repeated protest against the plan to reduce interrupted working time for policemen to 12 hours instead of 24 hours as it was before.

Health care was the most dynamic sector. In beginning of year, harsh proposal to close first aid stations caused ardent discussion among social partners.

In August, several actions were organised, when hospitals in three towns – Cēsis, Kuldiga and Ogre protested against reducing of funding for health care institutions (LV1110019I).

Protests were held also on 8 December, when the new appointed Minister of Health announced her plans for reforms in health care (LV1202019I).

LIZDA was involved in difficult discussions on financing of education in beginning of year and with the new elected minister of education and science on the planned reforms in education in end of year.

8. Restructuring (250 words)

Despite the fact that statistical data shows dynamics in economic life, evidence of restructuring is poor, because employers as well as employees are not interested in disclosing of the process. However some cases are reported. Tukuma mēbeles, has acquired the previously closed Sāga factory in Tukums and Kvist Industries has acquired another previously closed Sāga factory creating in total 300 working places. Retail chain Maxima Latvija opened new stores in Latvia and created 258 jobs.

Despite massive reorganisations in state institutions, only some examples are available. Latvia's State Forest service is planning countrywide restructuring including redundancies of 100 to 150 employees.

Nordea Latvia - the branch office of Nordea Finland is an example of trade union participation in restructuring. The bank announced reorganisation plans that included amalgamation of several client service centres and closing of its Sigulda branch. As the result 50 jobs would be cut. The bank explained that the reorganisation would last for next five month and all legal employment relations would be observed. LBAS insisted that the proposal of the bank is in breach with good practise. LBAS together with the Latvian Trade Union of Employees of State Institutions, Local Governments, Enterprises and Finance Sector (Latvijas Valsts iestāžu un pašvaldību, uzņēmumu un finanšu darbinieku arodbiedrība, LVIPUFDA) promised to assist employees to avoid illegal or guilty actions against them.


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