bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 24.07.2017 | Name days: Krista, Kristiāna, Kristiāns, Kristīne
LatviaLatvia

Latvians remain pessimistic in spite of growing welfare

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULooking at changes to their financial situation in comparison with previous years, Latvian residents have concluded that it has become worse. 24% of respondents say their financial situation has worsened only slightly. 8% of respondents say the financial situation of their household has worsened significantly.

20% of respondents say the financial situation of their household has become better this year. Only 2% say the financial situation has become significantly better. 44% of respondents say their household has not experienced any major changes this year.

When asked about factors that have impacted their household’s welfare in a positive way, 17% of respondents mentioned the decline of heating and gas tariffs. Other positive factors related to warmth include the uncharacteristically warm autumn and winter weather. Another 17% of respondents mentioned the reduction of PIT from 24% to 23% as a positive factor. This practically means that recipients of average wage in Latvia (EUR 808 on paper) gained approximately EUR 6.5 monthly or EUR 78 annually, as reported by Swedbank.

The third most important factor mentioned by 15% of respondents is wage rise. Compared with average gross wages in the first three quarters of 2014 (EUR 758), wages of the same period of 2015 have grown 6.6%. Residents’ purchasing power has been growing more quickly than wages lately – average wages have grown by 7.4% while consumer prices remained largely unchanged (annual inflation was 0.2% in the first nine months of 2015). With that, residents’ actual income has grown 7.2% this year. Nevertheless, residents still consider their expenses very carefully.

«One of the most positive tendencies worth mentioning in the context of careful consumption habits is the growing level of savings of Latvian residents across the country. This even exceeds the country’s economic growth rate. More and more people start making savings for different reasons – financial security, retirement, children, etc. The largest savings are currently formed in the form of bank deposits and money left on bank accounts. The total estimated volume of savings across the country has already exceeded EUR 5 billion. A significant increase has also been noted on the 3rd pension level, which the total volume of savings exceeding EUR 314 million,» – says head of Swedbank’s Financial Institute Reinis Jansons.

Other positive factors mentioned by respondents include the increase of minimum wages from EUR 230 to EUR 360 (15%), free lunches for schoolchildren up to 4th grade, reduction of prices on consumer goods and services (8%), finding a job (7%) and lower interest rates for loans (5%).

When asked about negative factors, respondents most often mentioned inflation (38%). 37% of respondents said their financial situation was negatively impacted by unplanned household expenses (car repairs, technical problems, etc.). The third most often mentioned factor is the liberalization of the country’s electricity market (30%). According to the estimate by Swedbank’s Financial Institute, electricity costs of a family with two children that is not considered poor and which consumes 350 kWh every month have increased since the liberalization of the electricity market.

«In spite of statistical data that shows the non-existence of inflation and growth of income, growth of certain expenses, according to residents, eats away wage growth. Even legislative amendments, including minimum wage rise, does not compensate for other financial benefits. This can be explained with the fact that residents with low or medium-low income still feel a heavy burden in the form of everyday expenses. At the same time, it is worth mentioning that this year has brought many positive changes to families with children – larger benefits, a support programme for purchasing housing and other positive things,» – said expert of Swedbank’s Financial Institute Evija Kropa.

Predictions for 2016

36% of respondents believe their family’s financial situation will remain unchanged next year. 6% of respondents predict their financial situation will become worse. 19% expect it will become slightly worse. 22% of respondents are optimistic about 2016 – 19% expect the financial situation of their family will improve and 3% expect significant improvements.

Looking at upcoming changes that are expected to affect Latvian households next year, it is worth mentioning the decision of the government to maintain PIT rate at 23%. Employed people can also expect a EUR 10 rise of minimum wages (from EUR 360 to EUR 370) and the increase of benefits for dependents by EUR 10 (from EUR 165 to EUR 175).

It is also planned to introduce differentiated tax-free allowance: small wage recipients will receive a bit more and large wage recipient will receive a bit less.

The increase of house management costs is expected to cause a slight increase in expenses for residents. This is because it is planned to apply VAT (21%) for house management costs starting with 1 July 2016. For example, if a household previously paid EUR 35 a month, starting with summer 2016 households will have to deal with a nearly EUR 8 increase of their monthly expenses.

Ref: 102.109.109.2733


Leave a reply

Latvians hesitant to use electronic means to request benefits

So far, Latvia residents have been rather slow in the use of electronic tools to request benefits from the State Social Insurance Agency.

Orbán promises solidarity with Poland as it approves controversial court reforms

Following the criticism Warsaw has received in mass protests and from Brussels on the approval of a controversial court reform, the Prime Minister of Hungary Viktor Orbán has pledged to defend Poland in the European Union.

New Conservative Party takes away one seat from Latvian Farmers Union in Kekava

The New Conservative Party has taken away one seat in Kekava council from Latvian Farmers Union, according to provisional data of the Central Election Commission on repeated elections in Kekava’s 785 election site.

17 journalists of Turkish newspaper charged with aiding terrorist organisation

In Turkey, 17 journalists of the opposition newspaper Cumhuriyet are to be tried over charges of aiding a terrorist organisation and, if found guilty, they face up to 43 years in jail.

