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Employers’ Confederation of Latvia

2004 -2005

1 Employers’ Confederation of Latvia 2004-2005


Content

Mission of LDDK

3

History of representation of employers’ interests in

4

Latvia Council of LDDK

5

President’s report

6

Report of General Director

7

Social dialogue – the foundation of democratic state

8

LDDK in Europe and in the world

9

Improvement of business environment

12

Education and employment

14

Social security and health care

16

Labour rights and labour protection

19

Corporate governance

20

Training and services for members of LDDK

22

National Programme Project of EU Structural Funds

24

2 Employers’ Confederation of Latvia 2004-2005


Mission of LDDK For more than a decade Employers’ Confederation of Latvia (LDDK) has been the largest organization that represents the interests of employers. LDDK represents 19 Latvian economic sectors, professional and regional associations, as well as companies employing more than 50 people. In total, more than 20% of Latvian employees are employed by LDDK members.

Mission of the Employers’ Confederation of Latvia Increase effectiveness of entrepreneurship and employment development by observing interests of the public at large, and strengthening and development of Latvian employers and their organizations; Provide growth for Latvian employers, enhance the development of enterprise culture and creation of favourable social conditions; Represent and protect economic, social and professional interests of members according to the Law on Employers’ Organizations and Their Associations; Represent and protect interests of its members in relations with trade unions, public and municipal authorities as well as international employers' organizations; Provide LDDK members with an opportunity to participate in negotiations of issues of their interest at all government levels.

3 Employers’ Confederation of Latvia 2004-2005


History of representation of employers’ interests in Latvia 1993 Latvian Employers’ Central Association merges with the Latvian Private Entrepreneurs’ (Employers’) Union. Consequently, the Employers’ Confederation of Latvia is founded (registered on 6 September 1993) to represent Latvian employers on the state and international level and to negotiate with trade unions. Cabinet of Ministers accepts a Concept Paper on the basic principles and the necessity of establishing the tripartite cooperation in Latvia, as well as the appeal to Latvian employers and employees’ organizations. Convention 144 concerning tripartite consultations of International Labour Organization is ratified in Saeima (Latvian Parliament).

1994 LDDK becomes a member of International Organization of Employers (IOE).

1999 Law on Employers’ Organizations and Their Associations is adopted, thereby strengthening LDDK’s status as the largest employers' organization in negotiations with government and trade unions.

2002 Cabinet of Ministers establish rules of order determining that all legislation drafts concerning employers' interests have to be agreed upon with National Tripartite Cooperation Council, where LDDK is one of the parties.

2003 LDDK representatives commence work in European Union institutions. LDDK joins propagation of the UN Global Compact.

2004 LDDK obtains observer status in Union of Industrial and Employers' Confederations of Europe (UNICE). LDDK conclude tripartite agreement on socioeconomic partnership and the future development of tripartite counsel with Cabinet of Ministers and Latvian Free Trade Union Confederation

4 Employers’ Confederation of Latvia 2004-2005


Council of LDDK Vitālijs Gavrilovs

President Vice-presidents

Teodors Tverijons

Association of Latvian Commercial Banks

Kirovs Lipmans Valdis Jākobsons Juris Biķis Vasilijs Meļņiks Andris Zorgevics

Joint stock company Grindeks Latvian Chemistry and Pharmacy Employers’ Association Joint stock company Latvijas Finieris Joint stock company Eiroholdings Limited liability company Latvijas dzelzceļš

Council Members Aiva Vīksna

Limited liability company Lietišķās informācijas dienests

Jānis Bertrands Juris Binde Arkādijs Suškins Ivars Strautiņš Vilmārs Lucāns

Limited liability company Baltijas logi

Jānis Dūklavs Viktors Puriņš Jevgēņijs Kalējs Ivars Puksts Rolands Gulbis

Latvian Beer Brewers’ Union

Gundars Strautmanis Jānis Dirba Valērijs Terentjevs Jānis Zudāns

Limited liability company Lattelekom

Limited liability company Latvijas Mobilais Telefons Cēsis District Entrepreneurs’ Club School of Business Administration Turība Latvian Municipal Employers’ Association Latvian Constructors’ Association Latvian Hospitals’ Association Joint stock company DATI Grupa Joint stock company Latvijas balzams Latvian Energy Construction Association LSEZ Stock Company Liepājas metalurgs Joint Stock Company Rebir

5 Employers’ Confederation of Latvia 2004-2005


President’s report Do we take advantage of all possibilities to protect the employers’ interest? We live and work in a time when lively economic and political changes occur both in the country and globally – the enlargement of EU and development of unified market in the West, - as well as gradual integration of the CIS in the world economy. Any changes come both with possibilities and difficulties. Are we astute and smart enough to not only follow and fit, but also be able to affect the rules of the game, taking the maximum advantage of our chances and avoiding losses? Having become the EU member-state, the questions of competitiveness, efficiency and productivity have become more topical to employers in Latvia. However, in this important time Latvia has to make every effort to fully integrate in the EU common market and fully utilize its potential – free movement of goods and services, capital and workforce. Both in Latvia and abroad, employers need a state’s vision and perspective in order to develop and be sure of the safety of their investments. In order for Latvian enterprises to develop more successfully in today’s times of mediated competition and big opportunities, it is significant to prevent holdbacks including expensive administrative procedures and requirements that distort fair competition. Employers should be supported with new ideas and ways of business. They should also be assisted in establishing an efficient dialogue between employers and public authorities so that an integrated position will be created showing the most important subjects both at Latvian and EU level. The agreement signed last year concerning socio-economic partnership between LDDK, LBAS and the Cabinet of Ministers is a real chance for the employers to affect the legislation and the medium of business in Latvia. We, being employers and businessmen, have to actively utilize the chance to offer our opinion and to participate in the process of its development, analyzing and giving advice in questions of national legislation and Latvian position concerning EU legislative acts in the early development phase. Latvian businessmen have to adopt the experience of veteran EU member-states in order to protect their interest in national, European and world level. We must use all possible channels and resources – in level of businessmen and national employers, EU and international organizations. We must appeal to public authorities to go actively into building relationship with other states. They should be encouraged to go into negotiation with World Trade Organization in order to provide not only export from Latvia to more slowly growing market – EU, but also to strengthen the chances of Latvian businessmen to compete in rapidly growing states in the Near and the Far East. Working out the national plan to achieve the aims set by the Lisbon strategy, as well as the National plan of action and other politics planning documents, it is significant in the future to create conditions of fair competition in business, to reduce the holdbacks caused by bureaucracy, and to build up a fundamental possibility for the businessmen to increase investment and productivity. I appeal to legislators and the government to listen to the opinion of employers more often, as the foundation of new enterprises and therefore work place sand the flowering of state economy is in the hands of private sector.

