On social security costs in Latvia in 2006

19.08.2008

According to ESSPROS methodology* costs for social protection in Latvia in 2006 constituted 1368 mln lats or 12.2% of gross domestic product (GDP) (in Estonia – 12.3%, in Lithuania – 13.4%), according to the data of Central Statistical Bureau. Compared to 2005 (12.4% of GDP) in 2006 share of social protection costs in GDP in Latvia has reduced. It mainly may be explained with the fact that, increase of social protection costs was lower than GDP growth.

If compared to other countries of the European Union in 2005 in Baltic countries costs for social security in GDP were the lowest, according to Eurostat data: in Latvia – 12.4%, in Estonia – 12.5%, in Lithuania – 13.2%. In European Union this indicator on average comprised 27.2% of GDP.

Structure of social security income in 2006 was as follows: social contributions – 63.9%, state and local government budget funding – 35.5% and other income – 0.6%. But social contributions, in turn, were formed by the employers’ contributions (73.7) and social contributions paid by the protected persons (26.3%).

Social security costs in Latvia according to ESSPROS classification (mln LVL)

2004

2005

2006

Cost increase in 2006 over 2005, %

Costs for social security - total

960.2

1120.3

1368.2

+22.1

Of which by function:

Sickness/health care

222.6

279.2

386.8

+38.5

Disability

71.9

80.3

97.0

+20.8

Old age

450.8

511.8

613.1

+19.8

Survivors

22.8

24.6

28.9

+17.5

Family/children

95.9

118.5

135.2

+14.1

Unemployment

32.0

41.4

49.2

+18.8

Housing

5.6

6.4

7.9

+23.4

Social exclusion

11.2

10.7

10.7

0.0

Administrative costs

20.5

24.8

28.9

+16.5

Other expenditure

26.9

22.6

10.5

-53.5

Of total expenditure in 2006 benefits and allowances paid in cash comprised 68.8%, but allowances and benefits paid in kind constituted 31.2%. Social security allowances and benefits with declaration of material situation comprised 1.4% of the total value of social security allowances and benefits.

Structure of social security expenditure in 2006

 

Expenditure for social security in Latvia in 2006 was dominating for persons at retirement age (ESSPROS function "old age") – LVL 613 mln or 44.8% of total expenditure for social security. 92.5% of this expenditure were for old-age pensions – LVL 568 mln. Additionally to old-age pension in the function "old age" expenditure includes also service pension, home care for elderly, as well as, other allowances and benefits.

Second largest expenditure group was formed by costs of health care (ESSPROS function "sickness") – LVL 387 mln or 28.3% of total expenditure for social security. This expenditure includes funding for outpatient and hospital health care, expenditure for sickness benefits, as well as, local government benefits to cover health care costs, etc. Compared to 2005 (38.5%) expenditure for health care has increased most of all. It may be explained with the fact that, country expenditure for secondary and outpatient health care has grown, as well as, expenditure for sickness benefits has increased.

Expenditure related for support of family and children in 2006 constituted LVL 135 mln or 9.9% of total expenditure. 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.

Expenditure related to disability was the fourth largest group of expenditure for social security. Expenditure for support in the case of disability in 2006 comprised LVL 97 mln or 7.1% of total expenditure for social security. Highest expenditure was formed by disability pensions, expenditure in social care institutions etc.

ESSPROS function "housing" includes expenditure for Social apartments/social houses, as well as, local government housing benefits. Total expenditure for this section in 2006 comprised LVL 8 mln or 0.6 % of total expenditure for social security. Second largest expenditure increase (by 23.4%) may be observed in the ESSPROS section "housing", it is related with the funding increase for Social apartments/social houses.

ESSPROS function "other expenditure" contains various social security expenditure, e.g., interest payments on long-term loans. Compared to 2005 "other expenditure" in 2006 has noticeably reduced, because in 2006 state pension special purpose budget loan repayment to state basic budget reduced noticeably.

* Every year in European statistics system harmonized data on social protection expenditure is compiled and published accordingly to ESSPROS (European system of integrated social protection statistics) methodology developed by Statistical Office of the European Communities (Eurostat). In Latvia data compilation on social security accordingly to ESSPROS was started in 2004. Data on social security expenditure can be found on home page of the CSB. Information provided by different state institutions are used for data compilation.

Prepared by Living Standard’s Statistics Section
Tel. +371 67366847
Kārlis Smudzis