Dark days ahead as poverty numbers rise

RIGA - In contrast with the slowly but steadily decreasing unemployment rate, the number of poor in Latvia is rising rapidly, reports news agency LETA. From around 100,000 at the beginning of this year, the number of those officially living in poverty has now doubled to nearly 200,000, according to the Nov. 21 edition of the Latvian State Television Sunday night program ‘De facto.’

The poorest area in Latvia is Cibla Region, located by the Latvian-Russian border near the town of Ludza. Among its 3,300 inhabitants, more than 1,000 are living in poverty, according to data from the Welfare Ministry.
While the average poverty rate across all Latvian municipalities is around eight percent, in Cibla the rate stands at 31.3 percent. The region is followed by Varaklani region (24.7 percent), Vilani region (24.7 percent), and Rugaji region (23.5 percent), all of which are in the eastern province of Latgale.

The lowest poverty level is in Kekava region, near Riga, where only 168 people are officially registered as poor, 0.8 percent of the region’s population.
The largest employers in Cibla region are the local school and municipal institutions. Other work is irregular and hard to come by, and the 100 lats (142.80 euros) grant employment program is considered one of the best and most stable jobs that can be found in the region.

According to a spokesperson for the municipality, the official number of those living in poverty has been rising not only due to the crisis but also due to many registering in order to receive support, for example, coupons from the electricity company Latvenergo. The number is also raised by the fact that many workers receive the minimum wage, and when this is divided among a family, it is insufficient for leading a normal existence.

Though unemployment numbers are now close to the level of October 2009, regional variations are becoming more pronounced, according to Bank of Latvia economist Olegs Krasnopjorovs. In Latgale, unemployment at the end of October was twice as high as in Riga - 21.9 percent compared to 10.3 percent. The difference between the rates in Latgale and Riga has grown from five to six percentage points before the crisis to 10 percentage points this March, when the national unemployment rate was at its peak and up to 11.6 percentage points this October.

However, figures from the Central Statistical Bureau do not show the same sharp regional distinction in the number of those actively seeking work, notes Krasnopjorovs. According to the economist, this indicates that regional variations in the unemployment rate do not so much reflect differences in the availability of work, but different levels of motivation to register with the State Employment Agency (SEA).

In Krasnopjorovs’ view, the difference is due to the larger number of economically inactive residents in rural areas. These are people who have given up hope of finding work or are prevented from doing so due to health or family circumstances, but who may still be motivated to register with the SEA. Even if lack of social security payments makes them ineligible for unemployment benefits, official unemployed status can be used as proof of a lack of income when applying for poor family status and related support payments.

Krasnopjorovs believes that the significant rise in unemployment in late 2009, particularly in rural areas, could also be connected with the commencement of the ‘100 lats’ employment program.
At the end of October, the registered unemployment rate in Latvia was 14.3 percent, representing a 0.3 percent decrease compared with September, according to information from the State Employment Agency (SEA). In October, 58,825 people took part in employment programs organized by the agency.