Latvia

   

Social Policies

#33
Key Findings
With a mixed safety-net record, Latvia scores relatively poorly overall (rank 33) with regard to social policies. Its score on this measure has declined by 0.1 point since 2014.

Education outcomes as measured by testing have declined in recent years. Education funding levels are low, with teacher retirement rates a concern. Schools are being consolidated, and a curriculum reform is underway. A new tax reform may help reduce the substantial income inequality. High emigration rates indicate the perceived lack of opportunity.

A single-payer universal health care system is in place, delivering effective care despite being underfunded. Out-of-pocket expenses are significant, and waiting times are long. A proposed health system reform would increase spending but push many people off the coverage rolls. Parental-leave benefits are generous, and the employment rate among women is above the EU average.

Pension benefits are low, but the introduction of a three-pillar system has made it largely sustainable. Policies for migrants and refugees are weak. Integrating long-term non-citizens remains a challenge. Crime rates are low.

Education

#20

To what extent does education policy deliver high-quality, equitable and efficient education and training?

10
 9

Education policy fully achieves the criteria.
 8
 7
 6


Education policy largely achieves the criteria.
 5
 4
 3


Education policy partially achieves the criteria.
 2
 1

Education policy does not achieve the criteria at all.
Education Policy
5
Latvia has a relatively well-educated population and performs reasonably well in international comparisons, such as PISA. However, compared with the 2012 PISA results, Latvia has experienced a decline in learning outcomes, especially in science and mathematics. The 2015 PISA results show that performance in the most significant indicators is now at the OECD average or below. The share of top performers has shrunk, while the share of low performers has increased compared to 2012.

Key challenges to the education system include a shrinking population, a high rate of early retirement among teachers, an unsustainably low teacher-student ratio and a level of public funding significantly lower than the OECD average.

Education reform has been high on the government’s agenda. The total number of general education schools has dropped from 824 in 2014/2015 to 790 in 2016/2017, as has the number of vocational schools, from 63 to 51. Further school system consolidation is planned, aiming to both reduce expenditures and increase school size and quality at the secondary school level, particularly in Latvia’s rural regions where schools are often unsustainably small and with poor educational outcomes. However, these reforms are opposed by local governments which fear the loss of jobs that would accompany school closures. In 2016, the government reformed the teachers’ compensation system; this reform has met with resistance, including strike threats. A significant curriculum reform is also underway, to be implemented on a rolling schedule between 2018 and 2022.

Overall, public expenditure on tertiary education is low and spread over a large number of institutions. With a population of just two million, Latvia has 58 accredited higher-education institutions, including both the public and private sectors. The country exceeded the EU 2020 education target of 40% of 30- to 34-year-olds holding university-level qualifications. In 2015, the ratio of 30- to 34-year-olds holding university-level qualifications was 41.3%, up from 39.9% in 2013. The IMF has warned that the current system is unsustainable due to a disproportionately high number of institutions, limited financing and falling student numbers. In 2017, the Bank of Latvia recommended a drastic reduction in the number of higher-education institutions, from 56 to 20, as well as a reduction in the number of study programs, from over 900 to less than 500. In 2016, the government reformed higher education financing, focusing on improving salary levels for teachers. These reforms have been met with substantial resistance but are still being implemented. The physical and communication infrastructures of 29 institutions were modernized between 2011 and 2013, supported by public funds in the amount of 65.3 million LVL. In 2014, the World Bank published a study that, among other things, analyzed financing models for higher education. However, frequent ministerial changes and a lack of political support means that it remains unclear when and to what extent these reforms will be introduced.

