Political battle drifts into pensioners' realm

  • 2008-03-12
  • By Talis Saule Archdeacon

STILL POOR: Pensioners joined in the rallies against the government at the end of last year. The background sign reads 'pensioners want to eat.'

RIGA - A new political organization founded by two former ministers has launched itself into the political arena with a bid to increase old-age pensions by organizing a public referendum on the issue.
The initiative has been slammed as populist by Latvia's government leaders, who have nevertheless reached out to the country's retirees by promising to raise pensions at a time when food prices are outpacing inflation and causing considerable stress among the population.
The average pension in January was 124.3 lats (176.9 euros), according to the Welfare Ministry, while the subsistence minimum reached 148 lats in January due to the soaring cost of living in Latvia, the statistics agency said in February.

Society for Different Politics, an organization founded by former Regional Affairs Minister Aigars Stokenbergs and former Foreign Minister Artis Pabriks, is now working to bring the issue to the forefront of Latvian politics.
The two political heavyweights founded the organization after they left the ruling People's Party over ideological differences. The organization, which will soon become a political party, has already collected significantly more than the 10,000 signatures to initiate a referendum on raising pensions.
For the referendum to succeed, the organization will need to collect a total of about 140,000 signatures. The signature gathering campaign is due to take place April 16 's May 15.
However, Stokenbergs hopes that it will not be necessary to hold the referendum 's a costly affair 's and that Parliament will be able to resolve the matter on its own.

"Find a positive way to resolve this, and we will not have to follow through with the referendum," Pabriks told The Baltic Times. "We think that the referendum is necessary, [but we hope] that Parliament will be smart enough not to push it that far, because it can be fixed earlier."
The government has already pledged to try to do something about low pensions but has not yet made any concrete plans to do so.
"Of course pensions are very low, and this increase is absolutely necessary 's and understandable 's from the point of view of pensioners," SEB macroeconomics analyst Dainis Gaspuitis told The Baltic Times.
On March 10, the daily Diena reported that should things get much worse 's and economists agree they will 's the government is prepared to raise old-age pensions. The paper quoted Prime Minister Ivars Godmanis as saying that if the minimum subsistence level increases much more in coming months, the government could push amendments to the pension law through as early as October.
"With these steps we want to prove that we are solving these issues gradually," the prime minister said.

Attacking the referendum
In light of the government's apparent willingness to resolve the issue, parliamentary speaker Gundars Daudze said that the referendum was not necessary.
Moreover, he openly accused Society for Different Politics of using the issue for their own political ends rather than working for the greater good.
"I am absolutely convinced that the initiators of the referendum have partly seized this opportunity to raise their own political capital and satisfy their political ambitions. They have not really considered the possible results and consequences," Daudze said in a radio interview.
"The referendum on pensions is especially populism-driven, though nobody denies that the pension issue has to be solved," he said.

Gaspuitis agreed that the referendum could be simple political maneuvering.
"Another thing is that [Society for Different Politics] could be trying 's from the politicians' view 's is to move against their opponents. If they propose higher pensions, then it is quite good for them to gain political popularity," he said.
Opponents of the pension increase point to fears that it will only exacerbate Latvia's already out-of-control inflation. Gaspuitis, however, said the theory that inflation is being driven by public sector wages is "absolute nonsense," and that pensioners should not be the ones to suffer.

Middle class
Pabriks said the people who suffer most from the system are the former middle class workers who lost their pensions in the 90s.
"The problem is not all pensioners, but the former middle class that had pensions until 1996. The modern pension system does not apply to them," he explained.
"We suggest solving this problem by restructuring the budget. We do not want to destroy the system, we want to fix it so that older pensioners are not the losers," he said.
The budget is divided into two distinct parts, Pabriks said 's the social budget and the discretionary budget. While the government has for years been saying that there is a huge surplus in the social budget, Pabriks said the real problem is that the government takes this surplus 's and more 's and transfers it to the regular budget.
"The current government has been cheating the public [by dividing] the budget into two parts. The social budget we have been told has had a high surplus for many years, but this actually does not exist because it is immediately transferred to the regular budget. We have even been taking [extra] money from the social budget and using it for other purposes," he said.
Gaspuitis pointed to the same problem. He rhetorically asked how the government could justify such low pension payments: "If people see there is quite a substantial amount for the social budget, how can we explain to them that there is so much money [available] when pensioners are so poor?"

* There are more than 485,000 pensioners in Latvia and the vast majority of them are unable to pay their bills on pensions alone.

* Statistics provided by the Welfare Ministry show that the average pension payment in January was 124.3 lats (176.91 euros). The minimum old-age pension payment is only 49.5 lats, and nearly 90 percent of pensioners make less than 150 lats per month.

* Pensions for the 66,000 disabled are even more dismal, averaging only 95.3 lats per month.

* Data from the European Union indicate that average pension payments are in fact less than Latvia's subsistence minimum (the minimum amount of money required to survive).

* "The average monthly subsistence minimum for a basket of goods and services for one person in the third quarter of 2007 was calculated as being 134 lats (191 euros)," the official Web portal of the European Union says. "Average consumer prices in Latvia do not differ significantly from average prices in other European countries."