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HR SPECIFICITIES
HR SPECIFICITIES

IN LATVIA AND ESTONIA
IN LATVIA AND ESTONIA
Estonia : Social security & Pension system

At first blush, when you talk about Eastern countries, you think of relatively poor
Eligibility for social security and social assistance Pension is a regular payment countries where employers rule as leaders and employees earn 10 times less than
rights in Estonia is primarily based on residence. made in case of old age, the French minimum wage. So, in your opinion, fake or reality?
Nationality is not a criterion, so that the sizeable incapacity for work or loss of Here are the general specificities of employment in Latvia and Estonia.
foreign-born proportion of Estonia’s population provider. The aim of the Estonian
is also covered. The Estonian social protection pension system is to help people
system is structured around three contributory to maintain their standard of
social security schemes: pension insurance, health living and monthly income when Employment contract Social security
insurance and unemployment insurance. Pension they retire. The Estonian pension
insurance and health insurance are financed from a system stands on three pillars: Just like in France, in those countries, there are Estonian employees do not contribute to social
social tax, while unemployment insurance is funded both permanent and fixed-term contracts. However, security, either for health nor pension. Only employers
by unemployment insurance contributions. I Pillar - State pension : As the permanent contracts are more common in Latvia as and self-employed workers finance it! However, they
name says, the state pension is fixed-term contracts shall only be used in specific contribute to the costs by paying outpatient fees of 5
The other schemes - family benefits, State a pension paid by the state, the cases such as seasonal or occasional jobs. A verbal € maximum. They also pay for their medicines, but at
unemployment allowances, national pension, death aim of which is to ensure regular contract is possible in Estonia only if the duration is reduced prices.
grants and social benefits for the disabled - are monthly income for the persons no longer than two weeks!
non-contributory, being financed from general State who have reached the retirement In Latvia and Estonia though, all legal residents,
revenues. age, have become incapable for whether they are locals or not, are covered by social
work or have lost their provider. Duration of work security! Nationality is not a criterion. They only
recognise residency. Therefore, you and I, if we both
II Pillar - Mandatory funded In both Latvia and Estonia, the average duration of move out to one of these countries, we can be covered
pension : The aim of the second
Latvia : Pension system pillar is to direct a part of the work is 5 days of 8 hours, being 40 hours a week. by social security and stay healthy!
In Latvia, an employer can increase the duration to
salary of the people who are
consulted staff representatives. However, in this case, Paid leave
working towards their personal 42 hours a week for 6 days but only after having
Since July 2001, there is a 3 pillar pension system in pension, so that people would the working day on Saturday will have to be shorter!
Latvia. It includes: have, in addition to the constantly Talking about reduced working time, did you know In Latvia and Estonia, the law obliges employers to
• 1st pillar -state compulsory unfunded pension financed state pension, an that Estonians work 3 hours less the day before New grant a minimum of 4 calendar weeks of paid holidays.
• 2nd pillar -state funded pension scheme additional pension that they Year, National Day (24th February), Victory Day (23rd Unexpected fact #2: holidays are all granted at a
• 3rd pillar -private voluntary pension scheme accrue themselves. June) and Christmas Day? specified time. In Estonia for example, around January,
Unexpected fact #1: legal duration of work also applies employers fix their working calendars and plan
Since July 2001, there is a 3 pillar pension system III Pillar - Supplementary funded to minors. Indeed, young adolescents are authorised holidays of their employees in advance for the whole
in Latvia. It includes the 1st pillar (state compulsory pension : The aim of the third to work, from 15 hours per week at 7 years old to 35 year. They shall listen to employees’ wishes but they
unfunded pension scheme), the 2nd pillar (state funded pillar is to direct a part of the hours per day at 17! What do you think of that? are not bound to follow them! Of course, paid leave
pension scheme) and the 3rd pillar (private voluntary salary of the people who are may be requested outside the planning period, but
pension scheme). Functionality and purpose of each working towards their personal with the agreement of the employer.
pillar are different, in order to ensure the stability pension, so that people would Salary
of the pension system and reduce demographic or have, in addition to the constantly Fun fact #2: in Latvia, employees must to take 2
financial risk for each pillar separately. financed state pension, an consecutive weeks of holidays. The employer cannot
additional pension that they A national minimum wage has been legally instituted refuse. Also, compensation of paid holidays in cash is
accrue themselves. in both Latvia and Estonia. It is 370 € per month for not allowed (except when your contract is terminated):
& Social security a full-time job in Latvia, against 470 € per month in therefore, Latvians have to take all of them!
Estonia. Fun fact #1: in Latvia, employers are legally
bound to pay salary each month in two settlements
The Latvian social security scheme comprises: care services, sickness insurance, maternity and in paper money! Of course, employers and employees
paternity benefits; benefits in the event of accidents at work and occupational diseases; funeral can agree on one settlement via a transfer on bank Remember that these are only the 5 general items
allowance; disability pensions; old-age and survivors’ pensions; unemployment insurance; family accounts though. Most of big companies use bank in HR. We look forward to visiting companies in the
allowances. transfer. In 2016, the average salary in Latvia and Baltics so we can share practices and see how they
Estonia were respectively 845 € and 1 073 €. manage and motivate their employees!
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