Citations:
1. OECD (2016). PISA 2015 key findings for Latvia. Available at: http://www.oecd.org/pisa/pisa-2015-latvia.htm. Last accessed 15.10.2017

2. OECD (2017) Education Policy Outlook: Country Profile – Latvia. Available at: http://www.oecd.org/edu/Education-Policy-Outlook-Country-Profile-Latvia.pdf. Last assessed 20.11.2017

3. IMF (2013), Republic of Latvia: Selected Issues, Country Report, Available at: http://www.imf.org/external/pubs/ft/scr/2013/cr1329.pdf, Last assessed: 20.05.2013

4. OECD (2016). Education in Latvia, Reviews of National Policies for Education. OECD Publishing, Paris. Available at http://dx.doi.org/10.1787/9789264250628-en

Social Inclusion

#31

To what extent does social policy prevent exclusion and decoupling from society?

10
 9

Policies very effectively enable societal inclusion and ensure equal opportunities.
 8
 7
 6


For the most part, policies enable societal inclusion effectively and ensure equal opportunities.
 5
 4
 3


For the most part, policies fail to prevent societal exclusion effectively and ensure equal opportunities.
 2
 1

Policies exacerbate unequal opportunities and exclusion from society.
Social Inclusion Policy
5
While economic growth and stabilization is evidenced by some economic and social indicators (such as poverty rates), the depth of the 2008 – 2010 economic crisis and persistence of high unemployment rates have until very recently had a lasting impact on citizens’ welfare and quality of life. Latvia has one of the highest levels of income disparity among EU member states, with a Gini index of 34.5 in 2016, still one of the largest in the European Union. This situation has been exacerbated by policy decisions that favored rapid economic recovery at the cost of social-security provision for at-risk population groups.

In 2017, a new progressive tax rate has been adopted, effective in 2018, along with other measures aimed at reducing the tax burden on low-wage earners.

Latvia’s economic-recovery package included policies to address poverty and unemployment. The social safety net includes a guaranteed minimum income (GMI) program addressing the needs of unemployed people and at-risk population groups. The minimum GMI benefit has since been increased, but responsibility for financing the program has been transferred from central to local government. This has undermined the program’s financial sustainability, and as the economy has recovered, a gradual phase-out is being considered. However, the GMI benefit remains in place for 2016.

The high emigration rate serves as a major indicator of marginalization and the lack of opportunity. A total of 275,131 people left Latvia between 2006 and 2016. Moreover, recent research shows that the emigrants are on average better educated than those who have stayed. The annual emigration rate is falling, however. This massive emigration, coupled with a high mortality rate and low birth rate, has led to a 12% decline in population over the past 10 years, the second-largest decline in the European Union. In 2012, a governmental working group was charged with devising policies to encourage emigrants to return to Latvia. The working group’s report, Proposals for Measures to Support Remigration, was approved by parliament on 29 January 2013. The report recommended: the provision of relevant information to potential returnees using a single one-stop website, including labor market information; a focus on attracting a highly skilled workforce; the provision of Latvian-language training when necessary; engaging in active cooperation with the diaspora (especially regarding development of business relationships); and the provision of support for students and school-aged children returning to the country. The Ministry of Foreign Affairs has appointed an ambassador-at-large to support and promote these initiatives. A 2016 review of the implementation of this plan concluded that it has been only partially implemented due to severe underfunding. For example, in 2016 only €596,400 were allocated to all remigration activities, significantly below the planned €1.2 million.

The Latvian political agenda has spotlighted demographic issues, including the prospect of remigration as one solution to the demographic situation. A 2016 report identified barriers to remigration, including a lack of demand for particular professional skills, lower wages, difficulty in readapting to the local environment, and a lack of institutional support and information.

Citations:
1. Central Statistical Bureau, Database, Available at: http://data.csb.gov.lv

2. Ministry of Economy (2013), Re-emigration Plan, Report and Supporting Documents, Available at: http://www.em.gov.lv/em/2nd/?cat=30791, Last assessed: 20.05.2013

3. Inta Mierina (2015), Latvijas Emigrantu Kopienas: Ceribu Diaspora. LU: Riga. Available at: http://fsi.lu.lv/userfiles/image/ESF%20Latvijas%20emigrantu%20kopienas/FSI_Ceribu_diaspora_pub.pdf

4. Mihails Hazans (2016), Atgriešanās Latvijā: remigrantu aptaujas rezultāti. Available at: http://www.diaspora.lu.lv/fileadmin/user_upload/lu_portal/projekti/diaspora/petijumi/Atgriesanas_Latvija_-_petijuma_zinojums.pdf. Last assessed 11.10.2017

Health

#41

To what extent do health care policies provide high-quality, inclusive and cost-efficient health care?