Vitālijs Gavrilovs, President of LDDK. 6 Employers’ Confederation of Latvia 2004-2005


Report of General Director of LDDK In the history of the state and Employers’ Confederation of Latvia, year 2004 can be characterized by several major events – Latvia became an EU member-state and incorporated into the North-Atlantic Alliance. Gaining status of “De jure” member-state provided LDDK opportunities to better represent Latvian employers’ interest in public authorities, to strengthen long-term competitiveness of enterprises in EU and worldwide, as well as to enter into new bilateral relationship with organizations from member other states. Last year was not only a significant examination and review of capacity and professionalism of public authorities, but also a “marathon” for employers that could be compared to the best Latvian athletic performance during the Olympic Games in Athens. LDDK’s contribution in solving socio-economical matters and role in the future was reaffirmed by the meeting of members of LDDK with the Government at the end of 2004. More visible to the society and employers were those activities that LDDK engaged in as an influential lobby group to improve the business environment in Latvia. Although, upon having joined the EU we have to recognize that each EU legislation initiative, whose impact on Latvian economics we cannot assess before its enforcement, can potentially have an adverse impact on the Latvian economic environment that will obstruct development of enterprises, employment and future prosperity. Therefore, LDDK in 2004 has actively participated in international activities, developing and strengthening partnership with state and non-state organizations of EU institutions and EU memberstates. LDDK has contributed to the promotion and development of business activities by careful analysis of the formation of criteria of EU structural funds and gauging successful acquisition of EU structural funds that would promote foundation for new enterprises and work places, and introduce innovations and real improvements in business processes. In order to strengthen the mission of employers, economical competitiveness, promotion of employment, social levelling, an initiative to expand LDDK capacity in Europe, “Strengthening of Employers’ Confederation of Latvia capacity”, with guidance from experts in fields of economics, finance, international affairs, educational and corporate administration of employment has started up proceedings. LDDK will continue working with renewed efforts to foment understanding that enterprises both sizeable and small and medium are the ones that form the basis of a healthy and prosperous Latvian economy and that the economic growth and competitiveness hinges on private sector success. Therefore, we will continue to appeal with urgency to enter into dialogue with Government and the Parliament, pointing not only to the problems, but actively offering proposals, insisting support to the initiatives of businessmen and bearing co-responsibility of implementation of the decisions and its results. We have to thoroughly and completely acknowledge that only by the combined efforts of Latvian employers’ organizations and regional unions can we successfully and effectively defend the interests of Latvian businesses and employers, and promote competitiveness in EU and the global economy. In looking back to the year, we can say that members of LDDK have exemplified courage, diligence and purposefulness, taking part in processes significant to the society, accordingly strengthening Latvian employers’ position in Latvia and around the rapidly changing world. Thank you for your continued cooperation and enduring support and I wish for all of us to find like-minded companions, strength, and success in the future!

Elīna Egle, General Director of LDDK. 7 Employers’ Confederation of Latvia 2004-2005


Social dialogue – the foundation of democratic state Social dialogue is a model for achieving balance of interests in order to secure the state's social stability – it is an advisory mechanism that involves government, employers and trade unions. In Europe, social dialogue is regarded as an integral part of democracy and an essential instrument to ensure good relations in the labour market. The Employers’ Confederation of Latvia (LDDK) is the only organization representing employers’ interests in the dialogue with the Latvian government and trade unions, and, as a social partner of national level has set a goal to participate in EU-level social dialogue by representing interests of Latvian employers and by providing enactment of agreements concluded by EU-level social partners in Latvia. Since "social dialogue" is a new concept in Latvia, its meaning and importance in longterm economic development and contribution to welfare of population is missed not only by the majority of people, but by state officials as well. Because of that, LDDK started an active campaign to explain the concept of social dialogue by holding workshops, addressing mass media and meeting state institution representatives.

A significant achievement in the development of social dialogue in Latvia was a conclusion of tripartite agreement on socioeconomic partnership that was signed by Prime Minister I.Emsis, chairman of LFTUC P.Krīgers and President of LDDK V.Gavrilovs on October 1, 2004.

Parties agreed to collaborate not only in traditional sectors dealing with common interests of employers and employees, such as promotion of fair competition and entrepreneurship, elimination of illegal employment and reduction of unemployment rate, but also in sectors of transport, communications and information technologies, environmental protection, regional politics and establishment of a single wage system.

