Barometer examines industrial relations in the Baltic states

* The rates of exchange used are the average rates of the Bank of Finland on 24 March 1999. 1 EUR is equivalent to: 5.65 Estonian Kroons (EEK); 0.65 Latvian Lats (LVL); and 4.35 Lithuanian Litas (LTL).

Source: "Working life barometer in Baltic countries", Juha Antila and Pekka Ylöstalo, Studies in Labour Policy 214, Ministry of Labour, Helsinki, 1999 .

Pay differences between women and men

EU social policy has highlighted the aim of achieving equality between men and women in the labour market. The present pay situation between the sexes in these three EU candidate countries can be considered as being quite unequal.

The differences in net pay between the sexes are fairly large in all three countries. In Lithuania, the average net earnings of men are 23% more than those of women; in Latvia, the difference is 30% in favour of men; and in Estonia, it is as high as 37%. In pay terms, the typical successful person in working life in the Baltic countries is a relatively young man working in the private sector. At the other end of the pay scale are older women. The trend indicates that the inequality is growing. In comparison, male/female differentials in the EU generally vary from 10% to 35% in favour of men (according to Eurostat figures for 1995). Only a few European countries exceed the level of 35%, and the majority are in the 20%-25% range. In this context, one again has to bear in mind that wages in the Baltic countries are very low. This means that women face real problems of survival compared with men. Even if some EU countries also have large wage differentials, wages are higher, and lagging behind men in this respect does not necessarily mean that women suffer financial hardship.

Overview of industrial relations

In order to understand industrial relations in the Baltic states, some basic facts for each country are set out below, with more detail available for Lithuania than for the other two countries

Lithuania

In Lithuania, labour relations are regulated by: Articles 48 to 51 of the Constitution; the Code on Labour Laws; the Law on Employment Contracts; the Law on Wages; the Law on Individuals' Safety at Work; the Law on Holidays; the Law on Collective Agreements and Collective Contracts; the Law on the Monitoring of Collective Disputes; and various other laws and legal acts. The Council of Europe's European Social Charter requires that possibilities be provided for carrying out negotiations and concluding agreements between the employer and the employee, between the employer and associations of employees, and between associations of employers and associations of employees. In Lithuania, the possibility of negotiations between the employer and the employee is provided for in the Law on Collective Agreements and Collective Contracts.

Taking into account ratified ILO Conventions, the right to organise is guaranteed by the Constitution, the Law on Collective Agreements and Collective Contracts, and the Law on Trade Unions. Particular aspects related to other rights arising from this right (such as rules on prohibiting strikes in some circumstances or on concluding collective agreements with civil servants) are regulated by other laws. According to the Law on Trade Unions, citizens of the Republic of Lithuania who work under an employment contract or on other grounds provided for by law may be members of a trade union. Also under this law, employers or the persons authorised by them cannot be members of trade unions functioning in an institution, enterprise or organisation. According to the Law on Employment Contracts, a person authorised by an employer is an individual to whom the employer has assigned a part of its rights - ie any representative of the company administration should be deemed a person authorised by the employer.

There are currently four major central organisations of trade unions: the Union of Lithuanian Workers (LDS), the Lithuanian Centre of Trade Unions, the Unification of Trade Unions (LPSS) and the Lithuanian Labour Federation (LDF). The main purpose of these central organisations is to protect members of trade unions and other employees of enterprises where unions are present. However, as stated above, trade unions in Lithuania cover about 15% of all employees (according to the Labour Inspectorate, the total labour force is 900,000). Often, trade unions in enterprises do not represent the interests of all or even of the majority of the employees.

In 1998, there were three employers' organisations- the Confederation of Industrialists of Lithuania, the Confederation of Lithuanian Entrepreneurs and Employers, and the National Confederation of Entrepreneurs. Until now, no law has been passed to regulate the status of employers' organisations, and so the employers find it more difficult to protect their rights in relation not only to trade unions but also to the government, which is seeking to influence business development policy, in particular that of small businesses (according to information from the Lithuanian Social Report, 1998)

Estonia

Since January 1994, there have been two central trade union organisations in Estonia: the Estonian Central Union of Trade Unions (EAKL) and the Professional Union of Civil Servants (TALO). There have been several bilateral meetings between the government and TALO, and the agreements concluded are binding for the government in the policy-making process. Today, EAKL has 28 member unions (with a total of 62,000 members), which operate in economic sectors employing around 340,000 workers (the total Estonian labour force stands at around 1 million, according to the barometer)

There is currently one central organisation for employers' representation, the Confederation of Estonian Employers and Industry (CEEI), established on 29 November 1997 as a result of the merger between two existing employers' organisations. CEEI is a non-profit organisation and is based on voluntary membership on the part of sectoral employers' associations. CEEI is a non-political organisation, which aims to represent the interests of its members vis-à-vis governmental organisations and workers' organisations, to protect the rights of its members, and to represent them in Estonia and abroad. The membership of CEEI comprises 32 sectoral associations of employers, four associations that are associate members, and 22 commercial undertakings. CEEI has about 6,000 member enterprises, which employ a total of around 200,000 workers (according to information from the Estonian Ministry of Social Affairs).

Latvia

In Latvia, the rights of the employees are protected by trade unions. The formation and organisational structure of the unions are determined in the statutes adopted by the unions and in the Law on Trade Unions. Any inhabitant of Latvia who is studying or working is allowed to form a trade union. At present, there are over 150 registered trade unions, but only 50 of them operate actively. Latvia's Free Trade Unions' Association (LBAS) is the country's only central trade union organisation. Its aims are to coordinate the work of Latvia's independent trade unions, to represent and support their interests vis-à-vis state and international institutions, and to fulfil a common working programme. At present, LBAS unites 27 sectoral trade unions comprising more than 2,983 "origin organisations" and a total of 222,000 members (the total labour force being 986,000). LBAS's "origin organisations" operate in all the regions of Latvia. In the larger regions and cities, LBAS has regional trade union centres, which coordinate the work of the region's unions and help to solve local problems.

