Order the autumn edition here

While we wait for welfare

After 16 years of freedom and turbo capitalism, the Latvians will have a social safety net to land in.


[latvia] When Kristine Timermane was born, Latvia was part of the Soviet Union. It was

opinion terror and commodity shortages. From childhood, she remembers how the right to buy a TV or a bicycle was solved because it was such a scarcity.

Today, 25 years later, Kristine takes a sip of the lemonade at a sunny cafe in the Latvian town of Cesis. She beams because it is her turn to give us a new world citizen.

This time, when the light comes to light in August, the child will experience a Latvia that has been an EU and NATO member for just over two years. There is market economy and more freedom. The little boy or girl should get a bicycle, without lottery. Kristine promises that.

Foreign companies are storming into the Latvian market today. Some of the companies are also Norwegian: Branches of chains such as Narvesen, Rimi, Dressmann and Statoil are popping up as mushrooms.

Latvia is at the same time the country in the EU

lowest salary level. 77 percent say they have trouble getting through, and 88 percent say they are unable to save.

- But we also have the fastest economic growth in Europe, says Foreign Minister

Artis Pabriks til New Times.

When the Soviet Union collapsed, we got a few hundred millionaires, and a few hundred thousand poor, say Latvians like to be asked to explain their new situation.

Pabriks believes Latvia is finished with the transition phase that followed the collapse of communism.

- We are on the right track. In a short time, we will be a donor country, and no longer an aid recipient. A new generation, who barely remember the Soviet era, is on its way to the top of society. New children, like Kristines, will not have experienced anything other than Latvia as an EU member, he says.

In Riga – and in the 800-year-old city of Cesis – there is still one contrast that is more striking than any other: showy newly renovated facades stand side by side with dilapidated apartment buildings that have a desperate need for four or five coats of paint and new, whole windows. . There is still some work to be done for the young Latvian state.

The balancing act

Latvia has only 2,3 million inhabitants and parties with names such as "Fatherland and Freedom", "New Era", "Harmonic Center" and "All for Latvia". The most important political dimension is ethnicity, not class. The distinction is between ethnic Latvians and Russians. The important turning point in 1990 and 1991 meant not only new national independence, but also a transition from industrial to service economy. Both unemployment and social disparities increased dramatically.

Recently, a conference was held in Riga, organized by a Latvian and an Estonian university in collaboration with the research institute Fafo from Norway. The development of the post-communist welfare state was discussed. The Latvian welfare state faces many of the same challenges as the rest of Europe: the aging population, economic globalization and failing legitimacy in an individualized age, to name a few. In addition, the country's economy is characterized by the aftermath of the liberalist horse cures of the 1990s.

- I would call what we have seen an overreaction to communism. The responsibility for the welfare of the inhabitants has been transferred from the state to the individual. Probably too much, says Feliciana Rajevska, a welfare researcher at the University of Latvia and one of the organizers behind the conference.

- But is not a moderate welfare state necessary to attract investment?

- Well then, we must probably have a low tax level if we are to raise foreign capital, but there must be a balance, she says.

A welfare state on the way

In 1989, the year the Berlin Wall collapsed, Kristine Timermane and her three-year-younger sister Elina were eight and five, respectively. Their mother was working outside and was paid. In addition, she received a small child benefit. In total, the mother had an income of 120 rubles a month. The two girls also had an aunt with two children. She did not work, unlike Kristine's mother. Still, she had the same income, 120 rubles a month – in child support. It was the same for everyone.

15 years after the collapse of the Soviet Union, Latvia is finding a new form of welfare state.

- The framework is quite clear, and our legal texts are on a par with the EU's. When it comes to pensions, unemployment benefits and social benefits, a lot is in place. In the field of health, we lag a bit behind, but it also happens there, says Professor Rajevska.

When Kristine's little one sees the light of day, Kristine will already have received full salary compensation for two months before the birth. She receives the same for another two months, before the sum is reduced to 70 percent for the remaining ten months of the child's first year of life.

- It is the second year that is difficult. The children rarely start in kindergarten before they are two years old, while the support is low, only 30 lats a month, says Kristine.

It is a general phenomenon in Latvia that the rates on welfare schemes are low, we must believe Arne Grønningsæter from Fafo.

- It gives an increased chance for people to buy private insurance on top of the public support schemes. In the long run, this will lead to a weakening of the welfare state, he says.

One of the problems the conference participants point to is the lack of public debate about the design of the new welfare schemes. Only one person with connections to politics and business is at the conference, namely Nilis Kristopans, former Prime Minister and Minister of Transport, now a businessman.