Regions in focus for 2005 Development of social dialogue in Latvia at national level can be regarded as successful; however, relations between entrepreneurs, employees and local authorities are still failing. Development of social dialogue at the municipal level plays an important role to secure a steady development of Latvian regions and municipalities, because successful collaboration of employees, employers and municipal executives allows for a predictable growth of the commercial environment that, in its turn, contributes to the development of regions and municipal infrastructure. For that reason, LDDK sets a priority to establish representation of employers in Latvian regions in year 2005, and by that, develop the social dialogue at municipal level.

8 Employers’ Confederation of Latvia 2004-2005


LDDK in Europe and in the World 2004 began a new stage in the life of Employers’ Confederation of Latvia (LDDK) for as soon as Latvia became a member of the European Union the Confederation’s range of tasks extended. LDDK’s present strategic objective in foreign policy is to stimulate the rise of the competitiveness of Latvian enterprises and Latvian welfare level, to a level where it converges with the old member states of the European Union. This will be done by developing economic relationships with the other Baltic States, the EU member states and other world countries. In 2004 LDDK became an official observer in the Union of Industries of the European Community (UNICE), which is the largest European organisation that stands for employers, thus receiving an opportunity to stand for the Latvian enterprises in the social dialogue that is carried on at the European level. LDDK delegated representatives take an active part in the activities of different EU institutions: • European Social Fund; • Advisory Committee for Social Security for Guest Workers; • Advisory Committee for Free Movement of Labour; • Advisory Committee for Safety, Hygiene and Health at Work; • Administrative Board of the European Foundation for the Improvement of Living and Working Conditions; • Administrative Board of the European Agency for Safety and Health at Work; • Administrative Board of CEDEFOP; • Advisory Committee for the EU Professional Education and Training. LDDK nominated representatives Andris Bērziņš and Vitālijs Gavrilovs take active part in the activities of the European Economic and Social Committee. This committee is an advisory assembly which advises the EU institutions (the European Parliament, the Council of the European Union and the European Commission) and has an active role in the process of Community decision making. Participation in the activities of this Committee gives LDDK members an opportunity to obtain information on EU current events and draft laws, which are important for the Latvian enterprises and to express its opinion representing and defending the interests of Latvian employers. To contribute to LDDK international recognition and partnership enlargement, in 2004 LDDK representatives took part an number of international events and conferences, as well as organised the reception of foreign business delegations in Riga. The most important events were: •

92nd session of the annual International Work conference in Geneva in which the president of LDDK took part.

Visit of Mr. Hans Skov Christensen, the General Director of the Confederation of Danish Industries, to Riga. The goal of the visit was to meet LDDK discuss business chances in the enlarged Europe.

The President of LDDK participated in Enlargement – a Chance for Business organised by UNICE in Brussels, during which a meeting with the EU Commissioners took place.

The President of LDDK participated in the annual conference of the members of the International Organisation of Employers which was organised by the Confederation of Polish Employers and in the celebration of the 15th anniversary of the Confederation of Polish Employers. Visit of the representatives of Andalusia Employers’ Confederation to Riga in September 2004 to discuss co-operation opportunities in future. The Spanish ambassador Mr. Emilio Lorenzo Serra participated in these discussions.

9 Employers’ Confederation of Latvia 2004-2005


The General Director of LDDK participated in the competition day Play to Win in December 2004, which was organised by UNICE and held in Brussels. During this competition day business people from different countries discussed problems concerning the rise of the competitiveness of the European enterprises.

In October several LDDK members of the Board took part in the visit of the President of Latvia, Mrs. Vaira VīķeFreiberga, to Spain. The aim of this visit was to thoroughly explore opportunities of co-operation between Latvia and Spain, to enlarge present co-operation, to identify new direction in co-operation and to establish new business contacts between the Latvian and the Spanish business. During the visit an agreement on further co-operation between LDDK and the Spanish Employers’ Confederation was signed in Madrid. The agreement includes mutual exchange of information, co-operation in working out employers’ position on different EU legislation questions, development of direct business contacts between the business people of both countries. In 2004 LDDK was involved in the implementation of several projects, using this as means for improving the capacity of its members. Within the framework of the German government financed project Stimulating a Social Dialogue with Social Partners from the EU Candidate Countries the following activities were organised: • • •

seminars on employment rights, safety at work and professional education; training trips for LDDK members in order to stimulate an exchange of experience in acquiring structural funds and in creation of a safety system at work; in co-operation with North German Regional Metalworking Sector Employers’ Association “Nordmetall” an international conference Agreement and Responsibility – Employers’ of the Baltic States for Competitive EU Labour Market was organised.

Priorities for the year 2005 As a full member of the EU the focus of much of legislative activity of importance to business leaders of Latvia has shifted to EU institutions in. Therefore, to ensure the development and adoption of legislative acts favourable for business environment, LDDK will take an active part in shaping and implementing further EU policy and initiative that corresponds to the interests of Latvian business: • the undertaken initiatives will be moved forward, paying more attention to lobbying Latvian enterprises interests in the EU institutions and implementing an active bilateral policy with other EU member states; • co-operation with foreign partners will be continued by participating in different international projects. In January 2005 LDDK will participate in the implementation of the EU Leonardo da Vinci programmes’ project Ccompetence. LDDK will perform public opinion poll and analysis on what skills and abilities an employee should have for successful integration into the labour market; • on the 10th and 11th of March, 2005 LDDK together with LAK and LBAS and Europe Social Partners: UNICE, the European Association for Small and Medium Business and Crafts (UEAPME), the European Centre of Enterprises with Public

10 Employers’ Confederation of Latvia 2004-2005


Participation and of Enterprises of General Economic Interest (CEEP), the European Trade Union Confederation (ETUC) will organise a seminar Participation of Social Partners from Central and East European Countries in the Social Dialogue Carried on at the European Level: What do Social Partners Require?; in order to stimulate mutual exchange of information and general opinion representation in the EU organisations, a triangular agreement between the employers’ organisations of the Baltic states will be concluded; it is planned to gain the status of an associate member of UNICE and take an active part in the activities organised by UNICE, in order to contribute to LDDK and its members’ active participation in the social dialogue carried on at the European level; active co-operation with employers’ organisation of Latvia’s Eastern neighbouring countries will be started.

