Latvian Employers’ Confederation (LDDK) has invited President Egils Levits to not proclaim Saeima’s approved legislative draft to the Labour Law that would provide for the increase of minimal wages in the country starting with 2023.
As LDDK director general Līga Meņģelsone stated in the invitation, the preparation of this legislative draft did not take into account principles of good legislation and the procedure for determining and reviewing the minimum monthly wage listed in Latvia’s legislative acts.
«LDDK has stressed conceptual support towards the increase of minimal wage multiple times, outlining the need to establish a link between the previous year’s average pay and develop balanced criteria for minimal wage outlooks. We propose developing a sustainable mechanism for determining minimal wage amount, because its growth must be predictable and planned,» stresses Meņģelsone.
The confederation also notes that in accordance with the European Parliament’s and Council of Europe directive on adequate minimal wage in the European Union, member states are to adopt requirements of the directive within two years of it coming into force. This directive’s requirements, which point to fact that the approach employed by the 13th Saeima was in breach of the principles listed in the directive.
While LDDK does not object to gradual increase of minimal wage in the Latvia, the organisation invites the president to keep in mind that labour force costs in Latvia are higher when compared to neighbouring countries in the region.
Increase of minimal wage amount in the country will create a major burden on employers active in certain sectors and regions. On top of that, the differentiated non-taxable minimum in Latvia has a significant influence on the tax burden for different wage levels.
At the same time, LDDK notes that the development of the legislative draft did not take into account the existing order for determination of minimal wages.
The confederation explains that, in accordance with the Labour Law the monthly minimal wage amount for a full time job, as well as minimal hourly rate determination is in the hands of the Cabinet of Ministers. Requirements of the Cabinet of Ministers, on the other hand, dictate that the initial review of proposals to increase minimal wages is to be held at a meeting of the Social Security sub-committee of the National Council for Trilateral Cooperation. After that the issue is discussed by the council and then submitted to the Cabinet of Ministers.
Additionally, every year the Ministry of Welfare together with Ministry of Finances and Ministry of Economics to evaluate the economic situation in the country and develop proposals for minimal wage amounts for the following years.
LDDK believes that the legislative draft, which was submitted for review during the pre-election period, was rushed and the review process did not include participation from social partners or estimates-based decision-making approach.
During the decision-making process, the objections from employers about the consequences that may surface as a result of this rushed decision were not taken into account, as noted by LDDK.
The confederation also turns attention towards the fact that ignoring social partners that are basically the ones who generate the country’s GDP and remain socially responsible towards their country in an unpredictable situation indicates the arrogance of deputies of the 13th Saeima.
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