She emphasized that in both cases the employment contract would be extended while maintaining the employment relationship.
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“We need a mechanism to make it less stressful for employers and to enable them to resume full-fledged economic activity more quickly after the crisis. Such a mechanism is already working well in several European Union (EU) countries,” Mengelson emphasized.
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She explained that Latvia currently has one of the fastest growth rates of unemployment in the EU, which shows that many companies in the Covid-19 crisis are unable to keep jobs, and the downtime benefit will expire on Tuesday, June 30.
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Mengelsone also noted that the next possible support tool for companies is conceptually named wage subsidies for export-capable companies, but the regulatory framework has not yet been developed.
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The head of LDDK explained that the shortened working time scheme allows the employer to employ a smaller number of hours or days without dismissing it. This allows the employer to be more flexible, reduce labor costs, avoid job losses, save human capital and save on redundancy costs.
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For employees, on the other hand, such a mechanism means a constant level of income, as the remaining part of the salary is paid from state resources. As a result, the employee does not have to lose his job and qualification, security and confidence are gained that the employment relationship is maintained.
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“On the other hand, the benefits for society are the non-increase in the unemployment rate, the constant level of consumption, the possibility to resume economic activity at the previous level sooner after overcoming the crisis,” Mengelsone explained.
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She noted that in many EU countries such a mechanism has been in place since the 2009 crisis, while in others it was introduced as a temporary solution to the Covid-19 crisis. The number of employees participating in the part-time scheme also varies, with less than 3% of all employees in the Czech Republic and more than 40% in France and Italy.
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Mengelson said that such a mechanism should be introduced as soon as possible and expressed hope that the Ministry of Welfare, the Ministry of Economy and the Ministry of Finance would be interested in introducing such a mechanism.
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She also pointed out that since the beginning of the Covid-19 crisis, the LDDK has actively expressed proposals for the establishment of such a system in Latvia in the working groups of the responsible ministries and at the meeting of the Saeima Sustainable Development Commission. At the same time, Mengelson admitted that so far there has been no great response from the responsible ministries to this LDDK proposal.
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