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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure LV-2020-46/1715 Updated – measures in Latvia

Wage subsidy for short time employees

Algu subsīdija nepilnu darba laiku strādājošajiem darbiniekiem

Country Latvia , applies nationwide
Time period Temporary, 09 November 2020 – 30 June 2021
Context COVID-19
Type Legislations or other statutory regulations
Category Employment protection and retention
– Income support for people in employment (e.g., short-time work)
Author Kriss Karnitis (EPC) and Eurofound
Measure added 14 January 2021 (updated 26 May 2022)

Background information

From 9 November 2020 the state of emergency due to COVID-19 pandemic was declared again, and different restrictions re-introduced.

On 28 November 2020 the Government adopted new amendments to regulations No. 675 "On the provision of support to taxpayers to continue their activities in the context of the COVID-19 crisis". The regulation describes criteria and procedure for granting support to short time employees (wage subsidy).

Content of measure

Wage subsidy for employees is intended as an assistance measure for companies affected by the crisis – to cover costs of retaining employees who work for a lower number of hours. The allowance is available from 9 November 2020 until 9 January 2021.

Employers (companies) whose income from economic activity for the specific support month of 2020 has decreased by at least 20% compared to the average income of August, September and October 2020 is eligible for this support.

The amount of the subsidy for an employee is 50% from average gross wage in August, September and October 2020, but not exceeding €500.

The employer is obliged to pay the employee the difference between the subsidy and the amount of full wage. The employer should retain an employee employed an extra month after the period of receiving the subsidy.

Although the employer is the one who demands subsidy, it is paid directly to employees.

Updates

The following updates to this measure have been made after it came into effect.

10 November 2021

Based on this support measure the Government developed new measures in November 2021: Wage subsidy for employees and Wage subsidy for self-employed .

08 April 2021

On 8 April 2021 the Government introduced additional criteria to widen the availability of the support. The new criteria determines, that the company is eligible if its income from economic activity for the specific month of support, compared to the income of the respective month of 2019, has decreased by not less than 30% and this decrease in income is due to restrictions on economic activity.

15 January 2021

On 15 January 2021 the Government ruled, that this support will be available until 30 June 2021, but not longer than the period during which the statutory restrictions on economic activities related to epidemiological precautionary measures to limit the spread of COVID-19 infection are in force.

Use of measure

From 1 December 2020 to 7 January 2021, the State Revenue Service has paid 11,240 wage subsidies in amount of €2,466,603. 30.93% of companies receiving subsidies operate in HORECA, 28.46% in wholesale and retail trade, and 11.88% in manufacturing.

In the time period from 1 December 2020 to 11 April 2021 the State Revenue Service has paid 56,159 wage subsidies in the amount of €15,800,120. 9,246 of those receiving wage subsidies were employed in wholesale and retail trade (NACE G). 17,006 subsidies were paid in the sector in the total amount of €4.7 million. The the second largest recipient with 5,695 employed receiving wage subsidies is HORECA (NACE I). In this sector 13,698 subsidies were paid in the total amount of €3.6 million. The third largest recipient with 3,623 employed receiving wage subsidies is manufacturing (NACE C). In this sector 7,681 subsidies were paid in the total amount of €2.3 million.

In the time period from 1 December 2020 to 18 July 2021 the State Revenue Service has paid 62,189 wage subsidies in the amount of € 22,761,663. 9,843 of those receiving wage subsidies were employed in wholesale and retail trade (NACE G). 21,904 subsidies were paid in the sector in the total amount of €6.06 million. The the second largest recipient with 6,785 employed receiving wage subsidies is HORECA (NACE I). In this sector 23,927 subsidies were paid in the total amount of €6.5 million. The third largest recipient with 3,932 employed receiving wage subsidies is manufacturing (NACE C). In this sector 9,873 subsidies were paid in the total amount of €3 million.

In the time period from 1 December 2020 to 29 August 2021 the State Revenue Service has paid 81,881 wage subsidies in the amount of €23,357,120.

Target groups

Workers Businesses Citizens
Employees in standard employment
Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
National funds

Social partners

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

Trade unions Employers' organisations
Role Consulted Consulted
Form Direct consultation outside a formal body Direct consultation outside a formal body

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

  • Unknown
  • Main level of involvement: Peak or cross-sectoral level

Involvement

Peak level social partners’ organisations normally are informed on Government decisions. Regarding COVID-19 measures social partners participate in working groups and depending on their capacities are involved in consultations and negotiations.

Views and reactions

Latvian Employers’ confederation informed that employers believe that the maximum amount of wage subsidies should be reviewed, taking into account the employee's social security contributions as well as dependents.

Sources

  • 09 November 2020: Regulations No 675 On the provision of support to taxpayers to continue their activities in the context of the Covid-19 crisis (likumi.lv)
  • 28 November 2020: The regulation on idle time support and wage subsidy enters into force (lvportals.lv)
  • 08 January 2021: The SRS has paid downtime and wage subsidy support in the amount of 11.1 million euros (www.vid.gov.lv)
  • 12 January 2021: Support for businesses for downtime and part-time employees will be available as long as economic activity is restricted (www.mk.gov.lv)
  • 13 January 2021: Employers are urging to improve the criteria for receiving crisis support (www.db.lv)
  • 14 April 2021: Information from State Revenue service on use of support (www.vid.gov.lv)
  • 27 July 2021: Statistics on support from the State Revenue Service (www.vid.gov.lv)
  • 15 September 2021: State Revenue service statistics 15 September 2021 (www.vid.gov.lv)

Citation

Eurofound (2021), Wage subsidy for short time employees, measure LV-2020-46/1715 (measures in Latvia), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/LV-2020-46_1715.html

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