MoE Jānis Vitenbergs: We can't keep mucking about forever

"If the government is unable to deal with Covid-19 and the effects it has on health, economic and other aspects, then all government ministers, not just me, should lose their jobs. Of course, we need to see the big picture, but who else will defend their industries if not the relevant ministers? Who in the government will defend entrepreneurs if not me?” - asks the Minister of Economics Jānis Vitenbergs (KPV LV), indirectly pointing out that often the whole team is to blame for the confusing actions of the Government of the Republic of Latvia, not individual members. Today an interview with the Minister of Economics Jānis Vitenbergs.

At a government meeting on Tuesday, epidemiologists suggested that from now on "only the most important manufacturing companies should operate". According to what principles will "the most important manufacturing companies" be determined? It is a part of the plan for the complete destruction of the Latvian economy? The list of prohibited/permitted goods fades in the face of such criminal stupidity...

It must be said that this proposal came as a big "surprise" that has not been discussed at all so far, basically - someone pulled it like a rabbit out of a hat... I and all of us, as the Ministry of Economics, will not judge companies by the "more important - less important" criterion, because all companies are important to us and everyone must be taken care of.

This would be particularly unacceptable for our manufacturing and exporting companies, which keep us alive and are a lifeline for our economy.

How does the Latvian economy look like today?

Key conclusion: the mood of entrepreneurs is getting worse as there are a number of industries where it has not been possible to work for months now. There has been restricted activity in trade for four months now. We also see this in terms of the amounts of financial aid paid, and the number of applicants is growing rapidly. This year, in January there will be more aid paid than last year's spring months combined. In two weeks, around 5,000 entrepreneurs had applied for working capital support in the amount of 65 million euros. According to company surveys, we have seen that entrepreneurs have behaved responsibly and honestly: in November and December, some of them spent their savings trying to overcome the crisis on their own.

But now, unfortunately, the savings have already been spent...

Yes, and interest in support has grown at a very rapid pace. Each subsequent month will cost the state more to help entrepreneurs survive the current restrictions. Together with downtime benefits, it could be around 100 million a month. We have analyzed the trade sector, which has a turnover of 8 billion euros a year - around a third of companies and workers are subject to restrictions, and by May this sector alone would need around 150 million euros if the restrictions remain as they are today.

The situation sounds quite bad.

Entrepreneurs need a ray of hope and a sense that something might change because we have been fighting Covid for a year now. And I don't want entrepreneurs to lose the will to fight and act. There are a number of entrepreneurs who have adapted and looked for opportunities, but many of them have given up all hopes. There are specific sectors that have a big drop, for example, in the trade sector there is a big drop in the sale of clothing, and this applies to ordinary and also used clothes, children's clothes, footwear. Spring is fast coming, and it looks like people will buy their clothes from Rimi and Maxima for this season.

It's hard to imagine the fashion cry that will sound when you see crowds of people dressed in the "brands" of both supermarkets...

Yes... And so winter collections in other outlets may have to be written off as losses.

Obviously, something isn't going the way it should, right? It's been a year since Covid arrived here, and we should begin to analyze the situation that is sliding in the ever-deepening economic pit to understand what's going wrong. Has such an analysis taken place?

At the recent meeting of the Cabinet of Ministers, it was discussed that a number of existing Covid restrictions need to be inventoried. We can't keep mucking about forever. If at some point a decision had been taken on even stricter restrictions, even for two or three weeks, I think the entrepreneurs would have supported it. But there is huge uncertainty at the moment. Vaccination continues to be slow. And it is almost impossible to make ends meet. It is important to understand which restrictions made no sense and which should be removed by proposing a new model. We can show how much each government decision costs the state and society. Every restriction worsens the economic situation. However, compared to the spring, when the government decided on various restrictions and had to react so that different forms of support could be applied to entrepreneurs, the situation has improved. We think about it all the time, we have offered new support ideas for shopping and sports centers, companies that have very high costs. We also are thinking about the beauty industry: many specialists will not be able to resume working, because there will not be enough work space.

Let's talk about lists of prohibited/allowed goods. This is still the case for many goods. Did it really never occur to anyone that this is an extreme absurdity: to allow one type of goods to be sold, but to ban another right next to it? Who wrote this absurdity?

Yes, there was a meeting of the Cabinet of Ministers on this trade model. Specialists informed the government that gatherings in stores were still high, and the Ministry of Health called for a reevaluation of how stores are operating. We also assessed how this is happening in other countries. In about half of the countries of the European Union, the "list of goods model" was implemented, the other half allowed only specific stores to operate. In Scandinavia, for example, there were no restrictions. There was also a more liberal attitude in Estonia. At that time, no decision had been made on the lists of goods, there was a wording "Basic household goods", "Hygiene goods", etc. It was then necessary to define what is meant by these wordings. This issue was addressed by the operations steering group.

And then the public dissatisfaction began. We realized that these lists of goods needed to be defined, and we had made them quite extensive. They were filtered by the operations steering group until the result that we all saw, with the store shelves being sealed off. Some other countries took similar measures until they understood what this meant for society and businesses, so they abandoned this practice. These lists lasted seven weeks, they were adjusted, but people's needs grew. Public attitude also grew increasingly critical. I received a lot of letters, for example, that the old cooking pot has "breathed its last" during Christmas...

