Poverty Risk Among Older People in Latvia Is Among the Highest in Europe
Eurostat data show that Latvia's overall poverty risk has fallen over the past decade, yet among the elderly it ranks near the top in Europe. An SEB bank economist and the Ministry of Economics explain the causes and the need to balance priorities.
Over the past ten years, the risk of poverty in Latvia has decreased overall, especially among children and young people, whose figures are better than the European average. However, the older people become, the higher the risk: in the oldest age groups Latvia ranks among the top countries in Europe, according to data from Eurostat, the European Union's statistics office. Latvia also has the largest gap in Europe between the poverty risk for children under six and for people over 75.
The economist's explanation
Dainis Gašpuitis, an economist at SEB bank, says economic growth has reduced the number of people at risk of poverty, but problems remain. The structure of the economy is changing, raising demand for new knowledge and skills, which gives younger people relative advantages in the labour market. This is shown by the fact that pay begins to fall after the age of 50. The Baltic states stand out in Europe because younger generations earn more than older workers; this can be explained by fewer labour market opportunities and other factors, such as health.
The economist points to a difficult choice: the state must fund the incomes of current pensioners while also creating better conditions for the generations who will fund the system later. If too many resources go to pensions and benefits, there will be too little for education, childcare and family support. If pensions are kept low, poverty may raise health and social care costs and weaken trust in the social insurance system. In his view, balancing priorities matters more than ensuring an equal poverty risk in every age group.
The Ministry of Economics' view
The Ministry of Economics holds that a high risk for older people cannot be justified by the greater long-term return on investment in the young, since the pension system is social insurance that provides income in return for contributions already made. Most differences between age groups, it says, are not the result of budget priorities. Children's figures improved thanks to targeted family support and rising wages in households, while seniors' incomes are tied to the pension system and grow more slowly.
The ministry cites other factors too. Income inequality in Latvia is among the highest in the EU. In 2024, the poverty risk for people over 65 living alone was 63%, compared with 30% in households of two adults, at least one aged 65 or older. Most seniors living alone are women. Housing, energy and medicine costs also weigh heavily on low-income seniors.
The Ministry of Welfare, which is responsible for the pension system, did not answer the newspaper Diena's questions about poverty risk.
