Abstract
The results of a survey carried out in Latvia in 2015 are examined to estimate the scope and depth of in-work poverty. The widely used EU-SILC data considerably underestimate in-work poverty in Latvia. Logistic regression analysis indicates that persons with low education, poor health, persons of pre-retirement age, and those employed in non-standard work arrangements are more likely exposed to a high in-work poverty risk. Social transfers and the income of other household members do not significantly reduce this risk. The Latvian government should provide adequate social protection and funding to alleviate the in-work poverty problem.
Highlights
Latvia experienced a deep economic crisis in the period from 2008 to 2010
As the Latvian survey data analyzed in this paper indicates, the skills gap is likely to widen because there are few opportunities for the low skilled to acquire the necessary human capital to claim higher wages in the future
This study indicates that those of pre-retirement age in Latvia are at a considerable in-work poverty risk
Summary
Latvia experienced a deep economic crisis in the period from 2008 to 2010 It had one of the largest GDP per capita drops in the EU reaching -12.9% in 2009 (EU-28=-4.6%) (Eurostat, 2017). In 2018, the GDP per capita growth rate was 5.6 % (Eurostat, 2019b) and the unemployment rate dropped to 7.4% (Eurostat, 2019c) These developments in Latvia have had a negligible effect on the in-work poverty rate, an indicator measuring poverty levels among the employed. In 2009, the in-work poverty rate peaked at 11.2% but decreased only slightly to 8.2% in 2018 (Eurostat, 2019a). This contradiction is the main focus of this paper. The paper compares various empirical sources and discusses a number of policy implications
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