Unforeseeable everyday needs.

There were many dissatisfied letters about the impossibility of buying children's goods.

Yes, there was even a saying: a person who has forbidden to buy children's clothes is either cruel or stupid.

Ordering children's clothes remotely is really complicated. I have three daughters in my family, and we also took the opportunity to order shoes remotely, and I would not say that the experience was a success. It was hard to read those letters from moms. But if we want to smile about something: I received positive words when we included women's stockings in the lists of allowed goods...

Yes, on Twitter some ladies wrote warm words: "Vitenbergs, thank you for the stockings!"

It is good that we can find something to smile about at this time as well... We had discussions with the trade industry because we had to deal with these lists of goods. It wasn't easy. I remember that in the spring, traders were strongly in favor of no restrictions, but now the industry no longer claims that there is no threat, the industry is calling for restrictions to be more logical and trade rules to be the same for all trade sectors. The compromise with the Ministry of Health was that small shops could work, the Ministry of Health replied - everything would be fine, only this is not the right time. But then what would be the right time?! And what will be the "right time" criteria? 200 people infected a day? Maybe we won't reach this level of 200 people for another six months or more. We are not populists, we are looking for compromises, and we need to create the conditions for people to work, albeit in restricted conditions, and for consumers to receive basic services. Everyone will never be 100% satisfied, but we will move forward so that we can live in times of Covid.

There are still food service companies, which miraculously have not yet gone bankrupt thanks to the government's "care".

There are a number of food service companies that have outdoor space to provide distance between people. Why not allow people to dine al fresco under epidemiological rules? In addition, spring is coming, and for Latvians, the arrival of spring is a special time: garden work begins. If the previous regulation remains in place for household and construction goods stores, where it is possible to buy only snow shovels and heaters, then... What will we do? Will we make spring/summer season lists of goods? With rakes and swimsuits in them? Sorry, but society is very tired of it all. In addition - it has divided into two parts. One part - those whose income has reduced, who have lost their job, who have to sit at home with a child and help them study; the second part - those whose rhythm of life has changed, they cannot pursue hobbies, meet friends, etc.

How many ministers support you in government?

The situation changes in waves. About a month ago, many colleagues changed their minds, realizing that Covid will stay here for a long time and we will have to live with it. Therefore, there was positive support for the idea that solutions should be sought to live with it. Then the model of trade and beauty sector work was adopted because it is not possible to keep the situation in the existing state for another six months or maybe even a year. The solutions are tough, but they make it possible to live.

What will happen to small shops? After all, it was promised that on March 9 they would be allowed to work. This is unfair competition: supermarkets work, small private entrepreneurs are prohibited.

Hard to say. I want to hear the opinions of specialists. It would not be right for the criteria for allowing small shops to operate to be unachievable. I would not want entrepreneurs to say: under such conditions, it is not worth resuming work at all, you are mocking us.

The President quite explicitly pointed out that those ministers who will support the easing of restrictions may lose their positions - if this reduction of restrictions will lead to an increase in Covid morbidity. It seems that these threats were also directed in your direction. Are you not afraid of losing your job? The president has no power to dismiss ministers, but still...

In my opinion, the President reminded us that we need to think about the epidemiological side, and we have always done that: we have invited epidemiologists and other specialists to the discussion table. But if the government is unable to deal with Covid-19 and the effects it has on health, economic and other aspects, then all government ministers, not just me, should lose their jobs. Of course, we need to see the big picture, but who else will defend their industries if not the relevant ministers? Who in the government will defend entrepreneurs if not me?

However, the President said that it was not acceptable for ministers to act only as lobbies for their industry.

Entrepreneurs will be able to analyze my work, and they will also have to evaluate it: was my work good or not. We have been working in practically combat conditions for a year now. Of course, the Prime Minister has the right to demand resignation, and he has exercised that. But demanding resignation cannot become an end in itself, and ministers must not be persecuted by feelings of fear, as a result of which, for example, I will no longer move forward things that I consider lacking and that need to be improved. But this is not my goal - to be the Minister of Economy forever.

What is going on with the party you represent? It looks shabby.

The root of the problem was there at the very beginning. Guilt has always been found in other people rather than the party itself, there has always been internal turbulence, even today. It is difficult to understand what is happening in the party, who is on the board and who is already excluded from it... It is a great challenge for ministers to keep in touch with the party, especially during Covid, because workdays are very intensive. On the other hand, co-operation with colleagues in the Cabinet of Ministers is good, the work of the Saeima factions is also constructive, and the faction supports its ministers. There have been times when it is difficult for me to understand what is happening in the party, not even considering telling others what is happening there...

Maybe it is time to look for another party?

That's a provocative question... There is still a lot of work to be done both by the party itself and by us as ministers. The voter has given us an important mandate, and we must justify it.

Will we switch to daylight saving time on the last Sunday in March to stay there forever? Former Minister of Economics Arvils Ašeradens (JV) once promised that this would happen.

Eternal summer - sounds good. For this to happen, a common vision from all the Member States of the European Union is needed. In 2018, the issue of the need to review the existing clock re-adjustment procedure came to the fore. The European Commission surveyed the population of all Member States, and most expressed the view that the current system should be abolished. The Latvian government also decided that we support the abandonment of the seasonal time zone change.