Municipalities lack money to raise minimum income in Latvia

The increase in the guaranteed minimum income (GMI) allowance to EUR 109, though insufficient, would be impossible to achieve with municipal budget, reported Latvian Television August 3.

GMI is a benefit for people in need. The income of a person, together with the benefit, must reach this minimum level of income.

The size of the GMI allowance is determined by the government, but it is paid by municipalities. Since the Constitutional Court has recognized that the current amount of the GMI allowance – EUR 64 – does not provide for basic needs, the Ministry of Welfare is proposing to raise the benefit either up to EUR 109 or up to EUR 164 per month. According to the Ministry, the person should be able to purchase food and clothing.

“It's a short-term benefit for a person when they are really in need, lost a job. Temporary support, until the person is able to find a job, to return to the labor market. This is not a benefit to live on,” said Welfare Minister Ramona Petraviča (“KPV LV”).

But even for a small increase in benefits, money is lacking. Since provision of basic needs recognized by the Constitutional Court must also be accompanied by an increase in housing aid, the cheapest options developed by the Ministry would cost municipalities EUR 25.3 million. Gints Kaminskis, head of the The Latvian Association of Local and Regional Governments, said after talks with the Welfare Minister that not all local governments could raise benefits.

“For example, the Chairman of Rēzekne municipality described that he needed an additional EUR 400 000 to meet this minimum requirement. […] If there is a situation that municipalities are not able to provide it, we have a common view with the Ministry that the State comes to help,” Kaminskis said.

The Minister alone cannot promise it. Negotiations on next year's budget will only start next week, with other costly priorities for welfare. For example, EUR 36.8 million is needed to increase the state social security allowance, which the Constitutional Court has also found to be insufficient. However, the Ministry's offer to raise GMI is considered too modest by Saeima deputies, who will have to approve the method of calculating the benefit. Members of both the opposition and the coalition expressed sharp criticism at the first meeting on raising benefits, both for the small rise and for the ministry's plan to set benefits as one fifth of the median income of household members.

“I think I should start to understand how much a person needs to live, and then calculate. Not from households, but one person,” said Evita Zālīte-Grosa, Saeima deputy.

“What is it –  EUR 109? “I can't put it together in my head, how can a person live?” asked Inese Ikstena (“For Development/For!”).

MEPs called for a portrait of a minimum income recipient and to understand the reasons why he had “fallen through” almost all levels of the social support system. Answer is needed to the question what improvements are needed in order to achieve real improvement in quality of life and to ensure a dignified livelihood. And then there is the question of what kind of investment it requires.

“Welfare problems have been accumulating for decades, and it's all sorted out over a year, two years, that's impossible,” said Petraviča.

On June 25, the Constitutional Court acknowledged that the current level of guaranteed minimum income, which is EUR 64 per month, is not in line with the Constitution, so it should be increased from January 1 next year.

The case was filed with the court by the Ombudsman Juris Jansons. He believes the benefit is too small to provide food, housing and other basic needs.

The level of GMI per person was previously €53 a month, but it was raised by the government to €64 from January this year. The Ombudsman pointed out that although the benefit was increased, it does not provide people with a dignified life.

Although the amount of the benefit is determined by the State, the benefit is paid to local governments from their own resources.

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Economy
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