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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 interna
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1. Trends and Problems in Latvian Welfare State Feliciana Rajevska
Vidzeme University of Applied Sciences
2. 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.
3. 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
4. Growth in Employment 2003 2005 2007 Goal -2010
EU-27 62.6 63.5 65.4 70
Latvia 61.8 63.3 68.3 67
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 labour market (data on August, 2008)
5. Level of wages and salaries and labour productivity to the EU-27 Latvia productivity wages&salaries
2003 44.2% 15%
2006 49.2 % 22%
2007 56.7 % 28%
6. 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?
7. 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
8. 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
9. 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
10. At-risk-of-poverty rates Year Latvia EU –25
2000 16 16
2005 19 16
2006 23 16
Cut-off point: 60% of median equivalised income after social transfers; Eurostat, May 2008
11. Social Protection Expenditure as % of GDP Year Latvia EU-25
2000 15.3 26.6
2001 14.3 26.8
2002 13.9 27.1
2003 13.8 27.4
2004 12.9 27.3
2005 12.4 27.4
12. Social Protection Expenditure per capita/per inhabitant Year Latvia EU –25
2000 547 5359
2001 566 5595
2002 590 5835
2003 591 5982
2004 625 6216
2005 700 6442
+153 + 1083
13. Social Expenditure: in absolute terms € per capita, before joining EU
2002 2003
Lithuania 609.6 645.9 + 36.3
Estonia 724.6 807.8 +83.2
Source: Eurostat
14. Expenditures on pension as % of GDP Country Latvia EU-25 Ireland
2001 - 6.9%
2002 - 6.6%
2003 - 6.1% 12.1% 3.7%
2004 - 5.5% 12.0% 3.8%
2005 - 5.1% 10.9%
2006 - 5.0%
15. 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
16. 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 sociala nodrošinajuma pabalsts)
50 EUR –in 2005; 65 EUR in 2006,2007, 2008, 2009
17. 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 implemented
18. 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