A conversation with Agris Jirgens and Raimonds Valcis, owners of the Vecrīga bar and restaurant “Garāža”

It is often said: good doctors do no harm, and professional state institutions do not interfere. What is the situation currently; can a business owner in Latvia work without interference?

Agris: I wouldn't say that anyone is interfering with us much! We pay our taxes and bills properly and do not notice intrusive checks. Over the last 10 years, we have had one excise goods inspection, and now, during the virus, when the first month of downtime ended, inspectors arrived to see if we had any illegally employed staff. That was related to our application for the downtime allowance.

How did the company fare with the downtime allowance – applying for it and receiving it? Much has been said and heard about that during the state of emergency!

Agris: Initially, the law did not include a provision for company board members to apply for this allowance. We got the allowance for our employees, everything was fine, but they found reasons not to give it to us (the board). We do not view entrepreneurship as a one-day gig. We don't talk about it every day, but we do everything to look after the people around us and those we work with. We feel like a family, and the business is like a family member. We think about practical sustainability so that we can continue our work.

We received the allowance for April; the State Revenue Service needed additional proof for March, which we have just submitted. We are waiting to see what happens next! We have to prove that (we, the board) haven't worked or earned income elsewhere. Looking at the events as a whole, I cannot say that anything is happening wrongly or incomprehensibly. As far as I understand, it was difficult for the government to find the right solution for those who needed the allowance to receive it; for the information to be clear and precise, but without entrepreneurs needing to prepare unnecessary documents. Probably, the situation could have been handled differently. For example, in Germany, they gave entrepreneurs money, and what came next was their own choice: paying rent, buying new equipment, or… Here it seemed that some requirements were exaggerated, because if a person formally 'counts' as being in a company that is effectively not operating and already 'forgotten', the allowance might not be granted. Speaking of board members, there was bitterness at first because: 'your company is in downtime, but they think that as an entrepreneur, money doesn't come from work but is something you can just grab from a shoebox.' Maybe it is like that for some, but we have to earn it! We can be glad that everything is slowly starting to 'move'.

Raimonds: We had a month of downtime, we sat at home! I will say it was easy because we didn't owe anyone anything! Others have it harder. Getting the allowance wasn't simple; we sent the documents about six times. It turns out the SRS has this system: if you are rejected once, you have to send the documents a second and third time! We didn't know that! We thought, why beg, if it's not there, it's not there! In March and April, the rules and laws changed more than once, and every time the documents had to be submitted anew! On the other hand – “if we don't ask, they'll think we're proud!” During the downtime month, we tidied up the hall and changed the chairs. It's a pity that there are strict limits on the number of seats and movement restrictions, but… everything else is going on!

Looking at the sector as a whole, is the outlook optimistic?

Agris: Everyone has their own blanket to patch! Looking at this year – it will be a write-off. This year, unfortunately, the sector will stagnate. Tourists will return, but there will be very few of them! A contribution to the sector is needed, but there won't be that many people! One thing I do foresee: those who had the habit of going on holiday abroad will now leave their money here. There are also sectors where the decline is small or non-existent!

From what I hear and read, in rural tourism, everything is 'rocking' at the weekends! That, of course, does not mean that my colleagues are finding it easy, because you need to earn every day, not just on Saturdays, Sundays, or Friday nights!

I allow that it is easier for family businesses because: they own it themselves, they work it themselves! Everyone is 'in on the work'! For us, the employees are the priority; if need be, we might not pay ourselves a salary, but the money for the employees will be there! They work for me, watch what I do, and judge!

Raimonds: In pubs, the situation varies from place to place. In the countryside, as good acquaintances tell me, people are 'more fearful', which we in Riga are not. However, in March, April, and May, there were many Rigans in the countryside. A friend has a pub in Ragaciems, and he couldn't keep people away! The locals, in turn, watched this and thought: 'Look, why are those Rigans coming here, we'll catch something too!' The people of Ragaciems even blamed the pub owners, saying: 'Because of you, there are so many people and cars here!' My acquaintance didn't let people inside the pub, but he cooked food and provided takeaways. The flow of cars and people was substantial; many went for walks by the sea and get hungry for food in the fresh air quickly. Other acquaintances in Ogre expressed similar sentiments: it hadn't been easy to deal with the flow of people! There was no shortage of work! That is the story of the first month!

For us, the situation is like in winter! I would even say – a bad winter! In winters, work matters usually 'go down', people and money circulation are lower; currently, it is spring and sometimes summer outside the window, but the processes and feelings are like winter! It's good that the price of the outdoor terrace has been lowered!

The year will definitely be a write-off! Our concerns aren't about the summer, we are worried about the winter: if there is no willingness to compromise on rent, if there are no changes in tax policy, there will be big trouble... We will survive the summer, but… usually then (in the summers) we accumulate reserves, 'pump up' our muscles for the winter! If there are no savings, it will be hard! Money will have to be found somewhere! We always try to keep our employees. At the moment, as I already said, winter vibes are felt in business; we got a discount on rent, and not all employees are back from downtime, which all in all is a certain relief! It's good that we don't owe anyone anything! We feel good! We don't owe suppliers a penny, and for the state, we have the split payment created by the situation, which we are coping with!

