Transcript Trends and Problems in Latvian Welfare State

Trends and Problems in Latvian
Welfare State
Feliciana Rajevska
Vidzeme University of Applied
Sciences
The neoclassical social policy
approach
The development of welfare institutions is
the outcome of complex negotiations among
historical legacies, political and institutional
settings,
The development of welfare institutions is
the consequence of strategic interactions of
national and international actors.
The main trends in Latvia in the
development of Welfare State
• From paternalistic etatist socialist policy towards
neo-liberal model of social policy;
• removing responsibility about person’s welfare
from the state and community to individual;
• Growth of inequality and polarization of income
• Decrease of state social expenditures as %of GDP
• Growth in employment
Growth in Employment
•
•
•
•
•
•
•
•
•
•
2003 2005 2007
62.6 63.5 65.4
61.8
63.3 68.3
Goal -2010
70
67
EU-27
Latvia
Women
EU-27 54.9 56.3 58.3
60
Latvia 57.9 59.3 64.4
62
Age 55-64
EU-27
42.5
50
Latvia 44.1 49.5 57.7
50
82 thousands or 17.4% of all pensioners were in
Level of wages and salaries and
labour productivity to the EU-27
• Latvia
• 2003
• 2006
• 2007
productivity wages&salaries
44.2%
49.2 %
56.7 %
15%
22%
28%
Protection against unemployment
• Duration of unemployment benefit since
2008
• 4 months - if work experience till 10 years
• 6 months – if work experience 10-20 years
• 9 months – if work experience more than 20
• Is it enough to receive new qualification and
find new job?
Amount of unemployment
benefit is earning related
• 50-65% from previous earning dependent on
longevity of work experience
• No any ceiling and no any minimum sum
• Periodical reduce of amount
• 4 months: 2months (100)+2 months (75)
• 6 months: (2)100% +(2)75%+(2)50%
• 9 months: 3 +3+3
• After – Local government social assistance benefit
• Guaranteed minimum income - 30 LVL= 43 EUR
Flexicurity
• Flexicurity is becoming central
• Integrated strategy to enhance at the same time
flexibility and security in the labour market
• Solidarity – to promote social cohesion and
sustainability;
• Such areas of social investment as youth and
professional transition are becoming crucial
Consequences for crisis time
• High level of insecurity, especially for
young persons;
• Heavy burden of social protection for local
governments
• Amount of guaranteed minimum income is
insufficient for survival
At-risk-of-poverty rates
• Year
Latvia
• 2000
• 2005
• 2006
16
19
23
EU –25
16
16
16
• Cut-off point: 60% of median equivalised income after
social transfers; Eurostat, May 2008
Social Protection Expenditure
as % of GDP
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•
•
•
•
•
•
Year
2000
2001
2002
2003
2004
2005
Latvia
15.3
14.3
13.9
13.8
12.9
12.4
EU-25
26.6
26.8
27.1
27.4
27.3
27.4
Social Protection Expenditure
per capita/per inhabitant
•
•
•
•
•
•
•
•
Year
2000
2001
2002
2003
2004
2005
Latvia
547
566
590
591
625
700
+153
EU –25
5359
5595
5835
5982
6216
6442
+ 1083
Social Expenditure: in absolute terms € per
capita, before joining EU
•
• Lithuania
2002
609.6
2003
645.9 + 36.3
• Estonia
724.6
• Source: Eurostat
807.8 +83.2
Expenditures on pension as % of GDP
Country Latvia
2001 - 6.9%
2002 - 6.6%
2003 - 6.1%
2004 - 5.5%
2005 - 5.1%
2006 5.0%
EU-25
Ireland
12.1%
12.0%
10.9%
3.7%
3.8%
Common Features of Welfare
states in Baltic coutries
Lowest share of social expenditure
High income inequalities
Weak civil society
Low labour movement
Insurance based social security with some
element of targetting in the system
Empowerment state
• Policy-makers and politicians should now turn
towards an “empowerment state”. This will be the
key of success for future social policies.
• There is clear support in the world for socially
responsible welfare state, for more active
government intervention;
• Latvia – state social safety allowance
• (valsts sociālā nodrošinājuma pabalsts)
• 50 EUR –in 2005; 65 EUR in 2006,2007, 2008,
2009
Need to revise priorities and to
redefine approach to security issues
• Crisis reduces opportunities for funding
• Crisis increases the demand for social support
• Traditional approach look on this as an individual
of family problem only is not productive, it is even
dangerous for the stability of society
• Creating and keeping up political will to respond
on this challenge is becoming crucial for
government, for parliament, for local
governments, for civic society in general
• Charity channels only cannot fulfill this mission,
more redistributive approach should be
Security is not defense only
• An excessive devolution of responsibilities
to the individual might not ensure basic
social security.
• Latvia needs crisis management activities
in social sphere