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Friday 19.10.2018 | Name days: Drosma, Drosmis, Elīna

Household income grows the slowest in Vidzeme and Latgale

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe rapid economic growth of 2011 and 2012 contributed to the rise of income of Latvian households. However, it was not equal in all of the regions. Inequality remains. In addition to that, last year’s general income increased the slowest in less developed regions.

Latgale is not the only poor child. In Vidzeme, for example, household income per capita is slightly larger. Both regions have a larger ratio of pension income than other regions do”, – Swedbank economist Martins Kazaks says.

The latest data from the Central Statistical Bureau of Latvia for 2011 shows that household income has increased in all regions, compared to that of 2004. The income gap between the regions has reduced significantly since then. While the total household income per capita was two times larger in Riga in 2004 than it was in Latgale, this difference is now much smaller. Income per capita in Pieriga and Kurzeme has come close to that of Riga residents (109%, 97% and 118% from the average one in Latvia in 2011).

Seeing as how the current data of the Central Statistical Bureau on income will only be available in the beginning of 2014, it will only be possible to add the analysis of the trends of 2012 into the state budget in 2015. This time gap could delay decision making and the ability to react to changes in the economy. In order to reduce the time gap and use the opportunity, Swedbank economists have performed a household income analysis in 2012 using the data available from the statistics bureau, as well as the information provided by the State Social Insurance Agency.

Nearly two-thirds of the income of Latvian households come from jobs. Therefore, the main reason for the gap in income among regions is the difference in employment and salary levels. The employment in Riga and Pieriga was 55-57% in 2011. That of Vidzeme, Zemgale and Kurzeme was 52-53% and only 49% in Latgale.

Riga and Pieriga has a large proportion of employed people who hold higher education. This partially explains both the high level of employment and salaries. According to Swedbank’s estimates, Zemgale’s residents’ salaries are much higher than those of Vidzeme residents.

One of the possible explanations for this is the general mobility of the residents there. CSB data show that over 50 thousand residents from Rieriga and 13-15 thousand from Zemgale work in entirely different regions, most likely Riga. Vidzeme’s proportion of residents who work in other regions is only 5 thousand (5-8%).

Given that the proportion of residents of working age is gradually reducing, a long-term and balanced situation for pensions and benefits should grow slower than salaries. Without an appropriate policy, the income levels of less developed regions could fall behind other regions even more, especially in Vidzeme and Latgale. In addition to that, given the smaller proportion of work in general household income, any improvements in the job market would affect these regions a lot less, banking experts explain.


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