The Foreign Investors Council in Latvia (FICIL), the Employers’ Confederation of Latvia (LDDK) and the Latvian Chamber of Commerce and Industry (LTRK) categorically oppose the Cabinet of Ministers’ proposal to introduce a 2% quota system for the employment of third-country nationals in Latvia. The business organisations call for the proposal to be halted, as the proposed quota is not linked to actual labour market needs and may negatively affect Latvia’s competitiveness and investment environment.
“At a time when businesses are facing labour shortages, Latvia must not close off its own opportunities to attract the people it needs. The rushed introduction of a quota without a proper impact assessment creates greater uncertainty for businesses, while for foreign investors it sends a signal that the availability of labour and the conditions for doing business in Latvia may change without sufficient predictability,” says FICIL Executive Director Tatjana Guznajeva.
The proposed quota model links the availability of foreign labour to the number of Latvian citizens rather than to actual labour demand and availability in specific sectors and occupations. Nor has there been an adequate assessment of which occupations would require exemptions in cases where there is insufficient availability of domestic labour in Latvia.
“Every new restriction should be able to answer one question: which of the shortcomings identified by the State Audit Office does it address? The quota proposal developed by the Ministry of the Interior does not answer that question. The Ministry itself acknowledges in the annotation that alternatives have not been assessed, the impact on the economy has not been assessed, and stakeholders have not been consulted. This is not urgency; it is unfinished homework. Decisions affecting the labour force across the entire economy cannot be made without an assessment of their economic impact. We therefore call for the proposal to be halted,” says LDDK Director General Kaspars Gorkšs.
Latvia is already facing a decline in the availability of labour, and demographic trends will continue to exacerbate this problem. Under these circumstances, attracting foreign labour is one of the instruments that enables businesses to secure the human resources they need and maintain their competitiveness.
Additional concerns are raised by the rushed advancement of the draft regulation. Only three working days have been provided for submitting comments, while the proposal is being advanced under an expedited procedure. The business organisations emphasise that significant changes to the conditions for attracting labour must be predictable, and businesses must have sufficient time to adjust their workforce and business plans accordingly.
“Businesses need clear and predictable rules of the game. Setting a two-percent quota without basing it on the actual situation in the labour market and the needs of specific sectors will not solve the problem. If the government wants to change the framework for attracting foreign labour, this must be a data-driven and thoroughly discussed decision, rather than a restriction introduced in haste. Otherwise, we are creating additional obstacles for businesses and weakening Latvia’s competitiveness,” emphasizes LTRK Chairwoman of the Board Katrīna Zariņa.
The business organisations also draw attention to Latvia’s international reputation and the attractiveness of its investment environment. When establishing a quota system, Latvia should take into account the experience of other European Union Member States and ensure that the regulatory framework is proportionate, predictable and does not send an unfavourable signal to foreign investors regarding the availability of labour and the stability of the business environment.
FICIL, LDDK and LTRK call on the government to halt further progress of the quota system in its current form and to develop a mechanism for attracting foreign labour that is based on data and actual labour market needs.