Background information

On 14 July 2020 the Latvian Government designed a support program for exporting companies. After coordination with the European Commission, the new support program entered into force, under which the state will subsidise the salaries of those working in the exporting enterprises, allocating €51 million, to overcome the consequences of the COVID-19 crisis. The program is set in force via Regulations of the Cabinet of Ministers Nr. 457 'On support for exporters of goods and services affected by the COVID-19 crisis to overcome the effects of the crisis.'

Content of measure

This is a support measure specially designed for companies exporting goods and services. The criterion that has to be met is that the income from economic activity for the company had decreased by 20% in one month between April and August 2020 compared to the corresponding month of 2019 due to the COVID-19 crisis. The other eligibility criteria are that the volume of exports of goods and services and the volume of delivery of goods and services in the territory of the European Union, except for Latvia, in 2019 reached at least €1 million and the average wage paid to employees in 2019 is at least €800.

The company has to justify that the support will be used to pay employees from the moment of submission of the application until 31 March 2021.

The support is set at 25% of the mandatory state social insurance contributions paid by the economic operator in 2019, but not more than €800,000 for one company or group of connected companies (with exception for NACE Red. 2 10.2). The company cannot have tax debts exceeding €1,000 as of the date of submission of the application.

Use of measure

211 companies have submitted an application for the support program up to 26 October 2020. The evaluation of the submissions, done by the Investment and Development Agency of Latvia is in progress.

As indicated in the annotation of the draft law, according to the Central Statistical Bureau of Latvia, 350 companies are complying with the criteria.

By 1 January 2021, 260 enterprises has received in total €30.4 million via this measure.

Target groups

Workers	Businesses	Citizens
Employees in standard employment	Larger corporations Importing/Exporting companies	Does not apply to citizens

Actors and funding

Actors	Funding
National government Employers' organisations	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Informed	Consulted
Form	Not applicable	Any other form of consultation, institutionalised (as stable working groups or committees) or informal

Social partners' role in the implementation, monitoring and assessment phase:

• Social partners jointly
• Main level of involvement: Peak or cross-sectoral level

Involvement

Section VI “Public participation and communication activities” of the annotation of the draft law states that companies and business organisations has been involved in the development of the measure. Both peak level organisations are usually consulted prior to issue the new regulations.

Views and reactions

Vitalijs Gavrilovs, President of the Latvian Employers' Confederation, emphasizes since the beginning of the pandemic that employers would like to see state support not only in a few sectors, but on a much larger scale, as the crisis has affected not only tourism and exporters. "Retaining employees as much as possible and minimizing possible insolvencies and bankruptcies of companies. (..) During COVID-19, support for all employees is very important to keep jobs so that companies do not look for labour afterwards," Gavrilov said.

Sources

• 14 July 2020: Regulations of the Cabinet of Ministers Nr. 457 On support for exporters of goods and services affected by the Covid-19 crisis to overcome the effects of the crisis for exporters of goods and services affected by the Covid-19 crisis to overcome the effects of the crisis (likumi.lv)
• 16 July 2020: Support for exporting companies to cope with the consequences of the Covid-19 crisis (www.liaa.gov.lv)
• 04 August 2020: The EC approves €51 million of support for Latvian export companies affected by Covid-19 (www.lsm.lv)
• 16 August 2020: Exporters are very interested in support for employees; the tourism industry is applying more slowly (www.lsm.lv)