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Improvement of business environment Year 2004 has enlarged opportunities for Latvian entrepreneurs. One of the main challenges, entering the European single market, is to withstand the severe competition and observe strict requirements in different fields. The most important task of Employers’ Confederation of Latvia in 2004 has been helping to companies to get accustomed to the new market requirements and to eliminate the obstacles preventing the development of entrepreneurship in the new circumstances. To carry out this important task in 2004 the principal concern of the Employers’ Confederation of Latvia has been the improvement of the business environment and lessening the administrative. Participating in the activity of the National economic council and in the activity of the National economic council of single strategy and development, Employers’ Confederation of Latvia has been taking part in the discussion of the important issues for the entrepreneurs and offered proposals for improving the present situation. Employers’ Confederation of Latvia has taken active part in the National Tripartite Cooperation Council, providing comments and offering suggestions about legislative acts’ for the projects concerning taxes, accounting, EU structural funding and other questions related to the field of national economy and finances. The most important legislative initiatives and activities include: •

• • • • • •

Cabinet regulations projects “Licensing regulations for juridical persons for defining real estate market value”, “Order, in which electronic communication merchant provides the electronic communication network with equipment for operative information obtaining from technical sources and operative talks interception in the cases defined by law”, etc.; Entrepreneurship environment improvement activities plan ; State and private partnership basics; branch development defining documents; export facilitating program; structural funds support programs’ defining documents; positions for top level EU meetings in the field of economics and finances.

Employers’ Confederation of Latvia also participated in the activity of the work groups formed by the ministries. They were used as a means for representing members’ interests. LDDK has participated in the Structural Funds managing committee, in the Ministry of Finance working group concerning tax issues and in the Consulting council of the Ministry of Justice state agency “Insolvency Administration”. As the result, another of solutions were offered for the consideration of the Ministry of Finance about small-scale entrepreneurs and the introduction of the fixed income tax, and it has been agreed that in May 2005 the debiting and administration system of entrepreneurs risk state tax will be reviewed and improved. LDDK members’ meeting with Prime-minister and ministers end of year 2004.

12 Employers’ Confederation of Latvia 2004-2005


To defend the Latvian enterprises interests on the European level, Employers’ Confederation of Latvia, in cooperation with the branch associations and separate enterprises, declared its position to the ministries on different issues that have been reviewed in the working groups and top level meetings. One of such issues has been Lisbon’s strategy survey and initiative, and legislation.

Priorities of the year 2005 In 2005 Employers’ Confederation of Latvia plans to continue working to improve legislative acts in order to facilitate the development of entrepreneurship, to increase the Latvian enterprises competitiveness and work at perfecting the investment environment: • Develop and offer proposals to improve the entrepreneurship environment program for the years 2005 and 2006. • Proposals about law amendments of VAT (value added tax) and EIT (enterprise income tax), thereby improving and optimizing pre-tax repayment order and reinvested profit’s tax-deductibility with EIT, which will stimulate manufacturing development and will promote entrepreneurship; • Evaluation of application of invoices and offering proposals to improve the system, evaluating the possibility of cancelling the requirement for entrepreneurs to obtain invoices; • Proposals for the sphere of administering taxes for improving the penalty system, which would be based on the principle of presumption of innocence and SRS (State Revenue Service) and the enterprises mutual cooperation; • Evaluation of the new draft law on insolvency and, in case if necessary, elaboration of comments and proposals to be able to defend interests of enterprise. • Suggestions about administrative barriers reduction or elaboration of cancellation in the context of the EU initiative “The Best Legislation”. For this field the proposals will be prepared for the new order of the satisfaction of the demands of the insolvent enterprise’s employees, agreeing that the entrepreneurship risk state tax will be cancelled or will be entirely redirected to the satisfaction of the demands of the employees, instead of maintaining the bureaucratic apparatus. • simplifying accounting procedures and encouraging entrepreneurship, which is especially important for the development of small and medium size organizations; • Proposals for developing the strategy of state innovations, which will not allow capital investment into the technology manufacturing, but will also model the mechanism for obtaining and legally using technology from other countries; • Elaboration of the Activity plan and methodology of the participation in the state and private partnership.

13 Employers’ Confederation of Latvia 2004-2005


Education and employment The Policy target of Employers’ Confederation of Latvia (LDDK) is to promote development and improvement of the education system, so that it will conform to labour market requirements, provide employers with qualified, skilled employees thereby increasing competitiveness in Latvia, EU and world markets. LDDK also aims to increase access to market resources, to promote development of employment and decrease unemployment and make fundament based on economical development knowledge. Employers’ Confederation of Latvia has identified the following as the most significant problems of the Latvian labour market: • Insufficient support to employers providing continuing education/training in the work place and promoting lifetime learning; • High undeclared level of employment (16-18% of GDP); • Lack of education programs that conform to qualification level for labour market requirements; • Regional differences in economical development and employment; • Lack of professional and geographical mobility. When initiating reform and development of vocational education, one of the most important things is to provide graduated students with appropriate skills that are necessary for the labour market. Social partners have agreed to commence work on development of profession standards and vocational education program, involving organizations of employers in before mentioned sections, and in exam commissions. In 2004 LDDK regularly took part in assessment of profession standard and accreditation commissions of education programmes that has led to substantial improvements in match between education and labour market requirements. Employers’ Confederation of Latvia is represented and operates in Vocational Education and Employment Tripartite Cooperation Sub-council (VEETCS), Higher Education Council, Study Curricula Accreditation Commission, Vocational Education Accreditation Commission and Vocational Education Co-operation Board, and in European Union - CEDEFOP (European Centre for the Development of Vocational Training). CEDEFOP, Greece To promote participation of employers’ in processes of vocational education, LDDK has submitted proposal to VEETCS about possible privileges for employers who provide internship opportunities to students studying in vocational education schools. To promote cooperation and interest coordination of state, municipality, public and nongovernmental organizations during implementation of employment policy, Employers’ Confederation of Latvia has nominated it’s own representatives in advisory boards of State Employment Agency (SEA) and committees to select organizers of events. At the moment LDDK is represented in Riga, Daugavpils, Rezekne and Tukums. LDDK co-operates with academic and vocational education teaching staff, teen organizations, providing both informative and advisory support to the target initiatives.