10
 9

Health care policy achieves the criteria fully.
 8
 7
 6


Health care policy achieves the criteria largely.
 5
 4
 3


Health care policy achieves the criteria partly.
 2
 1

Health care policy does not achieve the criteria at all.
Health Policy
4
In 2016, an OECD review stated that the health care system broadly delivers effective and efficient care considering its severe underfunding and a higher level of demand compared to most OECD countries. Latvia has universal health care insurance and a single payer system financed through general taxation. Universal population coverage, highly qualified medical staff, the innovative use of physician’s assistants are positive aspects of the system. However, substantial challenges remain, including disproportionately high out-of-pocket expenses (one in five people report foregoing health care due to cost), and long waiting times for key diagnostic and treatment services. Mortality rates for men, women and children are higher than in most other EU countries. Latvia is lagging to develop evidence-based reform proposals.

The economic crisis in 2008 resulted in a dramatic decrease in public funding for health care. The crisis gave impetus to structural reforms, which aimed to reduce costs, for example, by shifting from hospital to outpatient care. As of 2014, a “diagnosis-related group” system has been introduced to improve the financing of health care services. In 2017, the Latvian parliament is considering a substantial reform to the system. According to the government’s own estimates, the reform is projected to push 300,000 people out of health care coverage. The new system will tie health care coverage to tax payments and is being touted as a way to improve tax revenues. The new system increases allocations for public health spending, which are expected to be used to improve salary levels in the medical professions, to stave off personnel shortages.

The introduction of e-health and IT solutions began in 2017, after a considerable delay. The new system has come under heavy criticism and the requirement to use the system was one of the factors contributing to a family doctor strike in 2017.

Public expenditure on health care was equal to 3.2% of GDP in 2016. Latvia has the highest private, out-of-pocket health care expenditure rates in the EU. Patients’ out-of-pocket health care expenses constituted 41.6% of total health care financing in 2015. Total expenditure on health care amounted to 5.7% of GDP in 2016, below the EU average for public health care expenditure.

Over the course of 2016 and 2017 there have been many personnel changes in the upper management levels of the health care system. High turnover in senior management positions within the ministry and health agencies raises concerns of consistency and institutional memory within the system.

Although Latvia ranks among the worst performing countries in the Euro Health Consumer Index, there have been substantial improvements in recent years. In 2016, Latvia ranked 29th out of 35 countries, compared to 32nd in 2013. The EHCI points to an improvement in infant mortality from 6.2 deaths per 1,000 births (red score) in 2012 to 3.9 deaths per 1,000 births (green score) in 2014, and 3.8 in 2016.

Citations:
1. OECD (2016) Health Spending Data. Available at: https//data.oecd.org/healthres/health-spending.htm, Last assessed 12.11.2017

2. Euro Health Consumer Index 2016, Available at: https://www.healthpowerhouse.com/files/EHCI_2016/EHCI_2016_report.pdf. Last assessed 12.11.2017

3. OECD (2016). OECD Reviews of Health Systems.Latvia 2016. OECD Publishing, Paris. Available at: http://dx.doi.org/10.1787/9789264262782-en

Families

#19

To what extent do family support policies enable women to combine parenting with participation in the labor market?

10
 9

Family support policies effectively enable women to combine parenting with employment.
 8
 7
 6


Family support policies provide some support for women who want to combine parenting and employment.
 5
 4
 3


Family support policies provide only few opportunities for women who want to combine parenting and employment.
 2
 1

Family support policies force most women to opt for either parenting or employment.
Family Policy
7
Family-support policies enable women to combine parenting with participation in the labor market. In 2016, 74.5% of mothers with at least one child aged between 0 and 6 were employed, which is above the OECD-31 average of 67.7%.

