SYNERGY OF THE AMOUNT OF SOCIAL SECURITY BENEFITS AND ECONOMIC ACTIVITY IN LATVIA

Abstract

Research hypothesis: a synergy exists in Latvia between the average amounts of state social security benefits and the regions’ economic development.

The research aim is to identify interaction between the average amount of state social security benefits and economic development in Latvia.

The synergy between economic development and the average amount of security benefits, which was identified in this paper, can be regarded as a research novelty.

Latvia’s social safety system includes state social insurance, state social benefits, social services, and social assistance that are financed from both the central government’s basic budget and special budget and the budget of local governments.

Latvia’s social insurance includes state pensions and state social security benefits. In accordance with Latvia’s legislative acts, its state social security benefits are classified into two groups: unemployment benefits and maternity and sickness benefits. The present research showed that the average amount of state social security benefits gradually increased in the regions of Latvia in the period 2005-2009. The increase in the amount of benefits is related to an increase in wages, an increase in and the legalisation of employment, as well as amendments to legal acts of the Republic of Latvia.

To compare economic development levels according to various indicators in Latvia’s districts, a cluster analysis was performed. For the cluster analysis, 11 statistical indicators were selected. A cluster analysis showed that a monocentric economic development trend is specific to Latvia, as a result of which there are significant differences between Latvia’s capital city of Riga and the other districts of Latvia (a unit of administrative and territorial division in Latvia till the middle of 2009). The economic development level in many Latvian border districts (Aluksne, Balvi, Gulbene, Kraslava, Ludza, Valka) is low, as a result of which the socio-economic differences increase and differences in the average amounts of social security benefits paid in Latvian regions increase.

According to the research results, there are interactions – synergies – among the amounts of unemployment, maternity, paternity, and parental benefits, the distance of districts to the country’s capital city, as well as the economic development level of districts.

DOI: http://dx.doi.org/10.5755/j01.eis.0.5.1077