To analyze labor market trends that have been impacted by the Covid-19 pandemic and people’s readiness for new work organization forms, social partners – the Free Trade Union Confederation of Latvia (LBAS) and the Latvian Employers Confederation (LDDK) – organized the international conference “Teleworking and the role of social dialogue” on October 13.

Līga Meņģelsone, Director-General of the Latvian Employers Confederation, described the current situation at the conference: “The Covid-19 crisis has brough about significant changes in people’s interaction and businesses’ operations – we had to adapt to teleworking, but enterprises were also forced to move their operations to virtual platforms, using online services and online ordering, which resulted in an accelerated digitalization process. Because of this swift transformation, we were able to carry on with our work remotely, at least partially, almost without reducing activity and maintaining high productivity.”

Egils Baldzēns, Chairman of the Free Trade Union Confederation of Latvia, underlined the role of general and collective agreements in various sectors: “Promoting and advancing negotiations on collective labor agreements is a time-consuming process, especially regarding sectoral collective agreements that are compulsory for all employers in the given sector. Intensive work with employers is yielding first visible results already now. Collective agreements are of special importance at a time when new employment forms are emerging and gaining foothold and the necessity to adjust labor laws faster increases during the Covid-19 pandemic. Lawmakers and the government are not always able to do it as quickly as social partners who reach agreements through discussions.”

Gatis Eglītis, Minister of Welfare, stressed the significance of social partners: “Social dialogue is unquestionably an essential element in dealing with social and economic issues. Moreover, a timely and high-quality social dialogue, in my view, is also a basic prerequisite for ensuring social peace. I am glad that the social partners are present not only in the policy-making and legislative processes, but are also taking an active part in various activities aimed at mitigating the negative effects of the Covid-19 pandemic, including by promoting high-quality and meaningful teleworking wherever possible.”

At the conference we also learned about the Eurofound and the Organization for Economic Co-operation and Development’s (OECD) studies on new employment trends and latest data on teleworking and working conditions during the pandemic. The Eurofound and OECD studies reveal that employees want to work remotely, but that long working hours, isolation and inadequate equipment are still posing challenges, which have to be dealt with. As a result of the Covid-19 pandemic, many European countries have seen the number of teleworking employees grow significantly, but this figure may vary significantly – from 43 percent in Luxembourg to 3 percent in Bulgaria.

In Latvia - both before and after the pandemic - teleworking has not been commonplace at all. Most countries still have a huge untapped potential to make teleworking more widespread. Researchers indicate that by using teleworking opportunities more extensively, policy makers must realize the advantages and shortcomings of this work organization form so they can introduce the right policies to ensure better working conditions in the future.

According to the Eurofound and OECD studies, teleworking has been posing many challenges to employees during the pandemic, particularly in organizing working hours, and raised questions on how to better balance work and family life, wellbeing and a good working environment. It is expected that teleworking and a hybrid model allowing to work part of the time at the office and part of the time from home, will become increasingly commonplace. Social dialogue in enterprises plays an especially important role in organizing work so as to ensure employees’ wellbeing and productivity, while mandatory minimum work organization standards must be set forth in legislative regulations.

As for the impact teleworking is having on productivity, Dr.oec. Oļegs Barānovs, a leading researcher at the European Policy Research Institute at the Latvian Academy of Sciences and senior analyst at the Analysis Department of the Ministry of Economy, pointed out that during the pandemic, productivity increased in nearly all sectors of the economy. In Latvia, though, there is a wide gap between the existing and potential number of teleworking employees. The researcher noted that teleworking can increase employees’ productivity and reduce expenses like transportation costs, but that it can also cause feelings of isolation and distress because the line between work and home becomes diffused. There are also concerns that a lack of regular meetings with colleagues can dampen creativity and lessen team unity. Too much of teleworking can reduce employees’ efficiency and hamper long-term productivity growth. A future challenge is to find the optimal proportion between telework and conventional work. One of the solutions might be to bring all employees together at the office for a couple of workdays every month. The approach where employees devote a small portion of their working time to generating ideas with their colleagues can now be more productive than previously.

