Table 4.2 Giving up satisfaction of the primary needs (% of all respondents)
Giving up of Often Sometimes Rarely Never No answer
Food 9.2 21.3 20.5 48.6 0.5
Heating, electricity 3.8 9.8 13.3 72.5 0.7
Clothing or footwear,
which are truly necessary 12.7 25.7 23.4 38.0 0.2
Medication, medical aid 13.5 19.5 21.8 44.2 1.1
Source: Baltijas Sociâlo Ziòâtòu institûts. Jautâjumi sabiedrîbas demokrâtizâcijas dinamikas novçrtçðanai, Tabulu atskaite. Rîga, 2004. gada oktobris, 9.1.9.4. tab.
4.2 How effectively are the basic necessities of life guaranteed,
Ministry of Agriculture. In accordance with the Food Supply Supervision Law the Ministry of Welfare shapes and coordinates food policy and is responsible for development of general food safety requirements and submission of corresponding draft regulatory enactments to the Cabinet of Ministers. The State Sanitary Inspectorate of the Ministry of Welfare controls the compliance of drinking water, supplied to the public via water supply systems, with the requirements laid down in the regulatory enactments. The Cabinet of Ministers determines the procedure for monitoring and control of drinking water.
The Food and Veterinary Service (FVS), which began operation on January 1, 2002, supervises all food markets. Its task is to ensure distribution of safe food to consumers nation-wide by controlling food in all stages of its turnover. The FVS utilizes the approach from field to table in its activities, which means that consumer interests are protected not just with regard to health issues, but also with regard to issues of animal welfare, ethics and environmental protection. The Food Supply Supervision Law defines the functions of the FVS.
The Food Council a coordinating and consultative institution evaluates the funding of the FVS. The Minister for Agriculture is the chairman of this Council. The Council includes representatives from the Ministries of Agriculture, Economics, Health and Environment, as well as from the State Revenue Service (SRS), the Main Customs Administration, State Police, the National Fishery Administration (NFA), Food and Veterinary Service and other institutions (Cabinet of Ministers Regulations Food Council Statute). The Food Supply Supervision Law also determines the operation of the Latvian Food Centre. The Latvian Food Centre is a government institution, headed by a director who is appointed by the Cabinet of Ministers on the suggestion of the Minister for Welfare in coordination with the Food Council. The tasks of the Centre include the examination of complaints and suggestions related to food inspection and incidents of distribution of low-quality food, harmful to human health, life or environment.
According to Section 25 of the Consumer Rights Protection Law, the Consumer Rights Protection Centre is a government institution under supervision of the Ministry of Economics, which acts in accordance with the statute, approved by the Cabinet of Ministers. The main task of the Centre is to ensure protection of consumer rights and interests. The non-governmental sector also deals with consumer interest protection.
The first organization for the protection of consumer rights was established in 1989 the Riga Club of Consumer Rights Protection. This Club was the author of the first draft law On Consumer Rights Protection
(28.10.1992) and has actively participated in the development of other regulatory enactments on consumer rights protection in the field of advertising and consumer information, etc. Similar clubs for consumer interest protection have been established in other towns of Latvia (Jelgava, Rezekne, Daugavpils, etc.). On March 13, 1999, the above-mentioned organizations united with the goal to create a network of consumer interest protection and founded a unified organization Latvian National Association for Consumer Protection (PIAA). In 2002, the member organizations of the Association examined 3667 consumer complaints, the majority of which (38%) were about legislation, followed by rent and utilities (37%), other services (12.4%), other goods (6.3%), appliances (5.5%), food products (5.4%), footwear (5.1%), etc. The Association conducts educational seminars, training and discussions in Riga and other regions of Latvia, thereby introducing society to consumer rights and consumer protection legislation. It organizes training for representatives of the regional clubs on a regular basis to promote more effective consultations of consumers in regions.2 The Consumer Guide
operates since August 31, 2000, fashioned after the European consumer organizations as an educational, independent online consumer advisory organisation.
Conclusion: a broad institutional foundation has been created for food supervision and food supply control, and food consumers have opportunities to complain both via the non-governmental organizations and via the Food and Veterinary Service (by using the FVS hotline, for example).
At the same time, however, in Latvia there is relatively high income inequality and a high population poverty risk index. In Latvia the relation between the incomes of the highest and lowest quintiles in 1999 was 5.1 (EU-15 4.6), but in 2002 it was up to 5.5. In 2002, 16% of the population was at risk of poverty. However, the threshold of poverty risk in Latvia is very low. In 2002 it was 59 lats in a single-person household per month or 706 lats per year. The threshold of poverty risk in the EU-15 countries in 2001 was 3.6 times higher. Household Expenditure Survey data indicate that 80.00 lats was the average available income per household member per month in 2002.