14 Employers’ Confederation of Latvia 2004-2005


Priorities of the year 2005 •

• • •

• •

• •

promote planning of economic and education development by providing suggestions to respective Latvian Republic ministries to equalize the demand and supply in labour market; to improve work of VEETCS, developing new articles of this sub-board; participate in development process of National strategy in employment promotion; participate in development process regulations on working conditions according to EU directives (e.g. EU Directive 96/71 concerning employees’ temporary work abroad in EU member country) participate in development and ratification of profession classifier; support development of distance education, providing informative activities with an aim to popularize this way of education and attracting respective State financing; establish LDDK and scientific research work cooperation model; organise a conference on innovations as driving force of business development.

15 Employers’ Confederation of Latvia 2004-2005


Social security and health care Social security and health care policy of Latvian Employer` Confederation (LDDK) is directed towards the accessible, quality and effective provision of state services to every resident and towards the compliance of the services to the principles of free market economy and fair competition. LDDK takes part in the formation of advantageous legislation, in the inclusion of the private sector as well as in the promotion of partnership in those branches between the state and the private sector. LDDK supports the healthy lifestyle and work environment by learning the best examples among employers. LDDK takes part in solving social security and heath care problems in order to implement the employers` long-term concerns, assure accessibility to quality human resources and fair distribution of social guarantee load between employers and employees, as well as social peace in the country. Considering Latvian economic situation, LDDK has supported improvements developed in the sub councils of NTCC (National Tripartite Cooperation Council) social security and health care, directing attention to the social guarantees necessary for the individual: a right to live, to work in well arranged environment and to receive the necessary support for health security, as well as towards the country` s ability to secure all the above mentioned services in longterm aspect. The quality human resources form the base of a wealthy Latvia and serve as the guarantee for enterprise competitiveness and the increase of the employment rate and preparing for the aging of society. The employers support the necessity of the integration of elderly people, disabled persons and youth, as well as the elimination of sex discrimination in the labour market. Important improvements in Latvian legislation were made in 2004. The year 2004 was also very important because of the integration to the legal and social value area of the EU. Among the most important political document are these: • ‘’The Latvian National action plan meant for the abatement of poverty and social rejection (2004-2006)”, which is directed towards social consolidation and the abatement of social differences, • “ A programme for the implementation of the equality of rights for men and women in Latvia, year 2005-2006”, • The implementation of the project concept of the action plan “State politics of family” in 2004-2013, • Basic statements “for the politics of disability and the abatement of its consequences “ and • “e-Health in Latvia”, which is directed towards constant improvements. In the realization of welfare reform these reforms were envisioned: ”Providing of more efficient and economic social help services”; "The development of social insurance", "The legislation and control of the private pension foundation", "The development of social help” and "The control and evaluation of the social politics." Hence, social inclusion is the process with the aim to eliminate and diminish the poverty and the social rejection risk and the full-fledged integration of residents into society. The most important national bills the LDDK took part in the amendment coordination in 2004 were: • The law “On state pensions” and normative acts relevant to the law. The document was developed in order to ensure professional control of the action of the private pension foundation and to secure its long-term capabilities;

16 Employers’ Confederation of Latvia 2004-2005


• • •

‘’Regulations on the amount of child care allowance, its revision order and the order of the allocation and payment of the allowance’’, it will favourably affect the politics of family; ‘’Regulations increasing the guaranteed minimal income level and the allowance amount within the guaranteed minimal income level”, which will gradually improve the material situation and the inner consumption of the residents; ‘’The order of wage calculation resulting from the average insurance payments for fixing the amount of the unemployment benefit and to determine the order of allocation, calculation and payment of the unemployment benefit and funeral allowance”; The law ”About State Social Insurance”, to evaluate and control the existing system; “The law on patient rights”, to promote the service meant for the service recipient and customer oriented service; “The Immigration Law” etc.

LDDK led the NTCC work group on measures to be taken in order to improve work disability expertise. Within the group the social partners got acquainted with the situation analysis made by the Welfare Ministry and the Health Ministry and prepared proposals to avoid financing of operations of unfair employees and doctors by employers and the state. On the EU level Latvian employers have joined the committees of the European Social foundation, the European Economic and social committees, the Consultative committees on social security regime for guest workers, the Consultative committees on free movement of the labour force, the work group of the administrative council on improvement of life and work conditions in Europe. European Foundation for the Improvement of Living and Working Conditions, Dublin

Latvian employers also have developed statements about the situation in Latvia regarding: • Guidelines for the collaboration between the representative from the Ministry of Economics and the social partners, in order to provide the representation of the Latvian national concerns in the institutions of the EU; • The position project “The main indications of the Council of Ministers on the social politics, health and consumer affairs for the Spring session of the European council”; • “The reflection in finance reports of financial support (the financial help) of the state, municipalities, foreign countries, the European Community, other international organizations and institutions, as well as donations and presents in the form of money or in kind”; • The order in which the participation of Latvia is implemented in the 133d paragraph committee of the Council of Ministers of the European Union; • The initial position project on the regulation proposal of the Council has been reviewed. The proposal amends the Regulation 1365/75/EEK about the creation of foundation of improvement of life and work conditions in Europe, about the report of the international Labour organization, about the international convention on the protection of employees who migrate and their families.

