Many know Latvia, a small country in Eastern Europe that Lithuania and Estonia border, for its seaside capital city and rich cultural heritage. Following its swift recovery after the 2008 financial crisis, the country’s elderly population overshadowed Latvia’s strong economy. Brought on by a declining working-age labor force, the rate of elderly poverty in Latvia remains a point of concern.
The Vulnerability of the Elderly
In 2015, the World Bank unveiled a report titled “The Active Aging Challenge for Longer Working Lives in Latvia,” which presents data on the status of elderly poverty in the country. In coordination with the Latvian government, the project set out to discover how to develop a strategy to promote “longer working lives” while emphasizing the need to make better use of the existing workforce.
The results point to shrinking younger generations as the main contributor to elderly poverty over declining life expectancy rates. The report highlights two key risk factors that are causing the working population to dwindle: emigration and low fertility rates. An overall population decline of 0.5% each year is due to emigration siphoning workers out of the country.
However, low birth rates fail to provide the backup labor necessary to keep the economy stable. By 2035, this trend predicts that working-age populations will decrease by 23%. Furthermore, a report that the Organization for Economic Co-operation and Development (OECD) published determined that those in the 65 and older age group will increase in number by 50%, catapulting the elderly poverty rate in Latvia to double the average in comparison to other EU countries.
Lack of Safety Nets and Workforce Integration
The Latvian pension system is one of the problems which inherently stands in the way of solving elderly poverty in Latvia. Back in 1996, the government introduced the NDC scheme, or in other words, the pay-as-you-go system. This allowed individuals to make contributions to their retirement fund as they wanted. However, with the elderly population on the rise, it has become evident that those who made low contributions find themselves with very little to support themselves on.
Women in the 75 and older age group made the smallest contributions. The poverty rate of Latvia remains the highest across OECD countries. Additionally, the country has the lowest level of income among older people of OECD countries. Those who choose to remain employed find that only 40% of Latvian companies provide any training. This makes integration into the workforce much harder. Latvia has the highest proportion of people in the European Union with healthcare and education inequalities. This is due to a lack of training by firms and workers.
Lending a Helping Hand
The Riga Acting Seniors Alliance (RASA) aims to support Latvian individuals older than the age of 50 who are at risk of elderly poverty and help reintegrate them into society. Most notably, it connects seniors to others who share the same interests.
Caritas Latvia is another group that targets lonely seniors, the unemployed and people in poverty. It implements home visits, food and clothing drives, crisis centers and other volunteer work to help people in need. Caritas has pointed out that it will not be able to complete its work until spending on social protection increases to include the elderly at risk of poverty or social exclusion.
The country’s government recognizes the problem of elderly poverty in Latvia and has incorporated elderly poverty reform into its legislative goals. A survey that the Central Statistical Bureau (CSB) conducted in 2019 found a 0.4% decrease in populations at risk of poverty in comparison to a similar study in 2017. This drop was due to the rise in the minimum wage, changes to the income tax application and increased social benefit offerings such as pension plans. The changes signal a promising start to resolve Latvia’s core socioeconomic issues as well as a commitment to achieving progress.
– Nicole Yaroslavsky