A maximum of 112 calendar days of maternity leave can be taken, with mothers receiving 80% of their average wage. Paternity benefits are paid for a maximum 10 days at 80% of fathers’ average wage, with paternity leave taken within two months of the child’s birth.

Furthermore, parental leave of up to 18 months per child can be used by either parent prior to the child’s eighth birthday. Parents with three or more children are entitled to three extra days of paid leave per year, as well as other social benefits such as reduced fares on public transport. As of 2017, 10 days of parental leave are available for adoptive parents.

Labor law prohibits an employer from terminating an employment contract with a pregnant woman or a mother with a baby under one year old.

Local government support for private sector involvement in child care should address the shortage of available kindergarten places, although this financial support is likely to be cut as local authorities’ fiscal health declines further.

Citations:
1. European Commission (2016), Employment Rates by Sex, Available at: http://ec.europa.eu/eurostat/web/lfs/data/database, Last assessed: 29.11.2017

Pensions

#41

To what extent does pension policy realize goals of poverty prevention, intergenerational equity and fiscal sustainability?

10
 9

Pension policy achieves the objectives fully.
 8
 7
 6


Pension policy achieves the objectives largely.
 5
 4
 3


Pension policy achieves the objectives partly.
 2
 1

Pension policy does not achieve the objectives at all.
Pension Policy
4
The state pension system guarantees a monthly minimum pension. The amount of the monthly pension is dependent on the recipient’s years of service, but is at least equal to or larger than the state social-security benefit of €70, though less than half the 2017 monthly minimum wage of €380. However, where the amount of an individual’s monthly pension is below the minimum wage, the recipient qualifies for public assistance. The average monthly pension in 2016 was €279. According to the Central Statistics Bureau, the at-risk-of-poverty rate among retired persons continues to grow rapidly, reaching 38.1% in 2015 compared to 27.6% in 2013.

The introduction of a three-pillar pension system has increased the system’s fiscal sustainability and inter-generational equity. The three pillars consist of a compulsory state pension scheme (also known as a notional defined contribution system), a state-run mandatory funded pension scheme and a private voluntary pension scheme.

The European Commission Fiscal Sustainability Report 2012 concluded that the notional defined contribution system had low sustainability risks, given its expected reliance on funds raised through the second pillar. Initial projections that the pre-crisis contribution rate of 6% would be quickly restored were overly optimistic. In 2014, the rate was only 4%, with a further delay of the reintroduction of the 6% rate until 2016. The 6% rate is stable for 2017.

The second pillar mandatory funded pension scheme has come under criticism for excessive fees. An independent private start-up fund has emerged, offering substantially lower commissions and favorable terms. Legislators have taken interest and draft legislation is under consideration to limit as of 2018 bank commissions and fees levied for managing the mandatory funded pension scheme.

Citations:
1. Ministry of Welfare (2017). Review of state funded pension system. Available at: http://www.vsaa.lv/media/uploads/UserFiles/pakalpojumi/stradajosajiem/2_pensiju_limenis/parskati_par_valsts_fondeto_pensiju_shemas_darbibu/vfps_2016_gada_parskats_15_-6_2-17.docx. Last assessed 26.09.2017


2. Central Statistical Bureau, Database, Available at: http://data.csb.gov.lv

Integration

#18

How effectively do policies support the integration of migrants into society?

10
 9

Cultural, education and social policies effectively support the integration of migrants into society.
 8
 7
 6


Cultural, education and social policies seek to integrate migrants into society, but have failed to do so effectively.
 5
 4
 3


Cultural, education and social policies do not focus on integrating migrants into society.
 2
 1

Cultural, education and social policies segregate migrant communities from the majority society.
Integration Policy
5
In 2015, Latvia is still ranked second-to-last among 38 European and North American countries in the Migrant Integration Policy Index. The index noted that Latvia still has the weakest policies among European Union member states.