Representatives of employers’ organizations and trade unions from Ireland, Belgium, Germany and Spain informed about the evolution of teleworking and its legislative regulation, as well as the role of social partners. In the European Union, the teleworking regulation is still based on the European social partners’ framework agreement on telework, signed on July 16, 2002. The experience of European countries is similar:

• In Ireland, the role of social partners has especially increased lately as they help ensure that employers and employees can return to a safe environment once the pandemic is over.
• Belgium’s experience shows that teleworking cannot be organized in an improvised manner: it has to be organized, taking into consideration the balance between work and private life, employees’ wellbeing and respect of their privacy.
• Germany’s situation shows that social partners are the best at setting mobile work rules.

To ensure this, they need updated basic rules, not a universal regulation. Representatives of LLC “Tet”, JSC “Sadales tīkls” and LLC “SCHWENK Latvija” told the conference about the Latvian companies’ best teleworking practices:

• 86 percent of LLC “Tet” employees say that a flexible working environment is the best thing TET has introduced lately. 41 percent of the employees would like to work remotely, perhaps from any place in the world. And this, too, is possible for the TET employees, because at least 3 months in a year they can work from foreign countries.
• A characteristic feature of JSC “Sadales tīkls” is that this company’s staff includes both office workers and technical specialists, so to ensure everybody felt equal, the management had to take bold decisions when it came to introducing flexible work arrangements, because one model did not suit everybody.
• SIA “SCHWENK Latvija” informed about the detailed process in which teleworking was introduced and about its thoroughly developed risk assessment regulation. The company indicated that high work safety standards, digital solutions that had been introduced already before the pandemic, close attention to individual employees’ work challenges and the possibility to deal with them quickly helped to introduce teleworking more extensively.

A flexible working time regulation that had been introduced already earlier with the emphasis on the result, keeping and expanding access to various perks, managers’ involvement and “proximity”, as well as solutions found in a dialogue also proved useful. Aina Okseņuka, Tax Manager at “Sorainen” law firm, informed about the legal and taxation aspects of telework expenses, noting that cross-border teleworking has become one of the hottest tax-related topics over the past year. Already before the pandemic, companies hired foreign workforce and individuals worked for foreign employers, and the taxation framework for such cross-border situation has been existing for quite a long time already. However, in cases where teleworking is an inevitable necessity due to an emergency, new derogations from the existing general principles emerge. It is still essential to examine each situation on an individual basis to come to the right conclusion when deciding in which country the tax should be paid in the given case.

At the conference, we also learned about Latvian trade unions’ perspective on working time accounting, labor safety, cost refunds and other teleworking related issues and their solutions. Meanwhile, employers provided their opinion about teleworking as an integral part of work relations.

At the end of the conference, LBAS and LDDK representatives held a discussion on collective labor agreements as an opportunity to create a legal regulation themselves, analyzing the development of collective bargaining in Latvia. The social partners noted as achievements the first 3 sectoral collective agreements covering the minimum pay, as well as collective bargaining processes that have been started and are ongoing in several sectors. Furthermore, two of these general agreements – in the construction sector and fiberglass industry – are erga omnes, which means that they are binding on the entire sector. As a consequence, the construction sector is seeing good progress in terms of wage growth, the sector’s development and workforce retention, with employees continuing to “migrate” to higher salary levels.

The social partners, having promoted the development of collective bargaining in Latvia over the past four years, identified various obstacles to the conclusion of collective agreements. One of them was an excessively high erga omnes threshold. For that reason, amendments were made to Section 18 of the Labor Law to lower the turnover threshold from 60 percent to 50 percent, thus expanding employers’ possibilities to join the existing collective agreements. The social partners came to the conclusion that the labor law did not envisage sufficient autonomy for the social partners. As a result, first legislative amendments were made, providing for safe derogations from labor law standards in the interests of employees under collective agreements. The lack of a support mechanism was another obstacle, and a solution was found to this problem as well. As of 2022, tax allowances will be applicable not only for catering expenses, but also healthcare expenses in companies that have joined a collective or general agreement. The social partners continue to push for a tax allowance package for social guarantees that are included in collective or general agreements – work-related transportation costs, employee training costs and benefits paid to employees on special occasions.

The conference took place in the framework of the ESF project “Developing LBAS Bilateral Social Dialogue for the Development of a Better Legal Framework for the Improvement of the Business Environment” No.3.4.2.2/16/I/002 and “Developing Social Dialogue for the Development of a Better Regulation in the Field of Business Support” (No. 3.4.2.2/16/I/001).