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Priorities of the year 2005 In 2005 LDDK will continue to draw its attention to the long-term state social insurance possibilities in the field of state pension insurance, maternity and disease insurance, state social insurance in the case of unemployment, state social insurance against accidents at work and against work related illness, and to the quality, efficiency and accessibility of the social help. The employers` possibilities to support the social integration process and the reception of the state support for socially liable employers will be examined. The state support could be assigned only to those employers, who do something for the diminishing of poverty and social rejection risk and the full-fledged resident integration into society. In the Health care the important employers will take part in the analysis of the implementation of “structural plan� programme of the Health Ministry and in the evaluation of its correspondence to the principles of the free market, to examine the possibilities of partnerships of the public and private sectors in the elaboration of the law of organization of the health care and financing order. It will be important to eliminate corruption, to examine the contract concluded between VOAVA and medical establishments, and the efficiency of the service prices. By achieving a common understanding and consensus, we will be able to secure the public health in the strategy, the development of the Latvian health care sector in the strategy, the State obligatory health insurance in the concept and the Mother and child health care in the strategy as well as the securing of the other aims defined in the documents. The work on the EU level has already been started by coordination of the concerns of the social partners in the introduction of European health insurance card, in the development of the new regulation in the coordination of social security and in the creation of the COWEBS portal, which is about the social security rights of mobile citizens.

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Labour rights and labour protection On the whole, the labour environment in Latvia and Europe has changed substantially over the past decades by transforming from being a manpower-based economy to a knowledge-based economy. The development of new labour relations and emergence of new labour environment risks pose another challenge for employers and now requires a different kind of knowledge and information. For that reason, employer organizations are now even more important. To help companies to adapt and grow, they have to represent the interests of employers in the processes of regulatory enactment development and employer notification. In 2004, after more than a year's work on development of amendments, the Labour Law was finished. The amendments were initiated by LDDK after proposals of its members and focused on improving labour relation regulations within the current labour market situation. Thanks to the work accomplished, improvements have been added to provide more flexible working conditions. Saeima adopted amendments to the Labour Law, that were initiated by LDDK and introduced several legal provisions that are more favourable for employers: increased overtime, preferential terms for employee dismissal during probation, termination of labour relations when the employee is sentenced to imprisonment, new possibilities for sending employees to health examination, etc. LDDK also played a significant role in employers' notification on possibilities of providing safe working environment. LDDK offered information leaflets and practical help and participated in the annual exhibition, "For the safety of work". Provisions, that are more favourable for employers' interests, were introduced into draft labour protection legislation: • "Requirements for labour protection against vibration-induced risks in working environment;" • "Rules concerning types of business that employer involves competent authority into, and order of involvement of this authority."

Priorities of the year 2005 LDDK will continue working to introduce legal provisions that flexibly govern legal labour relations, develop models for employee notification and advice, and establish a discrimination-free working environment. In our future work, it will be very important to bring order into working environment when adopting new European Union directives regarding labour protection, and to pay a special attention to balancing requirements of directives and employers' possibilities to introduce them. •

• •

to improve Labour Law according to newly adopted EU directives (regarding employee notification and advice) and proposals submitted by employers; to take measures to expedite agreement of Europe's social partners on telework overtaking; to inform employers about development opportunities of new labour types as conditions change in working environment (working hours, working place); to supplement regulatory enactments of labour protection according to newly adopted directives of European Union (electromagnetic fields).

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Corporate governance The policies of Employers’ Confederation of Latvia (LDDK) in the sphere of corporate governance are directed towards supported enterprises forming their own structures and procedures according to the requirements, which put forward by state normative acts and entrepreneurship best practice. The purpose of Employers’ Confederation of Latvia is to facilitate the introduction of the corporate social responsibility principles in the circumstances of growing competition, providing the basis for the sustainable development and achieving the entrepreneurship goals with the promotion of the selfregulating initiatives. Corporative governance in enterprises is formed as the result of an integrated system of state political, cultural and institutional conditions – laws, normative acts, standards, selfregulating codes, generally accepted practices, and every country’s own economic or enterprise culture. That is why the Employers’ Confederation of Latvia in discussions with the state institutions, branch associations and mass media has expressed its point of view that corporate governance is developing, conditioned by the growing competition and is more effective if it is defined by self-regulating initiatives rather than government mandate. On the European level, commonly, when entrepreneurs implement the best corporate governance examples, the principles embodied in such best practices exceed those required by legislation. Alone with submitting reports and proposals to state institutions about branch ethics code’s compliance with best international and European practice examples, in 2004 the Employers’ Confederation of Latvia initiated more active communication with different target-groups. The primary activities were: • To further the active exchange of points of view, Employers’ Confederation of Latvia has organized entrepreneurs’ meetings and discussions with the state and local authority institutions and organizations representatives about different cooperation aspects and projects. These meetings promote mutual understanding and cooperation. • Employers’ Confederation of Latvia has supported and participated in research about corporative social responsibility. LDDK has participated in “The Entrepreneurship’s Best Ethics in Latvia” (BETIL), organized by Stockholm School of Economics in Riga and financed by the Swedish government. Employers’ Confederation of Latvia has taken an active role in this project’s council; • LDDK has involved the mass media in discussions of questions important to employers, in this way providing the united voice of the employers’ point of view in the mass media on the national level. Employers’ Confederation of Latvia has been involved in international activities regarding current events for the entrepreneurs in Europe and in the world, allowing knowledge to be gained, contacts to be established and information exchanged with the employers’ representing organizations in the other countries: •

President of LDDK V.Gavrilovs and Member of the Board A.Vīksna participated in the UNO Global Contract leaders’ conference in New York.

