'Blats,' lats - many more for some execs

  • 1999-10-21
  • By J. Michael Lyons
RIGA - Once upon a time in Latvia top executives of big state-owned companies enjoyed impossible-to-get gourmet foods, lavish apartments and Italian suits while others searched high and low for a coveted roll of toilet paper.

Company executives took care of each other, creating a network of perks that compensated salaries that were meager compared to their Western counterparts.

Latvians called it "blats" - as in "If you had blats you had everything" - and it was sort of a glitch in Marx's design.

Now, with capitalism running full blast, company execs are still on top of a deeply divided food chain. Many earn more in a couple of weeks than most Latvians do in a year, a fact that surprises many who grew up here.

For example, Latvijas Kugnieciba's President Andres Klavius earned 310, 619 lats ($535,550) last year, according to Latvia's revenue service. That's 25,885 lats a month.

The minimum wage in Latvia is 50 lats a month and the average wage, in Riga at least, is about 160 lats a month.

It would take a teacher earning average teacher wages slightly more than 20 years - much of a career - to earn what Klavius makes in a month.

Many say, "Hey, that's capitalism, the fruits of free enterprise". But, as of now and though it will change soon, Latvia's shipping company - the nation's second largest company in net sales - is state-owned and Klavius' salary is paid with taxes.

Companies and the government argue that to get the best help they have to pay the best wages. Sound business leadership doesn't come cheap.

Many Latvians, however, were unaware the execs of their top companies made near the money the revenue service said they did.

"If I could I would make that much money as well," said Juris Berts, a carpenter. "But if he makes this money himself, OK. But if the money is from the state budget then that's crazy."

Klavius's earnings are a bit of an anomaly, he's near the top of the top. Igors Skoks, director of the privatized Ventspils Oil, makes more - a hefty 364,150 lats per year - but most head honchos make less.

Einars Repse, governor of the Bank of Latvia, earned a slim 65,685 lats last year while Latvia's railway director Andris Zorgevics, who runs the country's fourth largest company, made 44,000 lats. Both are government owned.

Zorgevics has been criticized in recent weeks for raising train ticket prices, cutting workers' salaries by five percent and floating the idea of laying off nearly 1,800 workers to make up revenue lost in the decline in Russia-bound cargo. In his defense, Zorgevics cut his own salary 20 percent.

Like most state-owned companies, the word "privatization" has floated through the executive hallways of the railway company.

The Latvia Chamber of Commerce and Industry would not comment on what privatization might mean to salaries.

Salaries will likely be pegged to company performance, full of bonuses and stock options like most western firms. One thing is certain, however, they won't be paid by the government.

On the topic of privatization, Latvia Privatization Agency head Janis Naglis made 26,378 lats last year.

By comparison, Prime Minister Andris Skele reported making 20,350 lats last year and former prime minister Vilis Kristopans earned 93,000 lats.

On the street, the fact that government employees, never mind they are the heads of the nation's largest companies, were making tens of thousands of lats a year irked a few people.

"What can I think about it?," asked Ludmila Sobolevskaya, a shop owner who earns about 150 lats a month.

When asked to guess how much Klavius made last year, Sobolevskaya said 2,000 lats a month - tops.

"I see a woman sitting on the street with a child in her arms or a disabled person begging on the streetsÖ" she said before breaking into a litany of Russian swear words.

"I pay taxes and he gets the money."

Igor Kudryavstev, a Ph.D. student in social sciences, was a bit more forgiving. In an informal poll, he guessed Klavius made 4,000 lats last year - about a quarter of his reported earnings.

"Maybe he works very hard, maybe he has a difficult job, let him make his money," he said. "What do you want, a revolution?"