- Smaller state, more market and lower taxes will lead to a better life for all. 90 percent of the population is left-wing because it is easy to say that the rich have to pay, but then the economy stops, he says to Ny Tid.

Then he disappears. There are more important tasks than attending a welfare conference.

One European model?

It has been common to distinguish between three welfare models: the liberal model known from the United States and the United Kingdom, the social democratic one identified with Scandinavia, and the continental, conservative model. However, according to Chris de Neubourg of the Maastricht School of Global Governance, it is time to invent some new concepts.

- It may look as if the social democratic and the conservative model are about to merge, he says.

The reforms that are intended to ensure competitiveness and sustainability in the face of the threats from globalization and the aging wave, lead to less variation between the models.

However, Neubourg denies that we are approaching a single European welfare model.

- Maybe seen from the outside, but not seen from Brussels, he says.

Not least because of the new member states. Neubourg distinguishes between a "supportive", a "selective" and an "inclusive" welfare model.

In which category is Latvia, the country that only sees itself overlooked by the United States in terms of the proportion of citizens who have private health insurance, but at the same time have copied the entire pension system from Sweden?

Must benefit the middle class

In sociology, it is considered a fact that the welfare state must give something back to the middle class if it is to be politically sustainable over time. In Norway, huge sums circulate from middle-class tax slips to support schemes that mainly benefit the middle class. The education system is the most obvious example of what Neubourg calls a "supportive" model.

In Latvia it is different. The welfare model is closer to what Neubourg calls «selective». Kristine Timerman's little sister Elina is studying communication at Stradin's University in Riga. She says that students have had worse conditions after the collapse of the Soviet Union.

Scholarship schemes have deteriorated, and

tuition fees have skyrocketed. The only alternative to working alongside your studies is to ask for money from your parents. But Elina does not want that.

There is also a scheme with private student loans that the state guarantees, but this scheme is not very popular.

- People do not dare to take the risk, says Elina.

In the newest EU countries, including Latvia, a considerable proportion of the tax money is transferred to those with the lowest income, instead of student support and other measures being granted that affect those with medium income the best. Countries such as France and Germany, for their part, spend most of their tax money on pensions and health. While "Old Europe" spends about 30 percent of gross domestic product on social programs, the corresponding share for the Baltic countries is 15 percent.

Remains from the Soviet era

Chris de Neubourg was previously one of the World Bank's advisers in Latvia. He believes Latvia is in the process of developing a system reminiscent of what is found in countries such as Greece and Portugal.

- When a state-guaranteed minimum wage scheme was introduced, the local authorities failed to provide sufficient resources to enforce this scheme in a satisfactory manner. It can undermine the whole system, he says.

In other areas, too, Latvia continues to draw on destructive parts of the legacy after that

the communist system, while the positive aspects of the Soviet era have disappeared.

At that time, Kristine and Elina Timermane's mother could work when the girls were small because there were kindergarten places for everyone – and they were very cheap.

- Now we have to apply for a place already when the child is born, Kristine says.

It is the only possibility, one should have hope of a place in a public kindergarten when the child reaches the age of two. In Cesis, it will cost 15 lats a month. In Riga at least 35. Private kindergartens, which are often slightly better than the public ones, cost even more.

In addition, there are quasi-mandatory donations that parents are expected to give to kindergartens, preferably 150-200 lats a year. If you do not do that, you risk being without a kindergarten place the following year.

- It is of course illegal, says Kristine.

- The vast majority still do as they are told.

How to hold on to people?

[labor migration] While Western Europe fears social dumping as a result of cheap labor from the new EU

countries, Latvia is discussing loudly

how to hold it sore

needed labor. It's special

Ireland, Great Britain and the Scandinavian countries that are recipients of Latvian

labor migrants. A significant proportion also travel to Norway.

- Emigration will continue as long as there are such huge differences between the wage level in Latvia and the wage level in "Old Europe", believes the Latvian Foreign Minister, Artis Pabriks.

- What is your view on "Old Europe"'s fear of social dumping?

- For both sides, labor migration is a problem, but it is more important to increase European competitiveness than to complain about this. In the long run, protectionism will lead to Europe losing economic power. We are called free passengers, newcomers and so on, but that is not true. If Europe does not succeed, Latvia will also lose, says Pabriks.


  • Last year, growth in Latvia's gross domestic product was 8,3 per cent. It is the largest growth in Europe. At the same time, Latvia is the EU's poorest country.
  • Social disparities have increased in Latvia since the country became independent when the Soviet Union collapsed.
  • In connection with the application process to the EU, the country reformed its welfare system. Today, Latvia spends 15 percent of its gross domestic product on social programs.

You may also like