20 Employers’ Confederation of Latvia 2004-2005


General Director of LDDK E.Egle participated in the UNO Global Contract conference in Paris about facilitating long-term consumers among entrepreneurs.

Priorities for the year 2005 • •

Using the integrated marketing communications tactics, continue explaining the terms of corporate governance and corporate social responsibility; Work out and effect the Employers’ Confederation of Latvia strategy for the active and bilateral communication with the members, providing information exchange for representing entrepreneurs’ interests more effectively and forming the reputation of LDDK and its members.

21 Employers’ Confederation of Latvia 2004-2005


Training and services for members of LDDK •

21.01.2004. – seminar Top issues of Labour Law in the European Union and Latvia;

24.02.2004. – seminar Road Show;

24.02.2004. – seminar organised by the Ministry of Foreign Affairs together with European Commission on the opportunities of Latvian enterprises to participate in delivery, labour and service tenders organised by European Commission within the framework of the EU Programme of Foreign Help (TACIS, CARDS etc.);

26. – 27.02.2004. – conference Adaptation to Changes at Work organised by European Commission;

05.03.2004. – the Employer’s group discussion about taxation problems, rganised by the Latvian Investment and Development Agency;

25.03.2004. – conference Latvia and Internal Market; preparing the EU Enlargement organised by the Internal Market Monitoring Centre of the European Economic and Social Committee’s (EESC) Special Internal Market, Industrial and Consumer department;

11.03.2004. – EU PHARE Twinning Project conference Social Dialogue in Latvia: that is carried on between Employees and Employers;

31.03. – 03.04.2004. – seminar on the project Stimulating the Social Dialogue in Latvia;

19-20.04.2004. – seminar on the quality of professional education and training;

27. – 28.05.2004. – seminar organised by the International Communications Round Table (ICRT);

07.05.2004. – seminar The Employers’ Organisations and Businessmen’s Social and Economic Interests lobbying at the National and European Level;

26. – 27.05.2004. & 09. – 10.06.2004. – seminar Social Dialogue: Agreement between Social Partners;

29.06.2004. – seminar Judicial and Economic Aspects of the Organisational Structural Modifications organised by Employers’ Confederation of Latvia (LDDK) and the Mecklenburg - Vorpommern Economic Education Association within the framework of the project Stimulating the Social Dialogue with Social Partners from the EU Candidate Countries;

16.– 17.08.2004 – within the framework of the project “Stimulating the Social Dialogue with Social Partners from EU Candidate Countries” LDDK and the North German Regional Metalworking Sector Employers' Association Nordmetall organised the international conference of Agreements and Responsibilities – Employers’ of the Baltic States for the Competitive EU Labour Market.

15.10.2004; 05.11.2004; 26.11.2004; 03.12.2004. – EU PHARE Twinning Project Employment Strategy. Regional conferences Implementing of the European Employment Strategy (EES) and Latvian National Plan of Activities in the Regions and Provincial Governments in Order to stimulate Employment.

22.10.2004. – European Weeks 2004 closing conference Build Safe! organised by the Ministry of Welfare and the State Labour Inspection;

22 Employers’ Confederation of Latvia 2004-2005


23.11.2004. – seminar Organising a Labour Protection System in a company organised by Employers’ Confederation of Latvia LDDK together with the Mecklenburg Vorpommern Economic Education Association within the framework of the project Stimulating the Social Dialogue with Social Partners from the EU Candidate Countries;

13.12.2004. – seminar The Role of Employers in Order to provide the Appropriate Professional Education organised by Employers’ Confederation of Latvia LDDK together with the Mecklenburg - Vorpommern Economic Education Association within the framework of the project Stimulating the Social Dialogue with Social Partners from the EU Candidate Countries.

14. – 17.12.2004. – A seminar course sponsored by European Social Fund EU Structural Funds Project Management.

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National Programme Project of ESF "Capacity Building of Latvian Employers' Confederation" Employers' Confederation of Latvia has launched an capacity building programme in order to encourage employers' organization to take actively participate in addressing economic and social issues of employment at Latvian and EU-level, as well as coordinate resolution of industry-specific and employment issues in professional and industrial associations. Building LDDK capacity will provide an opportunity to improve the current employers' organization model in Latvia and also ensure its conformity to and full-fledged participation of social dialogue at EU-level. Employers from all over Latvia, employees of governmental and nongovernmental organizations, experts, mass media and society will all take part in promotion of social dialogue thus improving employment relation culture. During the project 22 activities will be accomplished, resulting in: • Substantial growth of LDDK capacity for taking part in policy planning, development and enforcement of regulatory enactments on social security, education, employment, economics and finance, labour relations and EU-related issues. • Holding informative workshops and conferences for employers concerning employer organization management and role of employer organization in policyformation. • Training of employer organization personnel in for EU structural funding project documentation and management, foreign languages, IT innovations, business and finance management, quality assurance and corporate communications. • Development of informative materials for employers about the importance of social dialogue and employer organizations in formation of EU industry policies, about collaboration of employers and employees, and possibilities to introduce flexible forms of labour. • Established methodology and procedures to enable employers express their interests regarding pending employment matters. • Research about approaches that professional and branch associations take to recruit new members. This will serve as a basis when developing guidelines for employer consolidation model that is most appropriate for Latvian conditions. • Training of LDDK labour protection experts on labour protection Master's programme at Riga Technical University. • Holding informative workshops about LDDK in order to recruit new members. • Notification of mass media representatives and youth about LDDK. • Established model of employers and research institute collaboration. • Establishment and introduction of new services for LDDK members. • Establishment and realization of LDDK corporative communication plan. Project accomplishment will result in employer organizations having the ability to timely participate and submit proposals when important employment, economic and social issues are resolved, which is important for long-term development of the state and promotion of social dialogue.

