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Strugling Imbalances Impact of Demographic T rends on Latvian Social Policy Making

Explore the impact of demographic trends on Latvian social policy making and the challenges faced in areas such as employment, social insurance, and family policies. From population decline to retirement age adjustments, uncover key insights and proposed solutions.

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Strugling Imbalances Impact of Demographic T rends on Latvian Social Policy Making

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  1. Strugling Imbalances Impact of Demographic Trendson Latvian Social Policy Making Arvils Ašeradens ParlamentarySecretary MinistryofWelfare

  2. According to EuroStat in 50 years population in Latvia will be less then1.6 mil people Age structure change 2011/2060

  3. Latvia - Census 2011,unpleasant surprise.... Natural growth rate Migration ratio ? Negative, How?

  4. Number of inhabitants in Latvia during last two decades has decreased dramaticaly:290 th from 1989 – 2000 (11%)309 th from 2000 – 2011 (13%)

  5. PostCrisisLatvia Grossdomesticproduct: 2007-2011; +11%, -5%, -18%, -2%, +4.5% Householddebt: 2007-2011: 5.7 bil LVL Statebudgetdeficit: 2009-2012 -6%, -3%, -2.5%, 0.8% Outgoingmigration: 2007-2011: >200 000inhabitants

  6. ThreemostafectedSocialpolicyareas : • Child and family policy • Active employment policy • Social insurance system

  7. Child and family policyDesperate fight for stable birth rate 2011 19/30 Natural growth inLatvia 1988 -2010

  8. Top priority of Latvian governmentCouncil of Demographic Affairs • Cabinet’s Regulations of 12 April 2011 No 293 “By-law of the Council of Demographic Affairs” • Henceforth demographic matters shall be dealt with under direct subordination of the Prime Minister, thus enabling that demographic issues are solved in an integrated manner in all the involved branches, not just only in a single ministry’s supervised fields of competence • The aim of the Council is to promote national demographic policy and its implementation in all the levels of state administration • The basic composition of the Council is formed by the branch ministers, nongovernmental organizations with which a good cooperation has been developed and which possess certain level of competence related to demographic issues, additionally such institutions have been included, which have a significant role in the Council’s work, such as Parliament’s Commission of Social and Labour Matters and Parliament’s Commission of Human Rights and Public Matters, Commission of Strategic Analysis, Employers' Confederation of Latvia, Latvian Association of Free Trade Unions, NGOs representing families’ interests.

  9. Employment policy High unemployment Basic reason of outgoing migration Registred unemployment level atState Employment agency (NVA)

  10. Labour market Three spheres of interaction Education System Labour force Industries Social Security Net

  11. Effective coordination of involved actors Welfare Ministry Education Ministry • Labour market development • Social security net Life-long Learnig • Secondary schools • Profesional education • Universities • Science Business Incubation Inovation • Bussines environment • Industrial policy Employment Policy Economy Ministry

  12. Employment policy chalenge 2015: labour deficit Dinamicsof laboursuplayanddemand agegroup 15-74 , th. Labour supply- economicaly active population Labour demand- number of people employed

  13. Social insurance system Social budget deficit presure

  14. Social insurance system Social tax rate – 35,09% (11% paid by employee, 24,09% by employer) • pension insurance 26,74% • insurance against unemployment 1,50% • work injury insurance 0,41% • disability insurance 3,16% • maternity and sickness insurance 2,28% • parental insurance 1,0%

  15. Factors afectingsocialinsurancesystem • Demographic indicators (birth rate, mortality, migration) • Macro-economical indicators • The proportion of grey economics • Political decisions

  16. Social insurance system burdenpersons employed/pensioners

  17. _________ ___ _________ ______ Population age structure change(%)

  18. Projected average age for persons reached age 62, years

  19. Changes overthe Life Cycle • Approximately one third of the life cycle person is retired • Rising life expectancy of persons increase the period of retirement, at the same time employment period declines • In order to maintain appropriate proportions, retirement age has to be increased

  20. Proposed Amendments in Concept Paper On the Long-term Stability of the Social Insurance System • Gradual increase of retirement age from62to 65 starting from 2014: • for 3 months starting from 1 January 2014 and 1 January 2015 • for 6 months starting from 1 January 2016 to year 2020 2) At the same time increase of early retirement age up to age of 63: • for 3 months starting from 1 January 2014 and 1 January 2015 • for 6 months starting from 1 January 2016 to year 2020

  21. Social insurance budget deficit/reserve balance after expected change

  22. Increase of retirement age in EU

  23. Thank You!arvils.aseradens@lm.gov.lv

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