LBAS cooperates with the Latvia Employers' Confederation, which is the country's largest employers' organisation, representing more than 4,000 employers. Every year, the two organisations conclude a general agreement on the minimum wage that has to be paid in the enterprises that are represented by the Confederation. In 1999, the monthly minimum wage was set at LVL 60 (around EUR 100) - LVL 10 higher than the state fixed minimum wage. The two organisations cooperate on other issues as well. The Latvia Employers' Confederation is represented, along with other employers' organisations and trade unions, on the National Trilateral Cooperation Council, a state body where the parties discuss issues of joint concern. There are other employers' organisations, such as Latvia's Chamber of Trade and Commerce. These, however, do not have any fixed or specified forms of cooperation with LBAS (according to information from LBAS in cooperation with Latvian Ministries of Justice and Welfare).

Problems of the social dialogue

Candidacy for membership of the European Union has placed the social dialogue and the problems of trade union and employers' organisation in the three Baltic states under the spotlight.

In Estonia, the development of the social partners' organisations - especially employers' organisations - is seen as very important in order to achieve balanced relations between the social partners in the future. The government's policy includes reducing its involvement in industrial relations, and the social partners should agree jointly on most questions in the field of labour relations and social benefits (according to information from the Estonian Ministry of Social Affairs).

In Latvia, along with the denationalisation of real estate and the reorganisation of the national economy in accordance with market economy requirements, the trade unions have undergone a process of reorganisation. Of the enterprises formed as a result of the privatisation of state and municipal property (a process that is presently nearing its conclusion), 70%-75% are privately-owned small and medium-sized enterprises, with 10 or fewer employees. This process has influenced the trade unions - the number of union members has decreased from 90% to 27% of all those employed since independence. According to information from LBAS in cooperation with the Latvian Ministries of Justice and Welfare, it is very difficult to organise a trade union in small and medium-sized enterprises, where wages are often not paid in accordance with the law, with a greater part paid unofficially. The influence of the employer over the employees is very considerable. The reason why the employees do not form trade unions is said to be a fear of losing their jobs. Besides, many people in Latvia are still not aware that they themselves have to protect their own rights. This is a reason why the trade unions are not as strong in Latvia as in Scandinavia.

In Lithuania, in many cases, the law leaves certain issues to be decided by the employer and the employees by way of negotiations and collective agreements. The law also stipulates that if a collective agreement is concluded, the employees can be represented only by a trade union; thus, the employees of the enterprises that have no trade union presence are deprived of the right to negotiate, and often all the conditions of employment are set by the employer unilaterally. This is why the protection of employees in enterprises where there are no trade unions functioning has become a major problem. Long-running debates between the central trade union organisations regarding the establishment of representative councils of employees in companies, and their status and rights, have been fruitless so far. The disagreements and the unwillingness to have such an institution introduced are based on a refusal to pay contributions, as well as on possible restrictions of certain privileges and rights. While rejecting the proposals for new company-level councils, trade unions are fighting for the legitimisation of professional negotiators who would represent, at the industry level, employees of small businesses that have no trade unions or collective agreements. This would mean that the rights of trade unions would be extended, as would be the field of application of collective agreements. However, there is a danger that agreements and covenants concluded by unions would be forced on those who are not union members and are not represented in the conclusion of the agreements, and this would be beneficial to only a proportion of the employees in question. Thus, in order to keep to the rule that an agreement is binding only on the agreeing parties, it would be necessary to prohibit such a forcing of the trade union's will on other employees (according to information from the Lithuanian Social Report, 1998).

Scandinavian labour movement support for development of industrial relations

Like its counterparts in other Scandinavian countries, the Finnish labour movement is in favour of a deepening of the "Nordic dimension", and associated initiatives, aimed at preserving social and political stability and achieving sustainable economic growth in Europe as a whole. In order to achieve these aims, the Council of Nordic Trade Unions (Nordens fackliga samorganisation, NFS) - to which the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), the Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) and the Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA) are affiliated - has worked toward closer cooperation among the trade unions of the countries around the Baltic Sea.

A programme document entitled Vision Baltic Sea 2010 was signed by unions from the Baltic states, Nordic countries, Germany, Poland and Russia at the European Trade Union Confederation congress held in Helsinki in summer 1999 (EU9907182F). These unions consider that the extension of the EU will enhance the importance of the Baltic Sea area. The signatories have agreed on strengthening the labour movement around the Baltic and on concrete initiatives in this area. Furthermore, the unions aim to promote the social dialogue and tripartite cooperation.

Commentary

After gaining independence, the Baltic countries have gone through a drastic metamorphosis from socialism to a market economy, and in the field of industrial relations it can be concluded that the social dialogue is currently practically non-existent. The government's role in organising bargaining mechanisms has been very limited. Economic policy is very liberal, which means that the state refrains from regulating the free formation of supply and demand. However, possible EU membership requires legislative changes which the countries must implement in order to meet European standards. This process, which is supported also by the unions of the Baltic area countries, will take some time. In the EU, recent discussions have revolved around flexibility and security. Some lessons can certainly be learned from the Baltic countries when trying to find the balance between a free market mechanism and employee rights. (Juha Hietanen, Ministry of Labour)

Annex