The Foreign Investors Council in Latvia (FICIL) and the American Chamber of Commerce in Latvia (AmCham) have proposed various recommendations to the Ministry of Economics and the Ministry of Welfare for amendments to the Labor law to improve the economic competitiveness of Latvia.

“We are happy to see that skilled labor availability is a priority for policymakers. While we continue to support policies aimed at upskilling the workforce, we also see room for improvements in the labor legislation, as it currently does not reflect the trends of the contemporary labor market,” emphasized Irina Rozenšteina, leader of FICIL’s labor force work group.

FICIL and AmCham emphasize that skilled workforce availability is a priority. Policies aimed at increasing productivity, addressing demographic decline, and encouraging re-emigrants are crucial. However, the current economic situation, and if Latvia wishes to achieve the set ambitious economic targets, demands immediate action. Policymakers are urged to actively evaluate and modernize existing labor regulations to align with contemporary labor market challenges and trends. To promote flexibility for both employers and employees, both organizations propose several key amendments to the Labour Law.

One of the main suggestions is to introduce zero-hour contracts and fixed-term contracts, allowing flexibility for both employers and employees. Additionally, both FICIL and AmCham ask to amend the law regarding the duration of collective agreements, suggesting that these agreements expire no later than one year after their end date if no new agreement is reached, to motivate timely negotiations.

The organizations also recommend adjusting overtime compensation to align with wage increases. Another important amendment is clarifying regulations to permit part-time employees to engage in summarised working time. In terms of union-related provisions, the recommendation is to remove the requirement for prior union consent for dismissing union members.

To facilitate better management of seasonal and fluctuating workloads, FICIL and AmCham suggest extending the period for summarised working time from three months to up to twelve months. Additionally, they propose establishing clear definitions and compensation rules for standby and on-call work to provide legal clarity and fair compensation practices.

Both organizations propose enabling employers to deduct the value of unreturned assets from an employee’s final salary, ensuring accountability. Finally, AmCham and FICIL suggest prioritizing electronic wage payments to combat the shadow economy, allowing cash payments only if mutually agreed upon by both parties.