Latvian government greenlights remuneration reformation plan in state administration

To retain workers and improve the general work environment in state administration, Latvia’s government has greenlit the plan to increase wages, BNN was told by the State Chancellery.
On 29 September the Cabinet of Minister passed amendments to the Law on Remuneration of Officials and Employees of State and Local Government Authorities. The aim is improving the efficiency and quality of work done in the state administration through a remuneration system reform.
The work done by executive power, the ability to execute orders from the government and parliament are directly linked to the professionalism and qualifications of people employed in the public sector. The state administration is currently unable to compete with the private sector, industry professionals and high-level managers.
Amendments to the aforementioned law were applied for the first time in Latvia eleven years ago. This helped resolve problems that had previously remained for a long time – low worker motivation, high worker rotation and the need to invest considerable resources into personnel training, State Chancellery director Jānis Citskovskis comments on the reasons behind the reform.
The State Chancellery concluded that the wages paid to highly qualified workers in the state and municipal administration sectors is up to 28-38% when compared to the people employed in similar posts in the private sector. If the state and municipal administration are unable to compete with the private sector, worker turnover goes up and it is harder and harder to attract qualified workers.
Unfortunately, wages that are too low to justify the complexity of tasks and the level of responsibility are the reason why most of the time people decide to work in the private sector instead.
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To prevent lasting problems, amendment provide several solutions to help improve the competitiveness of wages. It is planned to set monthly wage level in state administration at 80% of the wage level in the private sector. By changing the percentage of stable and variable portions of wages and reducing the number of bonuses, it is planned to reduce the total size of bonus pay workers can expect to receive (from 60% to 30% of the monthly wage).
This will help promote remuneration stability and reduce internal administrative burden generated by the complicated bonus administration system. Other modern wage solutions will be adopted as well: three level wage scale, link between wage and economic development, adoption of market index for especially sought-after specialists, etc.
It should be said that the reformation of the remuneration system is an important part of the State Administration Reform Plan 2020. This portion of the plan can be implemented only if ministries and institutions do their work more efficiently, reduce bureaucracy and optimize employee numbers. A similar problem is observed in municipalities, especially when it comes to the administrative territorial reform.
Considering the problematic situation, implementation of complex amendments to the Remuneration Law will be done gradually.