The Government must decide on the path poverty reduction should take: maintaining a system of universal support that does not have a common approach and supervision, or introduce a targeted approach genuinely based on individual needs for those who need it most, according to the State Audit Office.
The State Audit Office has reached such a conclusion by conducting a performance audit to find out whether the social inclusion policy implemented in the country achieves its goals in terms of poverty reduction.
“For poverty reduction not to remain just one of the declarative slogans in the top hierarchical documents of the Government, it must also be a priority at the level of sectoral policies and local and regional governments by envisaging specific actions to achieve the goals set. Unfortunately, the findings of the audit reveal a fragmented, uncoordinated allocation of national and municipal funds not based on precise data for poverty reduction, which does not always reach those at risk of poverty and social exclusion,” admits Auditor General Elita Krūmiņa.
Incomplete data and lack of single supervision
There are no extensive data on individuals at the risk of poverty in Latvia. At present, one can obtain information on the risk of poverty among the people of retirement and pre-retirement age, large families, single-parent families, and children. Information on the disabled people is only partially available.
On the other hand, one does not analyse the information on such population groups as Roma, ex-prisoners, individuals with insufficient, low, or inadequate skills for the labor market at all. The State Audit Office considers that one requires determining first which population groups are exposed to poverty and then decide on specific measures to reduce their poverty.
The government and local and regional governments push their own agenda
The Concept of the Minimum Income Level (Concept) approved by the Government in 2014 is the only coordinating policy document for poverty reduction at present aimed at introducing a single minimum income level, which would serve as a reference point for granting public and municipal support to the lowest-paid population stipulated within the social security system.
The leadership of a working group of the Ministry of Welfare has been drafting its implementation plan for almost five years. While writing the plan, the working group has mainly relied on discussions without initiating real reforms.
It has assessed the municipal social support system, which is a very essential tool for poverty reduction, in terms of only three benefits: annual minimum income, housing benefit, and crisis benefit.
In the auditors’ opinion, the introduction of the minimum income level required a comprehensive evaluation of the existing national and municipal support and its effectiveness, as well as the recording of overlapping in public and municipal aid.
One also implements social inclusion measures anticipated at the level of sectoral policies in a non-interconnected manner detached from common national objectives, and they are not always sufficient.
At the same time, several tax policy measures even run opposite to the national objective of reducing poverty. The COVID-19 crisis has already shown that employees in reduced tax regimes (micro-enterprises, the self-employed, royalty holders, and patent payers) are at risk of poverty and require urgent solutions because reduced compulsory national social security contributions have a direct impact on the amount of means of subsistence in case of unemployment, disability, and upcoming retirement age.