Week to be warm in Latvia, but some rain is still expected

At the beginning of the week, weather in Latvia will be dictated by a small cyclone with its centre above Lithuania. The precipitation zone associated with this cyclone will bring about rain to south-east parts of Lithuania, as reported by State Environment, Geology and Meteorology Centre.

BNN summary of the week: Kucinskis in Ridzene’s room and government’s rushed decisions

BNN offers a summary of this week’s topical news in a variety of categories: Change; Fight; Truth; Business and Growth.

Tourists die in Aegean Sea earthquake

A powerful quake that struck in the Aegean Sea has taken the lives of two persons in Greece, local authorities have stated.

Fashion in business: how to be heard in the modern-day world?

It would seem that nowadays strict fashion trends have «died». This is because people for ways to look beautiful and comfortable. One of the minds behind TRÉS fashion line, Enija Mugurevica shares advice how to start a business in the fashion industry from scratch and be heard and noticed in the modern-day world.

FCMC fines Norvik Banka for EUR 1.3 million and Rietumu Banka for EUR 1.56 million

Finance and Capital Market Commission in cooperation with Federal Bureau of Investigation’s Counterproliferation Center found out in a target inspection that Latvian banks – Norvik Banka and Rietumu Banka – have not followed requirements of regulations for the prevention of money laundering and terrorism funding.

Saeima approves controversial amendments to Credit Institutions Law

On Friday, 21 July, Latvian Saeima approved amendments to the Credit Institutions Law, which were previously returned to the parliament for a repeated viewing by President Raimonds Vejonis, completely unchanged.

Bank of Latvia: tax reform is a disappointment; it will not improve competitiveness

The tax reform submitted to the Saeima for approval is one big disappointment that will not improve competitiveness, said head of the Monetary Policy Office of the Bank of Latvia Uldis Rutkaste in an interview to LNT 900 seconds.

Betsafe predicts: will Duklavs remain Latvia’s Agriculture Minister?

Although Unity has asked the Union of Greens and Farmers to replace Agriculture Minister Janis Duklavs with someone else after the scandalous oligarch talks in Ridzene hotel, Duklavs will likely keep his post, according to Betsafe bookmakers. There is a 33% probability of Duklavs losing his post.

Latvian alcohol industry has an offer to increase excise tax rate

Experience shows – rapid increase of excise tax results in rapid increase of prices and rapid decline of revenue for the state treasury. Based on careful calculations, Latvian Alcohol Industry Association asks the government to stick with the current excise tax increase plan.

Air temperature to reach +24° C… +25° C in Latvia on weekend

Weather is expected to be largely dry this weekend in Latvia. Next week, however, is expected to be rainy, as reported by State Environment, Geology and Meteorology Centre.

Saeima deputies sign agreement on Oligarch talks committee’s formation

So far only parliament members have signed the agreement on the formation of a Saeima committee for the investigation of Oligarch talks. Neither of them represents Unity – Karlis Serzants from Union of Greens and Farmers and Einars Cilinskis from VL-TB/LNNK.

Seaima Praesidium approves parliamentary budget for 2018

On 20 July, Saeima Praesidium approved the parliament’s budget request for 2018. It is planned to be EUR 22.04 million, setting funding to maintain current functions on the level of 2017, BNN was informed by Saeima press-service.

Beer brewers: fooling around with tax reforms could destroy Latvia’s beer industry

By increasing excise tax for beer, the goal of reducing alcohol consumption will not be achieved. This is because consumption of other alcoholic beverages will increase as a result, notes CEO of Latvian Breweries Union Peteris Linins, commenting on the government’s plans to raise excise tax for beer.

4,558 marriages registered in Latvia in first six months of 2017

Over the past three years, Latvian birth number almost has not changed and constitutes 22 thousand annually. 10,175 children were born in the first half of 2017, which means 990 newborn fewer than in the same period a year ago.

Broadcasting organizations ask NEPLP to stop meddling with public media contents

The board of Latvian Association of Broadcasting Organizations urges the government and National Electronic Mass Media Council to continue realizing reforms in public media.

Kucinskis also met with Slesers in the infamous meeting room of Ridzene hotel

Latvian Prime Minister Maris Kucinskis admits having met with Ainars Slesers in the now infamous meeting room in Ridzene hotel a couple of times, specifically when the People’s Party made the decision to join Par labu Latviju.

Pumpurs hands 99% of Užavas alus capital shares to his son

Ildis Pumpurs, up until now the only owner and board member of Ventspils Užavas alus brewery, has handed 99% of the company’s capital shares to his son Oskars Pumpurs.

Repeated elections in Kekava – activity twice as high so far

Repeated election has commenced in Kekava’s 785 election site. 274 voters or 7% of local voting population took part in elections in the first day, according to data from the election site.

Estonia plans accepting from Turkey 160 Syrian refugees

Estonian police are looking into the documents on 160 refugees from Syria that are to be moved to Estonia in line with an agreement reached between the EU and Turkey.

Experts: potato harvest in Latvia may come later than usual this year

Potato harvest in Latvia may come one week later than usual. Still, the harvest is expected to be on the level of last year, BNN was told by Potato Growers and Processors Union.