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Wednesday 19.06.2019 | Name days: Nils, Viktors

Raising minimal income level in Latvia would require EUR 28 million

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvia’s Welfare Ministry has developed a Plan to improve minimal income support system in 2020-2021. In it, the ministry details that the plan’s implementation requires approximately EUR 28 million, as informed by the ministry’s social inclusivity department’s director Elīna Celmiņa.

She stresses that over a course of several years Latvia has maintained a relatively high proportion of residents subjected to the risk of poverty. This means reduction of poverty and social exclusion is topical and a significant priority for Welfare Ministry.

Celmiņa says that minimal income levels included in regulations are inadequately low, and because of this reason the ministry and Cabinet of Ministers accepted the concept On Determination of Minimal Income Level in 2014. Its goal is reducing poverty and income inequality based on the principle of solidarity, establishing a methodologically justified minimal income level that is compliant with the country’s social-economic situation.

According to the Welfare Ministry, after compiling necessary information, in 2017 and in 2018 the ministry submitted to the State Chancellery planning documents for the Plan on minimal income support system’s improvement. However, no funding was found in the process of development of the state budget. Welfare Ministry’s representative adds that instead the government decided to implement activities aimed at people at high risk of poverty.

The ministry plans to submit to the State Chancellery the plan for further submission to the Cabinet of Ministers. The ministry has prepared and announced a new plan project for inter-institutional review. The goal of this plan is offering solidary support from the state and municipalities to help increase income of the poorest residents.

As part of the plan it is expected to increase support for residents with low income, determine minimal benefit amounts in context with the existing median of income available to households per equivalent consumer, which is equal to the 2014 concept’s defined minimal income level. In 2017, the median was EUR 494.05.

The new plan provides for increasing state social security benefit starting from 2020. It is planned to increase this benefit by EUR 35 – from EUR 64 to EUR 99. This benefit, according to Celmiņa, has not changed in 12 years. This is why increasing it is an important step towards improving the lives of its recipients.

Increasing state social security would mainly affect residents of pension age who receive both minimal pension, recipients of the benefit, as well as disabled people. Celmiņa explains that increasing this benefit would increase income for approximately 83 000 people.

It is also proposed to increase the benefit for poor people starting from 2021 by changing the way status of a poor person is established and increasing the benefit amount for this specific group.

The income level of people that fit the status of poor people has not changed since 2009 and its amount is EUR 128.06 per capita. The project provides for expanding the range of people eligible to receive support as poor people. This means increasing the income level to EUR 198 for the first person in a household and applying a 0.7 coefficient for the rest of the people in a given household.

Celmiņa adds that the main support for poor people is the benefit for guaranteed minimal income. The ministry’s representative explains that this is the lowest form of income support for people who either lack any kind of income or whose income is very low. GMI level in Latvia is EUR 53 in 2019. It is planned to be increased to EUR 99 for the first person in a given household and apply a coefficient of 0.7 for every other person in a household.

The plan also provides for setting a single income level for low-income recipients worth 1.5 time the amount of a poor person’s income level of EUR 297 for the first person in a given households and a coefficient of 0.7 for every other person in a household.

Celmiņa notes the plan’s proposed actions would require additional state budget funds of approximately EUR 28 million.

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