On social protection expenditure in 2010

24.11.2011

The provisional data of the Central Statistical Bureau show that, in compliance with the ESSPROS methodology* the social protection expenditure in Latvia in 2010 comprised LVL 2,282.5 million or 17.9% of the Gross Domestic Product (GDP) (1 percentage point more than in 2009, when this expenditure constituted 16.9% of the GDP). The social protection expenditure during a year has changed by 3.3 percentage points.The introduction of the measures within the framework of the social protection network resulted in a growth of expenditure on social exclusion reduction by 60%. Since 2008 the social protection expenditure has increased by 12%.

Social protection expenditure in Latvia according to ESSPROS classification (mln LVL)

 

2008

2009

 2010

(provisional data)

Growth in expenditure in 2010

over 2009

%

mln LVL

%

Total social protection expenditure

2043,1

2 210,3

2 282,5

100,0

+ 3,3

of which by function:

 

 

 

 

 

sickness/health care

591,4

512,6

467,4

20,5

-8,8

disability

147,3

169,8

172,0

7,5

+1,3

old-age

875,7

989,4

1165,5

51,1

+17,8

survivors

38,9

40,4

38,3

1,7

-5,2

family/children

223,9

226,8

192,8

8,4

-15,0

unemployment

82,3

207,4

167,6

7,3

-19,2

housing

27,6

16,7

17,3

0,8

+3,6

social exclusion

18,2

18,9

30,3

1,3

+60,3

administrative costs2

37,1

28,1

31,0

1,4

+10,3

other expenditure

0,7

0,2

0,3

0,0

+50,0

 

76.1% of the total social protection expenditure in 2010 was paid in cash. But 23.9% of the benefits were received in kind.

The pensions for the persons at retirement age were the predominant social protection expenditure – LVL 1165 million or 51.1% of the total social protection expenditure.93.7% of this expenditure were for old-age pensions – LVL 1092 million. Additionally to old-age pension the expenditure includes also service pensions, home care for old-age persons, as well as, other benefits.The rise in the old-age pension expenditure is related with the enforcement of the Constitutional Court judgement3 that resulted in a fact that the money withheld in 2009 was paid to the old-age pension recipients in 2010.In accordance with the State Social Insurance agency information the old-age pension and service pension recipients received approximately LVL 68.8 million.  

The second largest expenditure group was formed by the health care costs (ESSPROS function ‘’sickness‘’) – LVL 467 million or 20.5% of the total social protection expenditure. This expenditure includes state funding for outpatient and inpatient health care, expenditure on sickness benefits, as well as local government allowances to cover heath care expenditure, etc. Compared to 2009, the expenditure has dropped by 8.8%, and that may be explained with the reduction of expenditure on general sickness benefits (from the social security special budget means) (LVL 94 million in 2009 and LVL 66 million in 2010) and decrease of state funding for health care.

In comparison with 2009, the most notable expenditure growth (of 60.3%) was recoded for reduction of social exclusion:  benefits in cash or kind.The expenditure rise in this function mainly is related with the growth of expenditure on local government benefit for provision of guaranteed minimum income level (henceforth GMIB).The expenditure on GMIB grew 2.9 times (LVL 6 million in 2009 and LVL 18 million in 2010).In compliance with the data of the Ministry of Welfare4, the number of the monthly GMIB recipients has risen from 29 thousand persons in January to 69 thousand persons in December.Additionally to the GMIB this function includes also expenditure on State and local government funded social services, expenditure on analogical purpose local government benefits etc.

The expenditure on unemployment benefits decreased from LVL 137 millionin 2009 to LVL 89 millionin 2010 (by 35.3%). This drop may be explained with the Law "On payment of state pensions and state allowances during time period from 2009 to 2012” adopted on June 16, 2009. This Law requires the limitations to the size of the unemployment benefit granted and paid (starting from January 1, 2010).But expenditure on severance pays, in turn, decreased from LVL 43 million  in 2009 to LVL 16 millionin 2010 (2.7 times).

In the same time, in comparison with 2009, the expenditure onactive employment activities included in the ESSPROS data base grew.For example, the expenditure on active employment activity “Work practice with stipend in local governments” rose more than 3 times (from LVL 8 millionin 2009 to LVL 27 millionin 2010).

Expenditure related to support of family and children in 2010 constituted LVL 192.8 million or 8.4 % of the total social protection expenditure, thus forming the third largest expenditure group.This function includes expenditure on state benefits for families and children, expenditure on social care institutions for children, local government allowances for families with children, as well as other support.Compared to 2009, the expenditure in this group has diminished by 15%, and that may be explained with the limitations in the size of the State benefits paid set by the Law mentioned prior.

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


1Every year in European Statistics System the harmonized data on social protection expenditure are compiled and published in compliance with the ESSPROSS (European System of Integrated Social Protection Statistics) methodology developed by the Statistical Office of the European Communities (Eurostat).  In Latvia the compilation of the data on social protection in accordance with the ESSPROS was started in 2004.Data on social protection expenditure are available on home page of the CSB.The information provided by various state institutions is used for the data compilation.The ESSPROS expenditure is funded from the State and local government budgets, employer social contributions etc.

2The information on administrative expenditure was acquired with the help of calculations.

3The Law “On payment of state pensions and state allowances during time period from 2009 to 2012” adopted on June 16, 2009 required to reduce the size of old-age and service pensions by 10%, but for working retired – by 70%.

4INFORMATIVE LEAFLET On social protection network strategy introduction in 2010,Ministry of Welfare, 15.02.2011