Highly educated and well paid Latvian journalists are working without proper social insurance and often forego annual holiday pay, paid sick-leave, maternity leave, unemployment, and retirement benefits. These professionals are in danger of becoming one of the least protected and most vulnerable sections of society.
How has this situation arisen? Why have journalists, who know how to campaign against social inequality elsewhere, ended up almost excluded from the social insurance system. It is easy to blame global economic shocks and a febrile media sector, but the Association of Latvian Journalists argues that the Latvian system of paying journalists through royalties instead of a regular salary, leaves them vulnerable.
Journalists – Mainly Authors
One of the main reasons journalists do not have social insurance is to do with the way the Latvian system deals with royalty payments. Journalists, including cameramen, news moderators, proofreaders, editors, photographs, producers, often end up not paying into the mandatory state social insurance system (MSSIC).
In 2001, Latvian law changed and companies and workers cannot make MSSIC payments on money received from royalty payments. At the time royalty payments only traditionally made up a tiny portion of someone’s income and the change was not seen as significant. However since then, more and more journalists have lost staff jobs and begun freelancing. Latvian media organisations tend to have one of three models. 1) A salary and additional royalties that are equal to or less than the salaried income. 2) A basic salary, topped up heavily by royalties and 3) royalty payments only.
Royalty payments now form a significant part of journalists’ income and yet it cannot count towards MSSIC contributions. This means journalists often have no unemployment benefit, sick pay or maternity pay. Some media organisations fill the gap, providing sick pay, maternity pay and other benefits, but not all.
Journalists can make their own extra payments to the MSSIC but these contributions will only count towards their pension, not for other social insurance benefits.
Two Important Laws – none really works!
The ALJ has lobbied for the Latvian Ministry of Welfare to change the law, levy MSSIC contributions on royalty if they comprise the largest part of the employees’ income. The problem of royalty payments and social insurance contributions affects book publishers, writers, and advertising professionals too, but the situation with journalists is different for two reasons. Firstly, it is becoming more and more common to replace employment rights with royalty agreements, so Latvian labour laws are applied only partially to journalists. Second, Latvian Copyright Law does not extend to reporters because copyrights are mainly owned by the media organizations. Unlike other authors, journalists and other media professionals do not receive royalties for re-published, translated, or works in any other form.
Crisis has strengthened the “tradition”
Advertising revenue in Latvia has halved since the onset of the global financial crisis, and the portion of salaries paid in the form of royalties increased. Journalists agreed to a decrease in salary and royalties, because they accepted that media managers and owners were also receiving lower incomes. They are now almost powerless to improve their situation.
The labor market is limited; and the use of royalty payments rather than salary payments has made it difficult to change the system. Journalists are often criticized for not making regular MSSIC payments , but employee royalties are often small, and registering, calculating personal taxes, and making payments can be complicated.
Industry is aware of the problem, but cannot create a solution
The Ministry of Welfare did propose that paid employees should be obliged to make MSSIC payments on royalties. Journalists employed by several employers would be able to keep their self-employed status and choose whether to make MSSIC payments. Employees who have a steady job, and those who work part time would also have a choice on whether to pay. In respect to the income earned, the employee would then be able to choose whether or not to make MSSIC payments. The MSSIC rate of 34.09% on royalties was planned to be the same as the one generally applied, with 10.5% to be paid by the employee, and 23.59% by the employer.
But as soon as the government published these proposals, it was criticized by several non-governmental media organizations, including the Latvian Press Publishers Association, the Latvian Association of Broadcasting Organizations, the Latvian Publishers’ Association, and the Latvian Journalist Alliance. Their main argument is that they are aware of the predicament journalists are in, but the media sector is struggling so much that it cannot afford to incur these expenses: an argument that few other businesses could employ to wriggle out of paying taxes. And while it is true that some media organisations are struggling, others would be able to absorb these extra costs, but simply prefer the current, cheaper royalties system.
Publishers argue that journalists should make their own MSSIC payments, but the current system is based on an assumption that MSSIC is paid jointly by both the employee and the employer. Some journalists, nervous of working without a safety net, have agreed to take a paycut in return for receiving MSSIC contributions from their employer.
Currently negotiations are at a dead end, because there are no alternatives and no acceptable proposals to improve the social insurance situation for media professionals. The only proposal is to make MSSIC payments on royalties supported by the Association of Latvian Journalists and the Trade Union for Employees of News outlets; Information and Analytical Broadcasts are not being accepted by the industry. It’s stalemate.
This article was translated from the Latvian Žurnālisti un Valsts Sociālās Apdrošināšanas Sistēma
Photo credit: Tax Credit / Flickr Cc