In 2002, 35%3 of households with one adult and one or more children and 22% of households with two adults and three or more children were at risk of poverty. In 2002, according to the Household Expenditure Survey data, 39% of the total number of children lived in the 20% poorest households of Latvia.4
In the course of the poll conducted by the Baltic Institute of Social Sciences during September 30-October 21, 2004, Questions for the Assessment of the Society Democratization Dynamics, 1002 respondents were polled. When asked the question Has your family had to give up food products during the past 12 months?
9.2% of the respondents answered often, 21.3% - sometimes, 20.5% - rarely, and 48.6% - never.
The very low amount of the social security benefit (35 lats) limits the right to food of those people who must subsist on this benefit alone. Social security expenditure in absolute numbers has been increasing since 1997, yet the share of social security expenditure in GDP has decreased from 13.4% in 1998 to 11.9% in 2001.
Ensuring the Right to Housing
Legislation regarding the right to housing has been in the process of amendments since the restoration of independence. During the Soviet period the housing sector was included in the social sphere. During the initial period of the transition to a market economy (1991-1995) housing-related legal and regulatory enactments were developed with the goal of creating preconditions for the introduction of market relations. To some extent, the previously established rights and social guarantees of tenants were preserved.
The laws passed during the period of 1995-2002 relate to apartment privatization, the adjustment of property relationships in apartment buildings with apartments privatized separately, one by one, maintenance of these apartment buildings, social assistance provision regarding housing, as well as land use and sorting out the technical issues of housing construction.
The law On Residential Space Rent (entered into force on April 1, 1993) has been amended seven times the last amendments were made on December 20, 2004 and is highly important. This law regulates the terms for renting residential space, as well as the legal relations between the renter and the tenant; determines their rights and obligations, regulates the procedure of conclusion, amendment and termination of rental agreements for residential space. The initial version of the Law included a norm specifying that the renter may terminate the rental agreement of the residential space and evict the tenant and his or her family members and other persons without providing alternative housing in the following cases (Section 28, Paragraph 2):
1) if the tenant has not paid rent for more than three months, although the tenant has been granted the opportunity to use the residential space in accordance with the rental agreement and the regulatory enactments;
2) if the tenant has not paid for basic services for more than three months, although the tenant has been granted the opportunity to use the basic services in accordance with the rental agreement and the regulatory enactments.
The renter must warn the tenant about the termination of the rental agreement in writing at least a month before the renter brings a claim to court. In cases when the renter does not have information about the location of the tenant, the renter may raise a claim in a court provided a warning has been published in Latvijas Vestnesis a month before. As a consequence long waiting lists to hear such cases developed in the courts of Latvia and the number of homeless people increased rapidly.
Several norms of the Law have been amended, specifying the categories of people who should be assigned residential space, as well as defining what kind of apartment is deemed adequate for living. Also, the responsibility and the ways of involvement of local governments in solving housing issues were defined. Norms have been incorporated into the legislation, which protect socially excluded people or people under the risk of such exclusion from loss of housing. The legislative norms in force since 2002 no longer permit the eviction of families with children as a consequence of rent and public utility payment debts without assigning alternative residential space. Since 1997, the status of social apartments and the procedure and the criteria for assigning such apartments have been specified. Since 1995, the obligation of local governments to grant housing benefits to families unable to pay the rent and utilities in full due to insufficient income has been specified.
In 2000, rent and public utility expenses in the total household expenditure was 17%, and the proportion of food expenses was 38%, which, when put together, amount to 55%, although, by 2002, these numbers decreased to 13% and 35% respectively, totaling 48%. By comparison, in EU countries the total proportion of these two types of expenditures amounts to 38%. This is a considerable difference.
According to the existing legislation, assistance should be provided only to people locked in an impasse situation. Assistance is not available to most of the less-protected groups (families with children, pensioners, young families, etc.) whose income is greater than the defined minimum for a low-income person, yet is nevertheless insufficient to accumulate savings to improve or purchase/rent housing in the private sector by paying a market price.
Since 1992, 11,684 houses have been returned to their legal owners, 10,302 of which are residential buildings with 77,828 apartments (source: Central Statistical Bureau of Latvia). In Riga, there are 4213 denationalized buildings and buildings returned to legal owners with 51,000 apartments or 2/3 of the total number of apartments in denationalized buildings.
Table 4.3 Denationalized Apartments
Private rent apartments, Including current tenants who lived in this denationalized and returned apartment before the building
to their legal owners was denationalized Percentage of total Percentage of total Apartments private rent appartments Apartments denationalized rent apartments
Total 40 270 87 29 084 72
Riga region 28 804 93 21 544 75
Including Riga 27 302 93 20 295 74
Vidzeme region 3971 77 2909 73
Kurzeme region 4077 83 2360 58
Zemgale region 2813 68 1848 66
Latgale region 605 76 423 70
Source: Privâtie îres nami. Biïetens 2004. Rîga: Latvijas Republikas Centrâlâ statistikas pârvalde, 2004, 3.lpp.
87% of rented apartments are currently located in denationalized buildings returned to their legal owners.
