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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-2021-40/2111 – measures in Latvia

Wage subsidy for employees

Algu subsīdijas darbiniekiem

Country Latvia , applies nationwide
Time period Temporary, 01 October 2021 – 31 January 2022
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 05 January 2022 (updated 26 May 2022)

Background information

Following a surge in COVID-19 infections to record levels, on 9 October 2021 the Latvian Government declared the state of emergency for three months, in force from 11 October 2021. Later, on 21 October, the Government introduced a four-week period of even more strict restrictions in order to significantly slow down the spread of COVID-19 infection. To help entrepreneurs overcome this phase of the crisis, the government introduced several support measures.

Wage subsidy for employees is based on previously developed support measure Wage subsidy for short time employees ).

On 10 November 2021, the government amended the regulations No. 675 "On the provision of support to taxpayers to continue their activities in the context of the COVID-19 crisis".

The amendments were agreed with the European Commission and entered into force on 18 December 2021.

On 6 January 2022 the state of emergency was extended till 28 February 2022.

Content of measure

Entrepreneurs who experience a drop in income during the state declared emergency period may apply for a wage subsidy for their employees. In turn, the employer is obliged to pay the employee the difference between the amount of support received and the amount of wages, as well as to pay taxes from the calculated gross wages, taking into account that the wage subsidy is part of the net wages paid to the employee.

A company is eligible for the wage subsidy if its income from the economic activity in the month for it is requested (in October, November, December 2021 or January 2022) has decreased due to restrictions:

at least by 20% compared to the average income in July, August and September 2021; at least by 30% compared to the income for the respective month (October, November, December or January) of 2019.

Only employees who has been vaccinated against COVID-19, or recovered from it (has certificate), or has the conclusion of the medical council on the authorization not to vaccinate can receive subsidy.

Only employers operating in certain sectors can apply for wage subsidies. For October 2021 and November 2021 the list of non eligible sectors was determined (containing 17 sectors, including agriculture, manufacturing, construction and others). Whereas the restrictions had been reduced, for December 2021 and January 2022 more precise list of eligible sectors was determined. The list includes operation of bars, activities related to the organization of cultural activities, artists' activities, artistic and literary creation and interpretation activities, activities of cultural institutions, gambling and betting, and amusement and recreation activities. The size of the subsidy is determined in the amount of 50% of the average gross monthly salary for the period from 1 July to 30 September 2021, but not more than €700 per calendar month.

The total amount of support for the wage subsidy, which consists of the support granted to the employee by all employers or in various forms of employment, may not exceed €700 per calendar month. In the case of a sole proprietor, both employees can apply for support and the self-employed person can apply for support for a wage subsidy as a self-employed person.

Use of measure

As the measure is just introduced, there is no data on uptake available.

Target groups

Workers Businesses Citizens
Employees in standard employment
Sector specific set of companies
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 Any other form of consultation, institutionalised (as stable working groups or committees) or informal Any other form of consultation, institutionalised (as stable working groups or committees) or informal

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

  • Unknown
  • Main level of involvement: Unknown

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

No specific views to report.

Sectors and occupations

    • Economic area Sector (NACE level 2)
      I - Accommodation And Food Service Activities I56 Food and beverage service activities
      R - Arts, Entertainment And Recreation R90 Creative, arts and entertainment activities
      R92 Gambling and betting activities
      R93 Sports activities and amusement and recreation activities

This case is not occupation-specific.

Sources

  • 08 October 2021: From 11 October, an emergency situation is declared in Latvia for three months (www.mk.gov.lv)
  • 21 October 2021: During four-weeks period, Latvia will put in the maximum efforts to control the Covid-19 pandemic (www.mk.gov.lv)
  • 10 January 2022: State Revenue service website (accessed on 10 January 2022) (www.vid.gov.lv)
  • 10 January 2022: Regulation 806: amendments to the regulation No. 675 "On the provision of support to taxpayers to continue their activities in the context of the COVID-19 crisis" (likumi.lv)

Citation

Eurofound (2022), Wage subsidy for employees, measure LV-2021-40/2111 (measures in Latvia), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/LV-2021-40_2111.html

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