In 2016, 350 persons applied for asylum in Latvia. Only 23 were granted refugee status and 222 received alternative status. Most people who were granted protection status were from Syria, Russia, Afghanistan and Iraq.

In 2015, Latvia convened a working group charged with creating a coherent policy for accepting and integrating larger numbers of refugees as part of a burden-sharing process reflecting the broader European refugee crisis.

On 11 October 2011, Latvia adopted the Guidelines on National Identity, Civil Society and Integration Policy (2012 – 2018). These guidelines established a set of policy goals for achieving a more inclusive and cohesive society, which include new policy proposals, increased governmental support and improved institutional arrangements. Latvia faces challenges in integrating two particular categories of immigrants: migrant workers and non-citizens. Non-citizens are long-term residents of Latvia who were not eligible for citizenship when Latvia regained its independence from the Soviet Union and have not been naturalized since independence. Non-citizens comprise 11.43% of the total population. The Office of Citizenship and Migration Affairs indicates that there are 89,023 migrant workers (i.e., individuals holding either a temporary or permanent residence permit) in Latvia; they comprise 4.5% of the total population.

Since July 2010, Latvia has granted temporary residence permits to investors meeting monetary investment targets. Between 2010 and mid-2015, 15,820 temporary residence permits were issued. In September 2014, parliament doubled the minimum investment required to attain a temporary residence permit resulting in a significant drop in demand for these types of permits.

Rights for immigrants depend on the type of residency permit. Individuals holding a temporary residency permit are particularly vulnerable, as they do not qualify for public health care, legal aid or unemployment support. An individual holding a permanent residency permit or who has acquired long-term resident status within the European Union has the same rights as Latvian non-citizens.

In May 2013, Latvia adopted changes to its citizenship law that legalized dual citizenship with 38 countries. This will enable some permanent residents to retain their current citizenship if they choose to apply for Latvian citizenship.

As of March 2010, all children, including children of migrant workers holding temporary residence permits, have access to free education.

No restrictions are placed on the right to work for high skilled migrant workers, foreign students or immigrants who have moved for family reasons. However, access to the local labor market is restricted for migrant workers who have obtained only a temporary residence permit. These individuals’ work rights are tied to the employer who invited them to Latvia. Temporary migrant workers do not have the ability to freely change employers or their position within the company.

Access to the labor market also depends on language proficiency, as a certain level of language skill is required by law for many professions. This is true of state and local government institutions as well as commercial companies in which the majority of capital shares are publicly owned. Moreover, in late 2017, politicians from the National Alliance party called for legislation to strengthen the importance of the Latvian language in the private (primarily service) sector.

Legislative obstacles restrict the ability for immigrants to participate in society. Migrants do not have voting rights in local elections and cannot be members of political associations. Third-country nationals with temporary residence permits cannot organize protests or marches.

Citations:
1. Office of Citizenship and Migration Affairs (2017). Statistics – Asylum seekers. Available at: http://www.pmlp.gov.lv/lv/sakums/statistika/patveruma-mekletaji.html. Last assessed 10.10.2017

2. Policy Report: Migration and Asylum in Latvia 2014 (in Latvian). Kitija Kursa. European Migration Network. http://www.emn.lv/wp-content/uploads/ANNUAL-REPORT-2014_Part-2_LATVIA.pdf. Last assessed 21.11.2015.

3. Policy Brief: Immigration in Latvia. Dace Akule and Indra Mangule, Centre for Public Policy PROVIDUS (2014), Available at: http://providus.lv/article_files/2617/original/Kopsavilkums_Imigracija_Latvija.pdf?1402392942. Last assessed 22.11.2015.

4. Migration Policy Group (2015), Migrant Integration Policy Index, Available at: http://www.mipex.eu/latvia, Last assessed: 22.11.2015.

