The transformation of welfare systems in the Baltic States: Estonia, Latvia and Lithuania

Abstract

This chapter aims to give a general overview of the main problems and reform challenges of social protection in Estonia, Latvia and Lithuania since the collapse of the Soviet regime. Baltic social policy offers an interesting case study, as the experience of Soviet authoritarian rule between 1940 and 1990-91 had an impact on their subsequent trajectories, while post-communist economic and social restructuring has coincided with population ageing and the increasing impact of globalization and Europeanization in recent years. The Baltic economies have experienced rapid economic expansion during the last years of the transition (2000-2007) and had the fastest growing GDPs in Europe (see Table 6.1).1 Consequently, employment opportunities have increased in the Baltic region and unemployment has decreased considerably. However, despite comparatively good economic indicators and GDP growth, Baltic societies spend much less on social protection as compared to the EU-15 and the EU-27 average. The share of GDP spent on social protection in the three Baltic states (12-13 per cent) is among the lowest in the European Union (Keune, 2008, p. 13). Thus, it is not surprising that the income inequalities expressed as a ‘Gini coefficient’ are also the highest in these societies, ranging from 36 in Estonia and Lithuania to almost 38 in Latvia (Table 6.2). The absolute poverty rate is non-existent in the EU-15 countries and also in the Czech Republic, Slovenia and Hungary, but it is still present in the three Baltic states.