Efficient investments in health care, education and business are necessary for Latvia’s recovery and resilience

18. December, 2020

Employers’ Confederation of Latvia (LDDK) has prepared proposals for development of Latvia’s Recovery and Resilience Facility (RRF) plans and calls on the government, while making decisions, to carefully assess return of public investment projects for overcoming the social and economic consequences of the COVID-19 pandemic.

Employers, based on the guidance to the EU member states prepared by the European Commission, call on the government to set the common goal of the RRF, the main resultative indicators that should be achieved, and the expected impact, while proposals of ministries for investment projects should be mapped in the following directions: labour market, education, health and social policy; public finances and taxation; sectoral policies; green transition; digital transition; business environment and public administration.

LDDK Director General Ms Līga Meņģelosne: “It is important that, during decision-making process, the responsible institutions assess the return of public sector investment projects. It would help to ensure considerate and targeted use of resources for economic resilience and recovery. We believe that the funding ratio between strengthening public authorities and measures for economic sustainability, recovery to cope with the social and economic consequences of the Covid-19 pandemic is not correctly balanced within the framework of the plan.”

The COVID-19 crisis has clearly showed that Latvia needs systemic improvements and support to the health care sector, starting with preparation of specialists and up to investments in technologies and digital solutions. Employers underscore that, in order to prepare for future challenges, it is significant to ensure appropriate funding for continued training of medical staff and students, as well as research programs in health sector within the RRF plan.

In order to improve employment indicators and ensure availability of the necessary labour force for companies, education programs based on work environment on all levels should be implemented, investments should be made in inclusive job market activities, ensuring long-term care, child care, as well as support for adapting environment infrastructure in private sector.

Employers note that it is equally important for competitiveness of Latvian companies to continue gradual and fiscally neutral reduction of the tax burden, developing a system that is easy to administrate, understandable and predictable.

The prepared draft RRF plan has set an ambitious goal – to increase export share to 65% of GDP, while employers believe that such a goal can be achieved only if more funding is allocated for economic transformation and productivity than planned today, and the approach proposed by the ministries is amended. Support for full-cycle innovations process, including manufacturing commercialization and export ability should be ensured.

In order to promote introduction of green and digital economic principles in business and digitalization, LDDK believes that support to energy efficiency projects and new technologies, as well as for innovations is necessary, that can best be solved by promoting cooperation among companies and higher education institutions. At the same time, support to programs developing advanced digital skills in particular sectors or professions at the demand of companies should be ensured. Support for the renovation of industrial and other non-residential buildings and the insulation of residential buildings is needed to effectively and demonstrably improve climate performance and meet epidemiological safety requirements.

LDDK believes that, during development and implementation of the plan, constant monitoring and modelling of Latvia’s national economy should be conducted, and development of the leading company groups in the particular sectors should be monitored. In order for the adopted decisions to be weighted, they should be based not only on analysis of sectors, but also on analysis of microdata of each sector’s leading companies.

A big job has been done in development of the RRF plan, still, employers believe that some improvements are necessary in order to guarantee that the available funding primarily is used for resilience and recovery of Latvia’s economy and business support.