The Latvian Employers’ Confederation (LDDK) encourages the introduction of reduced working hours, thus temporarily solving the employment problem in crisis conditions and overcoming the consequences of the crisis. Such a mechanism could replace downtime benefits, which expire on Tuesday, June 30th.
LDDK emphasizes that Latvia currently has one of the fastest growth rates of unemployment in the European Union, which shows that many companies are unable to keep jobs in the conditions of the Covid-19 crisis, moreover, the period of payment of downtime benefit will end on Tuesday. Conceptually, wage subsidies for export-capable companies have been named as the next possible support instrument for companies, but the regulatory framework has not yet been developed.
LDDK General Director Līga Menģelsone emphasizes that the first phase of the crisis, during which many companies experienced a sharp decline in turnover, is over, and it is important to lend a helping hand in the second phase.
Mengelson: On the part-time schemeLinda Zalane
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“It can be said that we are entering the second phase, which will already be a phase of reorientation and consolidation. Therefore, it is important to have a tool now to support companies with declining turnover or other difficulties, and at the same time to incorporate it into law. “It must be admitted that we were not ready for such a crisis in the middle of March. Looking at the experience of other European countries that have gone through several crises, this tool – reduced working hours or temporary redundancies – has been introduced a long time ago,” stressed .
The main benefit of the reduced working time scheme for businesses, workers and society as a whole is a sense of security and flexibility for both employer and employee. Namely, when the company understands that the market situation is changing and it is no longer able to fully employ people, then employees do not have to be laid off, but are offered the opportunity to work part-time. The overall level of pay does not change during this time and, in essence, the employer halves the “grief” with the state. Society, in turn, benefits from rising unemployment and continued consumption.
Mengelson: How will the shortened working time system workLinda Zalane
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“For example, there is zero percent in this system, then it is normal time, normal working hours. But when an employer realizes that the situation has changed, supply chains have changed, customers have changed, maybe the market situation has changed, there are some special in circumstances where it is not possible to work normally, this flexibility could exist even from 20%, 40% or 60% when the employer decides that he can provide the work, for example for certain days or hours. “There is no job at all, it goes to 100% so-called temporary redundancies. It is a great deal of flexibility for the employer, but for the employee it is security and confidence that the employment relationship is maintained. It is very important for the state that the unemployment rate does not increase.” stressed the Director General of LDDK.
Mengelson admits that for the time being, the new scheme alone takes on a more concrete outline. This means that the sectors in which such a scheme should be introduced have not yet been specified, but she predicted that it was likely to be binding on producers, those working in the tourism sector and service providers. Negotiations are still ongoing with the social partners and ministries. However, a clear signal of support from the ministries has not been received yet.
Research is also ongoing. Experience can be gained from other European countries, whose legislation has already incorporated such a system during the previous crisis and has successfully proven itself.
Mengelsone is convinced that Latvia must also follow this path – a scheme of reduced working hours must be incorporated into legislation, if necessary, it can be used. However, it is important to do so in a timely manner and with little administrative burden. Otherwise, this support mechanism would be meaningless.
CONTEXT:
To overcome the economic consequences of the pandemic in Latvia specific state aid mechanisms Covid-19 affected companies, their employees, Covid-19 patients and all companies. Therefore mobilized by the state approximately EUR 4 billion.
In connection with the crisis caused by the Covid-19 infection, the Latvian government agreed at the end of March this year on state support for companies whose turnover has fallen by 30% due to the crisis, but in some cases – by 20%. The government agreed to allocate 102 million euros to the State Revenue Service (SRS) for the payment of downtime benefits.
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