Agris: Overall, the mood is mixed! Very mixed! There are people who do not feel the state of emergency, it does not affect them. 'A fed brother does not understand the hungry one!' Exactly! For example, when talking about the situation with an acquaintance, the interlocutor listens, looks around: 'Listen! But your bar is full! Why are you worried?'

Wait! Thanks, but you haven't been here all day and haven't delved into the situation! Nor into the cash flow. If there are more people at some point, that's not how it is all day! If I eat crackers every day and suddenly buy a pizza – does that mean I'm 'in the saddle'? That's not how things work!

We have a good location. Maybe we are good people. Maybe the place and the work attract. But it's not like that for everyone! If we talk about the sector as a whole, broader (more global) issues need to be solved. There cannot be the same conditions for everyone! If we are a small family business, our tax rate could be different. For example, recent talks about 5% VAT. It won't give a small business anything significant, but the big ones will feel the benefit (support)! In my opinion, it is necessary to divide businesses: by turnover or number of seats, or… We are competing anyway! A chef also wants to earn as much as in a larger bar, hotel, or restaurant, where there is a different flow of people and a different turnover. We want a small, family-like place!

For example, in Latvia, to pay 1000 euros in salary, about 800 must be paid in taxes. In Great Britain, this figure is 200! The money stays right there, there is just a desire to take more from a person in taxes! There is no balance!

Raimonds: We are not like the big ones. Of course, every reduction is cool and we will gain something from it too, but… we are small! I, perhaps, even agree with the Government in this regard for not giving a VAT reduction, because… it must immediately be given to the big chains too, for example, 'McDonalds', 'Hesburger', etc. Sorry, 'Hesburger' has ruined quite a few rural pubs because it has expanded significantly in the regions! Long-distance drivers don't enter the old town and don't eat in the pub, they pull up to 'Hesburger'! The big chains will be the first to shout that a VAT reduction is needed!

I think a mechanism or 'title' is needed to separate the small Latvian pubs from the big chains, and then we can think about taxes!

The table (seating or square metre) system mentioned by Agris works abroad, and not much is needed for its implementation: an official comes with a ruler or calculator, measures or counts, enters it into the system, and that's it! A set monthly fee that we take into account, and no headaches! When the data is entered into the system, it can be controlled by one person – a computer will do everything! The company and the SRS know how much a specific company must pay per month. By the way, abroad, business owners often keep cash registers for their own needs to see cash flow. Revenue services don't need that! Small pubs don't need it either, because the owners know what amount is payable in tax!

Did the movement of people in Riga slowly restart in mid-April?

Raimonds: We are located in the Old Town, we have won the love of the local residents. Locals come, and we don't feel the same discomfort as some other neighbour who was entirely focused on tourists. They are having a hard enough time. Thanks to the locals who came and continue to come to us, and support us!

Was that intentional – to work (focus) on locals?

Raimonds: Yes, that was our goal! Back in the day, we refused all guides; if a group came in, we served it, but we didn't accept bookings for guide groups! There was a certain logic to that, because we don't have many places – a local will come once – there's nowhere to sit, a second time – there's not… Will they come a third time? … Our visitors know there are so many seats, they know tourists come, but a place will be found. This is how we have worked for 10 years. I must say, in the current situation, this helps and saves us, because the local public continues to come to us!

Quietly, but quite intensely, there is talk about post-crisis emigration as in 2008 and later. Is there any basis for that?

Agris: Yes and no! People from my family also live abroad: in England in a good position. Desires are different. I myself am 'more down to earth', younger people want to travel, learn, and see the world, and… They don't yet have a 'rush' to return to Latvia. Recently, I was watching the TV Press Club in a recording: older generation politicians argue that many will not leave, it will be good for us here, etc. There is a saying: 'The grass is always greener on the other side!' If there are opportunities and a desire to go and live and work elsewhere, let them...

We don't have that order and conviction here that you definitely have to stay! If you compare salaries and costs, it varies; what is cheaper elsewhere is more expensive here and vice versa. Let young people try working abroad! Let them see what's happening there! Will they return? Great! It will be a benefit both for themselves and for us all – the country! In Latvia, life is often like 'eternal stewing': it's not like that, it needs to be changed, that's missing. For example, money is missing for many things and – suddenly – 4 billion are found... 'There is and will be more money than ever!' And medics? Will there be for them too? A short time ago, a few million couldn't be found, now they talk about billions. I don't know what suddenly happened: the pandemic starts, money appears… Maybe it is necessary to help people more and not look for 'reasons not to do'?

Recently, an economic reviewer called our sector unimportant to the state, justifying it with the small percentage of GDP. So, so… If we 'aren't important', why not loosen the legislative reins? We would gladly not be 'important' and work more calmly! The developers of the documents (laws) regulating the sector should look at the experience of Italy or Germany… Fools don't live there! Accounting there is simpler! Latvia still has a 'cap system' because it is necessary to keep caps. For inspection! An excise duty label is required on the cap. Control looks to see if something hasn't been poured somewhere. Hm… There are many ways to do it! The system should be changed, because it is outdated!

Photographs from "Garāža" and zemeunvalsts.lv have been used