Strengthening the capacity and effectiveness of the Labour Inspectorate continues to be crucial for the functioning of Latvia’s labour market. One key challenge is enforcement of applicable labour regulations in small firms, where very low levels of trade union activity mean that many workers may not benefit from any legal protection other than that provided by the inspectorate. Other reporting requirements were tightened as well and several recent initiatives aimed at addressing what is often described as the “cultural problem” of tax evasion.