- State Audit Office of Latvia - http://www.lrvk.gov.lv/en/ -

Law is Still Breached in Terms of the Remuneration of Local or Regional Government Councillors

Alignment of the legal framework for the remuneration of local government councillors is still pending. The audit of the annual report of the state that the State Audit Office carried out has established actually the same situation as it had been a year ago.

Despite the findings of the 2017 audit and the recommendations made to the State Chancery to regulate the legal framework of the remuneration system at the national level, the resolution of this essential issue is currently delayed. The situation has not changed, as many local governments also continued to interpret the monthly salary limits defined by law differently in 2018.

For getting an overview of the situation in the country as a whole, the State Audit Office expanded its cooperation with the certified auditors of local governments during the audit this year. The State Audit Office invited the sworn auditors of local governments to verify the compliance of the calculation and accounting of the councillor remuneration in the local and regional governments to the laws and regulations according to the specific methods. The certified auditors discovered that only 31% of local governments fully complied with the requirements of the Law on Remuneration of Officials and Employees of State and Local Government Institutions (hereinafter referred to as the Remuneration Law), 69% of them did not comply in full or complied only partially. A large part of local governments continued the adverse practice they had started in 2018 despite the criticism of the State Audit Office expressed to the representatives of local governments already during the audit.

A municipal council decides on councillor remuneration by the provisions of the Remuneration Law. The monthly salary of the councillors of the municipal council may not exceed the average monthly salary in the country. Furthermore, one applies the coefficient specified in the Remuneration Law to the monthly salary of the councillors. Thus, the monthly average salary of 859 euros in 2016 had to be used to calculate the remuneration in 2018, while the basic monthly salary, which corresponds to the monthly average salary of 926 euros in 2017, had to be used to calculate the remuneration for 2019.

It follows from the Remuneration Law that councillors of a municipal council, who have a paid position in the council, mainly the chairperson of the council and his or her deputies, receive a monthly salary for fulltime job of 40 hours a week or 160 hours a month. In their turn, councillors who do not hold a paid position in the council should be calculated a monthly salary in proportion to the time worked, that is, the hours worked. According to the interpretation of the legal provisions provided by the State Chancery, local governments should also record the working time of councillors.

In their turn, according to the Remuneration Law, premiums may be granted only to those councillors who hold paid positions in the Council. In addition, councillors can only receive premiums for extra work in the local government but are not entitled to the general premiums provided for in the Remuneration Law, such as overtime or holiday work.

The audit established that during the audited period, several local governments did not keep full records of the working hours of their councillors and the monthly hourly rate of councillors not holding a paid position in the council exceeded the limit set by the Remuneration Law in 62 local governments. At the same time, there is a widespread practice of awarding cash prizes and bonuses, as well as setting a monthly salary higher than the one prescribed by law unreasonably or illegally.

The State Audit Office cooperates with law enforcement bodies regarding the remuneration of councillors. In recent years, the Corruption Prevention and Combating Bureau of Latvia (CPCB) has also carried out procedural actions in several local governments in connection with irregularities in the determination of the remuneration of councillors, which have led to several legal proceedings initiated. The result of those proceedings confirms the consensus of the State Audit Office, CPCB, and law enforcement bodies on this issue. Co-operation of the State Audit Office with CPCB and other law enforcement bodies is still ongoing.

The research of the Congress of Local and Regional Authorities of the Council of Europe and the recommendations made to the Member States, including Latvia, also characterise the topicality of the issue in European dimension. The Council of Europe calls on Member States to set limits on remuneration by stressing that its amount should not depend on the level of prosperity and development of the region and stresses the importance of paying remuneration relevant to the contribution of the elected representatives by applying a transparent, comprehensible system and carrying out independent audits on their application practice constantly.