A compromise with trade unions on amendments to the Labour Law must be found, and negotiations should not be suspended once again, Latvian Chamber of Commerce and Industry (LCCI) Chair of the Board Katrīna Zariņa said in an interview with news agency LETA.
She noted that the issue of overtime pay has dragged on for a long time, as it was already on the agenda even before the pandemic. A compromise with trade unions must be reached, and talks should not be broken off again, as happened five years ago.
Zariņa pointed out that both employers and employees have presented their arguments, and that both sides have strong positions. “Of course, it is easier for politicians to say that if you cannot agree, then we will do nothing and change nothing. But that is an ostrich policy on the part of politicians—burying one’s head in the sand and saying that if you can’t, then we can’t either. That is simply not true,” Zariņa added.
The arguments have already been laid out, and perhaps it is precisely politicians who could achieve a compromise by taking on the role of mediators and acting as more effective facilitators of negotiations than the parties themselves when they talk directly to one another. This is the responsibility of politicians when thinking about the country’s long-term development and its future vision, especially since this issue has already been resolved in other European countries, Zariņa said.
She also noted that
investors, before deciding on investments, assess several factors, including labour costs and labour availability.
Labour availability in Latvia is limited, and if this problem is not addressed fundamentally, it leads to poaching of the best specialists. This, in turn, drives artificial growth in average wages that is not always accompanied by an increase in productivity, which subsequently has an impact on inflation.
Zariņa also stressed that the issue concerns how wages are formed overall. Overtime is not the most commonly used solution in companies, but when it does become necessary, labour costs double. For example, during flu season the need to replace sick employees increases. Employers must also cover health insurance costs because access to state-funded healthcare services is limited. This creates additional expenses, and when an investor looks at all of this together, the situation does not appear particularly attractive.
Zariņa emphasized that Latvia needs development projects for the economy to grow and expressed confidence that trade unions understand this.
As previously reported,
the Saeima has supported in first reading amendments to the Labour Law
proposed by the Ministry of Welfare, on which social partners have sharply differing views.
When the draft law was considered by the government, lengthy discussions took place, and ministers and social partners expressed differing opinions on several issues. As it was not possible to reach agreement on everything, it was planned to continue work and discussions on the draft law in the Saeima.
Later, heated debates on the Labour Law amendments also took place in the Saeima’s Social and Labour Affairs Committee between representatives of the Employers’ Confederation of Latvia (LDDK) and the Free Trade Union Confederation of Latvia (LBAS).
The amendments provide that employers and employee representatives may agree in a collective agreement on a lower overtime premium, but not less than 50%, if the minimum monthly wage or hourly rate in the respective company or sector is increased by at least 50%.
If the state-set minimum wage is increased and the wage stipulated in the collective agreement becomes lower than the statutory minimum, but the parties do not amend the collective agreement, only the provision reducing the overtime premium would lose effect,
without affecting the other terms of the collective agreement, the draft law provides.
To mitigate the negative effects of downtime and promote job retention, the draft law proposes an obligation for employers to inform employees about the onset of downtime, its reasons and conditions. Employers would be granted the right to reduce downtime pay to 70% if the downtime lasts more than five working days. If downtime continues for more than four consecutive weeks, the employee would have the right to terminate the employment contract without observing the one-month notice period.
The LDDK proposes that after the expiry of a collective agreement, its provisions should remain in force for 1.5 years instead of the current 2.5 years. It also proposes setting the minimum overtime premium at 50% instead of 100%, with the proviso that the employee and employer may agree on an overtime pay rate above the minimum that is acceptable to both parties. According to the LDDK, work beyond normal working hours should be permissible only if the employee and employer have mutually agreed to it, and a 50% premium would encourage more accurate and responsible recording of overtime, as at present it is either not recorded at all or recorded only minimally.
The LCCI also calls for setting the overtime premium at 50% as a general rule. Currently, the Labour Law stipulates that overtime pay must be no less than 100%. At the same time, the LCCI proposes that a collective agreement should remain in force for one year after its expiry, that the overtime premium should be set at 50% as a general rule, and that trade union consent for dismissal should be required only for elected trade union officials.
In addition, the LCCI proposes paying vacation pay together with the monthly salary in order to reduce administrative burden, and calls for abolishing the concept of average earnings, replacing it with clear wage rates. With its proposals, the LCCI also seeks to clarify regulation regarding employers’ rights to recover equipment, deduct its value from wages, and clearly define the reduction of remuneration during downtime to 70% after five days. The organization also calls for simplifying the termination of employment during the probation period by abolishing the three-day notice requirement.
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