To compensate inflation, Latvia’s Ministry of Welfare proposes different support mechanisms for the least protected members of society. The ministry also proposes changing benefit sizes and terms to receive them.
Because of the war started by Russia in Ukraine, inflation is on a rapid rise in the world, Latvia included. Prices of energy resources and food products are also on a rise. In such a situation Latvia’s government stresses it is important to provide focused aid for the least protected members of society, the ministry notes.
The ministry’s report mentions that from next year onward it is planned to raise the income threshold for poor households
to 50% of minimal income median, reaching EUR 313 for the first or sole member of a household and EUR 219 for all other members. Currently the income threshold for poor households is EUR 272 for the first or sole person in a household and EUR 190 for the rest.
Each municipality is authorised to set the income threshold for poor households at no higher than EUR 436 for the first or sole member of a household and EUR 305 for the rest. However, it must not be lower than the income threshold set for poor households. This means that the income threshold of poor households differ from municipality to municipality and residents’ options to receive state support differ as well.
Because of that the ministry suggests increasing the peak threshold for low-income municipalities from 1 January 2023 onward and setting the allowed peak at 80% of the minimal income median – EUR 501 for the first or sole member of a household and EUR 351 for the rest.
Ministry of Welfare stresses that municipalities will still have the right to set a lower low-income household income threshold because the Law on Social Services and Social Assistance states that the income threshold of low-income households is not allowed to be below the threshold of poor households.
Generally, if support is focused on households whose income reaches EUR 508.57 a month, a total of 938 700 people become eligible to it.
This year, municipalities apply different coefficients for guaranteed minimal income when calculating housing benefits.
It is planned that independently living pensioners or independently living disabled people are to be applied with a coefficient of 2.5 or a coefficient set by their local municipality if it is higher, whereas for households that have only persons of pension age or invalids, the coeffient is to be set at 2 or a coefficient set by their local municipality if it is higher than the one set here. For all other households the coefficient will be 1.5 or a coefficient set by their local municipality if it is higher.
Ministry of Welfare also notes that application of higher coefficients offers a larger number of households to become eligible for housing benefits.
Housing benefits are intended for residents with the lowest income. However, residents with relatively low income 2nd and 3rd quintile group do not qualify for housing benefits.
To improve hosing benefit accessibility, the Ministry of Welfare suggests setting a coefficient of 3 or 4 for all households to calculate housing benefits from 1 September 2022 onward.
The ministry notes that increased coefficients will open the path towards supporting lonely people and multi-person households and helping them cover everyday expenses and qualify for housing benefits.
From 1 January 2023 onward it is planned to set GMI threshold at 20% of minimal income median. This means for the first person in a household this could be EUR 125 and EUR 87.5 for the rest.
From 2023 onward the co-financing for municipalities is planned to be set at 50% of GMI and amounts paid for housing benefits.
To reduce the negative impact from rapid inflation for pensioners, in 2022 it is planned to perform pension indexation a month earlier than usual – 1 September. The legislative draft needs to be passed by the Saeima, and its review is currently paused.
With that, in 2022 state pensions or their portions that do not exceed EUR 534 of the previous calendar year’s average insurance contributions in the country will be reviewed on 1 September, considering the actual consumer price index and 50% of insurance contributions. For politically repressed persons, 1st group invalids and participants of the emergency response of the Chernobyl nuclear power plant disaster pension amounts will be reviewed in their entirety.
LETA previously reported that Prime Minister Krišjānis Kariņš had ordered Ministry of Welfare to work with Ministry of Economics, Ministry of Finance, Ministry of the Interior and Ministry of Environment Protection and Regional Development to develop a comprehensive benefits system by 14 June. The ministry developed proposals in time. However, the government had no time to review the proposal this week. The proposed changes also include a mechanism to compensate heating, electricity and natural gas tariff rise.