Kazāks: Latvia is in dire need of sustainable and far-sighted energy policy

Latvia is in dire need of a sustainable and far-sighted energy policy, said Bank of Latvia governor Mārtiņš Kazāks in an interview to LTV programme Rīta panorāma on Thursday, 6 January.
He said the current situation on the energy market is very indicative of the ongoing global trends – both the recovery of oil prices and the rapid climb of gas prices. All of this affects heating costs and electricity prices. At the same time, this situation indicates that Latvia desperately needs a sustainable and far-sighted energy policy.
«This is a very clear signal – we need to go back and compose a sustainable and far-sighted energy policy. The country needs this very, very much,» said Kazāks.
At the same time, the governor of the Bank of Latvia noted in regards to the state aid provided to residents due to the rapid growth of prices of energy resources that focused support for groups of poor residents would be a good idea, but it is not necessary to keep supporting everyone all the time.
«You have to understand, we cannot give out ‘fish’ every time. We have to give a ‘fishing rod’ to both businesses and residents. The ‘fishing rod’ of residents is skills and ability to earn money. Then there is the active policy from the labour market, which helps people learn new skills and receive better-paid jobs,» said Kazāks.
He also mentioned that reduction of value added tax would not be the best solution in this case, because it would serve as assistance to everyone, wealthy residents included.
Kazāks also mentioned that last year wages in Latvia increased by an average of 8-10%, whereas prices increased by an average of 3-4%. «This means average workers’ wages have increased more rapidly than inflation, making these people wealthier. Do we need to support hem? We’re thinking on that. This is much like having average temperature in hospital. Unfortunately, during the crisis we have observed a risk in the two-gear labour market – those who have the skills have experienced a major wage increase, because to reach an average increase of 8%, someone needs to have their wage increase exceed 10% by a large margin. For other people, however, wages have either stayed the same or have even decreased,» says the governor of the Bank of Latvia.
He also notes that focused aid programmes are welcome in short-term perspective, but when it comes to the long-term perspective it would be more beneficial to think about helping residents improve their skills. «Let’s give people an opportunity to earn more money, rather than keep them on benefits,» said Kazāks, adding that this kind of thing requires time, but if nothing is done, there will be no result.