On social protection expenditure in 2009

24.11.2010

According to ESSPROS methodology1 expenditure for social protection in Latvia in 2009 constituted LVL 2 201 mln or 16.8% of gross domestic product (GDP), according to the data of Central Statistical Bureau. But in 2008 this expenditure comprised LVL 2 042 mln or 12.6% of GDP.

Expenditure for social protection in Latvia according to ESSPROS classification (mln LVL)

 

2007

2008

2009

Expenditure changes in 2009

over 2008

%

mln LVL

%

Total expenditure for social protection

1 660.2

2 042.1

2 200.6

100.0

+ 7.8

of which by function:

 

 

 

 

 

sickness/health care

499.0

591.4

512.6

23.3

- 13.3

disability

109.3

146.3

168.3

7.6

+ 15.0

old-age

707.8

875.7

982.7

44.7

+ 12.2

survivors

32.0

38.9

40.4

1.8

+ 3.9

family/children

172.9

223.9

226.9

10.3

+ 1.3

unemployment

60.7

82.3

206.0

9.4

2.5 times

housing

18.5

27.6

16.7

0.8

- 39.5

social exclusion

16.6

18.2

18.5

0.8

+ 1.6

administrative costs3

30.0

37.1

28.1

1.3

- 24.3

other expenditure

13.5

0.7

0.2

0.0

- 71.4

 

Out of the total expenditure in 2009 benefits and allowances paid in cash comprised 76.1%, but allowances and benefits paid in kind (in a form of goods or services) constituted 23.9%.

As a reaction to the economic situation, most notable growth of expenditure was recorded for costs related to unemployment. Compared to 2008, these costs increased 2.5 times. That mainly can be explained with the growth of expenditure for unemployment benefits and severance pays made by the employers. According to the data of State Employment Agency at the end of the December 2009 totally 179 thsd unemployed were registered in the country, of which severance pay received 67 thsd persons. Expenditure for unemployment benefit increased from 56 mln in 2008 to 137 mln in 2009. Also expenditure for severance pays made by the employers in 2009 rose more than 2 times (in 2008 – 19 mln, in 2009 – 43 mln). In comparison with the year before, expenditure for all active employment activities included in the ESSPROS data base in 2009 increased. Additionally to these activities starting with 2009 also new active employment activities were introduced – e.g., work practice with stipend in local governments, etc.

Expenditure for social protection in Latvia in 2009 still was dominating for persons at retirement age (ESSPROS function ‘’old-age’’) – LVL 983 mln or 44.7% of total expenditure for social protection. Of this 94.3% were expenditure for old-age pensions – LVL 927 mln5 (if compared to 2008 the expenditure has grown by 13.2%). Old-age pension expenditure changes in 2009 were influenced by the Law ‘’On payment of state pensions and state allowances during time period from 2009 to 2012’’ adopted on June 16, 2009, as a result of that value of old-age and service pensions was reduced by 10% and for working pensioners – by 70%. The increase of the additional monthly payment for old-age pensions (starting from January 1, 2009 from LVL 0.40 to LVL 0.70 for each service year until 1995 regardless the persons' insurance length and amount of pension) influenced the old-age pension expenditure changes in 2009 as well. Additionally to old-age pension expenditure in function ‘’old-age’’ include also service pension, home care for old-age persons, as well as other benefits.

Second largest expenditure group was formed by costs of health care (ESSPROS function ‘’sickness‘’) – LVL 513 mln or 23.3% of total expenditure for social protection. This expenditure includes state funding for outpatient and inpatient health care, expenditure for sickness benefits, as well as local government allowances to cover heath care expenditure, etc. Compared to 2008, expenditure for this ESSPROS function in 2009 decreased by 13.3%, and that mainly can be explained with the reduction of state funding for health care. According to the information of the Health Payment Centre, in comparison with 2008, expenditure for impatient health care in 2009 reduced by 22.9% and for outpatient health care (primary and secondary health care) – by 14.0%.

Expenditure related to support of family and children in 2009 constituted LVL 227 mln or 10.3% of total expenditure, thus forming the third largest expenditure group. This expenditure includes costs for state benefits for families and children, expenditure for social care institutions for children, local government allowances for families with children, as well as, other support.

ESSPROS function ‘’housing’’ includes expenditure for social apartments/social houses, as well as, local government housing benefits. The most notable decrease of the expenditure in 2009 was recorded in ESSPROS function '’housing’’, by 39.5% if compared to 2008. That is related to the reduction of funding for single allowances for vacating residential space for premises of denationalised houses.

 

Prepared by Living Standard’s Statistics Section
Kārlis Smudzis
Tel. 67366948


1 Every year in European Statistics System harmonized data on expenditure for social protection are compiled and published accordingly to ESSPROSS (European system of integrated social protection statistics) methodology developed by Statistical Office of the European Communities (Eurostat). In Latvia data compilation on social protection accordingly to ESSPROS was started in 2004. Data on expenditure for social protection can be found on home page of the CSB. The information provided by different state institutions is used for data compilation.
2 Provisional data.
3 Data on administrative expenditure were obtained in the result of calculations.
4 There was a reduction of the expenditure in the ESSPROS function ‘’other expenditure’’ - 94.8%. It may be explained with the fact that in 2008 repayment of the disability, maternity and illness special purpose budget loan into the general budget was not made any more.
5 Excluding sum withheld from old-age pensions due to the Law ‘’On payment of state pensions and state allowances during time period from 2009 to 2012’’ adopted on June 16, 2009.