5. Guidelines on National Identity, Civil Society and Integration Policy (2012 – 2018), Available at (in Latvian): http://www.likumi.lv/doc.php?id=238195, Last assessed: 20.05.2013.

Safe Living

#27

How effectively does internal security policy protect citizens against security risks?

10
 9

Internal security policy protects citizens against security risks very effectively.
 8
 7
 6


Internal security policy protects citizens against security risks more or less effectively.
 5
 4
 3


Internal security policy does not effectively protect citizens against security risks.
 2
 1

Internal security policy exacerbates the security risks.
Safe Living Conditions
9
The Ministry of Interior, state police, security police, state fire and rescue Service, state border guard, and Office of Citizenship and Migration Affairs are responsible for domestic security policy. They collaborate on some policy issues, notably on immigration policy.

In 2015, crime rates have increased by 2.2% over 2014. There are 2,386 reported crimes per 100,000 inhabitants, the lowest such rate among the Baltic states. Despite international developments, the threat of terrorism is low. In 2015, there were no criminal offenses associated with terrorism. In late 2015, the security police started a criminal investigation into alleged participation in the military conflict in Syria. One conviction has followed, carrying a four-year prison sentence. In 2016, two criminal investigations for terrorism threats were launched, another for inciting terrorism and four for participation in foreign armed conflicts.

Opinion polls from 2016 indicate that public trust in the police continues to rise and more people feel safe (74% of respondents report feeling safe or rather safe).

Citations:
1. Research center SKDS (2013), Attitude Toward the State Police, Available at (in Latvian): http://www.vp.gov.lv/?id=704, Last assessed: 20.05.2013

2. State Border Guard (2011), Official Report, Available at (in Latvian): http://www.rs.gov.lv/doc_upl//Valsts%20robezsardzes%202011.gada%20publiskais%20parskats.pdf, Last assessed: 20.05.2013

3. Ministry of Interior (2014), Public Report, Available at (in Latvian): http://www.iem.gov.lv/files/text/Gada_parskats_2014_wwwf%281%29.pdf, Last assessed: 22.11.2015

4. Ministry of the Interior of the Republic of Lithuania, Information Technology and Communications Department (2013), Crime statistics in Lithuania, Latvia, Estonia, Available at: http://www.ird.lt/doc/statistika/duomenys_bv_per_2012m_%2001-12_men.pdf, Last assessed: 20.05.2013

Global Inequalities

#39

To what extent does the government demonstrate an active and coherent commitment to promoting equal socioeconomic opportunities in developing countries?

10
 9

The government actively and coherently engages in international efforts to promote equal socioeconomic opportunities in developing countries. It frequently demonstrates initiative and responsibility, and acts as an agenda-setter.
 8
 7
 6


The government actively engages in international efforts to promote equal socioeconomic opportunities in developing countries. However, some of its measures or policies lack coherence.
 5
 4
 3


The government shows limited engagement in international efforts to promote equal socioeconomic opportunities in developing countries. Many of its measures or policies lack coherence.
 2
 1

The government does not contribute (and often undermines) efforts to promote equal socioeconomic opportunities in developing countries.
Global Social Policy
3
As a result of government austerity programs, funding for bilateral development cooperation was reduced to a minimum between 2009 and 2011. This reduction has meant that Latvia’s ability to directly contribute to efforts to tackle global social inequalities has been negligible. In 2016, Latvia’s official development assistance (ODA) expenditure was €19 million or 0.08% of GNI, down from €21 million or 0.21% GNI in 2015. Latvia has adopted a multi-year ODA strategy, which foresees increasing contributions to 0.33% of GNI by 2020.

Bilateral development cooperation focuses on the three top-priority countries of Georgia, Moldova and Ukraine.

Citations:
1. State Development Cooperation Policy Plan (2016 – 2020), Available at (in Latvian): http://www.likumi.lv/ta/id/284775-par-attistibas-sadarbības-politikas-pamatnostadnem-2016-2020-gadam. Last assessed: 10.11.2017
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