24 Employers’ Confederation of Latvia 2004-2005


Gratefulness to members

To Ieva Jaunzeme for her contribution during four

years as general director of LDDK Elīna Egle took over the management of LDDK in 2004

To LDDK Vice - Presidents Juris Biķis (JSC “Latvijas Finieris”) for his service on the National Tripartite Cooperation Council.

Valdis Jākobsons (Latvian Chemistry and Pharmacy Employers’ Association) for his service on the National Tripartite Cooperation Council, National Alcoholism Prevention Council and 10 year contribution to Social Security Subcouncil.

Kirovs Lipmans (JSC “Grindeks”) for his service on the National Tripartite Cooperation Council.

Vasilijs Meļņiks (“EiroHoldings” Ltd.) for his service on the National Tripartite Cooperation Council.

Teodors Tverijons (Association of Latvian Commercial Banks) for his service on the National Tripartite Cooperation Council, Economic Council, Organization for Economic Co-operation and Development (OECD) Advisory Board and Fiscal Policy Advisory Board.

Andris Zorgevics (State JSC “Latvijas dzelzceļš”) for his service on the National Tripartite Cooperation Council.

To Council members: Jānis Bertrands („Baltijas logi” Ltd) for his service on the Vocational Education and Employment Tripartite Cooperation Sub council, Gender Equality Council, Quality Assurance National Programme Coordination Council, Steering Committee of the Phare 2002 National Programme project Employment Strategy, Steering Committee National Programme “The improvement of the infrastructure of labour market policy introduction institutions and the improvement of the technical support”, European Union Vocational education and teaching advisory committee and State Employment agency’s tender committees On the Most Economical Offers for Vocational Training and Retraining of the Unemployed competition jury.

Jānis Dirba (Latvian Energy Construction Association) for his service on the Study Curricula Accreditation Commission.

Jevgēņijs Kalējs (Latvian Hospitals’ Association) for his service on the Health Care Sector Subcouncil and Health Compulsory Insurance State Agency Advisory Board.

Arkādijs Suškins (Cēsis District Entrepreneurs’ Club) for his service on the Social Security Subcouncil.

Aiva Vīksna (SIA “Lietišķās informācijas dienests”) for her service on the State Revenue Service Advisory Board.

25 Employers’ Confederation of Latvia 2004-2005


To LDDK representatives of member-organisations Maija Ambrēna (Latvian Energy Construction Association) for her service on the National Council for Standardization.

Lilija Babre (Association of Latvian Commercial Banks) for her service on the Vocational Education Cooperation Council.

Aivars Bauze (JSC „Grindeks”) for his service on the Labour Affairs Tripartite Cooperation Subcouncil.

Indulis Bērziņš (“Daugavpils Energoceltnieks” Ltd) for his service on the committee of State Employment Service Daugavpils branch to select organizers of events.

Juris Borzovs (JSC “Dati”) for his service on the Higher Education Council. Anda Būmane (JSC “Latvijas Finieris”) for her service on the Vocational Education and Employment Tripartite Cooperation Subcouncil.

Jānis Davidovičs (“EiroHoldings” Ltd) for his service on the Vocational Education Accreditation Commission.

Pēteris Druķis (Technical Experts Association) for his service on the National Metrology Council.

Aleksandrs Grigorjevs (SIA “Grif”) for his service on the Labour Affairs Tripartite Cooperation Subcouncil and advisory committee of European Committee on Work Safety, Hygiene and Health Care.

Juris Kaksītis (“EiroHoldings” Ltd) for his service on the State agency Insolvency Administration Advisory Board.

Laura Kalniņa (JSC “Latvijas Balzams”) for her service on the Vocational Education and Employment Tripartite Cooperation Subcouncil and committee of State Employment Service Riga city branch to select organizers of events.

Gunārs Kalniņš (SIA “Latholding Grupa”) for his service on the Vocational Education and Employment Tripartite Cooperation Subcouncil.

Inga Kola (State JSC “Latvenergo”) her service on the Labour Affairs Tripartite Cooperation Subcouncil.

Uldis Kupšs (JSC “IBNA”) for his service on the committee of State Employment Service Liepaja branch to select organizers of events.

Gaida Lāce (Latvian Municipal Employers’ Association) for her service on the Vocational Education and Employment Tripartite Cooperation Subcouncil.

Jānis Nipāns (SIA “Lattelekom”) for his service on the Labour Affairs Tripartite Cooperation Subcouncil.

Gundars Prolis (Latvian Hospitals’ Association) for his service on the Health Care Sector Subcouncil.

Māris Rēvalds (Health Care Employers’ Association) for his service in Health Care Sector Subcouncil.

Baiba Siksne (State JSC “Latvenergo”) for her service on the Social Security Subcouncil. Vladislavs Siņavskis (JSC “REBIR”) for his service on the committee of State Employment Service Rezekne branch to select organizers of events.

Arnolds Spirģis ( “Tukuma Energoceltnieks” Ltd) for his service on the committee of State Employment Service Tukums branch to select organizers of events.

LDDK expresses its gratitude to all that has actively operated in work groups as well as expressed their opinions.

26 Employers’ Confederation of Latvia 2004-2005


Implementation of strategy of the Employers' Confederation of Latvia in 2004