The existing laws and Cabinet regulations do not provide equal opportunities to enter the housing market for all tenants of the former national/local housing fund. That is, those, who have been given an opportunity to privatize their rent apartments, enter the market with a startup capital; those, who do not have such an opportunity (tenants of denationalized buildings, for example), are forced to enter the market without such capital.
According to the amendments of the law On Residential Space Rent, which took effect on January 1, 2002, local government assistance is provided also to the tenants of denationalized buildings and their families by allocating alternative housing of equal worth, provided that the rented apartment is located in a denationalized building or in a building returned to its legal owner and which the owner (or his heir) needs for living. Thereby, the rights of those tenants who do not belong to the low-income group are protected. However, are the local governments able to provide alternative housing? Moreover, one that is of equal worth to the previous one?
The rent and utilities charges cause significant problems. The Transitional Provisions of the law On Residential Space Rent specify a rent ceiling, denoting: If the apartment is located in a denationalized house or a house returned to its legitimate owner and the tenant has used the apartment before the restoration of the ownership rights, the rent of the residential space is established by a written agreement of both parties, including in the rent a portion of the maintenance costs of the respective residential building proportional to the space of the respective rented apartment, and revenue. However, if an agreement is not reached, the renter sets the apartment rent. There is a schedule of maximum rents per square meter which is: 1) 0.24 lats in 2002; 2) 0.36 lats in 2003; 3) 0.48 lats in 2004. It should be noted here that the rent in privatized and municipal apartments is 14.8 santims, which in 2004 was less than a third of the maximum rent in denationalized properties. It is no wonder that tenants of denationalized apartment buildings have greater problems with paying rent.
Table 4.4 Payment Difficulties for Apartment
Payment of apartment rent and utilities Owe rent and public has been very difficult during the past year utility payments for apartment
Percentage of total tenants Percentage of total tenants Tenants of private rent apartments Tenants of private rent apartments
Total 19 487 42 5282 11
Riga regions 14 792 48 3626 12
Including Riga 14 226 48 3425 12
Vidzeme region 1747 34 546 11
Kurzeme region 1504 31 488 10
Zemgale region 1035 25 509 12
Latgale region 410 51 114 14
Source: Privâtie îres nami. Biïetens 2004. Rîga: Latvijas Republikas Centrâlâ statistikas pârvalde, 2004. 6.lpp.
The data indicate that almost half of the tenants have had significant difficulties with the payment of rent and utilities. Moreover, if the number of persons with debts of rent and public utility payments is considered, then the total is more than a half of all tenants. In the course of the poll conducted by the Baltic Institute of Social Sciences during September 30-October 21, 2004, Questions for the Assessment of the Society Democratization Dynamics, 1002 respondents were polled. When asked the question Has your family had to give up heating and electricity during the past 12 months? 3.8% of the respondents answered often, 9.8% s sometimes, 13.3% - rarely, and 72.5% said never.
What hinders the solution of the problem? First, it is the fact that since the restoration of independence the state and the local governments have not participated or participated only marginally in the construction of new housing. In the housing sector the number of dwellings and apartments constructed by local governments has been negligible up to 2002.
Something of a turnabout came only in 2003 and 2004. Recently, the number of social residential houses has increased, which, on the one hand, indicates that the population is provided with housing security, but, on the other hand, it indicates that a certain portion of the population is unable to support itself independently under existing economic conditions. The number of social residential houses has grown from 56 homes in 2001 to 74 in 2003. Moreover, the large number of persons on the waiting list to improve their housing conditions must also be taken into consideration. In 2003, it was 10,449 persons.
Solutions are sought in different ways. The last amendments (of December 20, 2004) to the law On Residential Space Rent specify: If the apartment is located in a denationalized house or a house returned to its legitimate owner and the tenant has used the apartment before the restoration of the ownership rights, the rent of the residential space is established by including in the rent a portion of the maintenance costs of the respective residential building proportional to the space of the respective rented residential apartment, and the revenue. The amount of the rent is determined by a written agreement between the tenant and the renter.
However, if such an agreement is not reached, during the time period until December 31, 2007, the rent per one square meter of the rented apartment may not be higher than: 1) 0.24 lats in 2002; 2) 0.36 lats in 2003; 3) 0.48 lats in 2004; 4) 0.60 lats in 2005; 5) 0.72 lats in 2006; 6) 0.84 lats in 2007. After December 31, 2007, the rent may be increased during the operation of the existing rental agreement upon a mutual agreement between the tenant and the renter.
With the amendments to the Law On Local Government Assistance in Solving Housing Issues, which entered into force on January 25, 2005, in addition to the existing authority to prioritise tenants of denationalized dwelling-houses, local governments have authority to provide such tenants with assistance in purchasing or constructing residential space by covering interest payments fully or partially.
The state may also provide assistance to the aforementioned risk group by issuing a guarantee for purchase or construction of a residential space (Section 27. of the law On Assistance in Solving Housing Issues). With the aforementioned amendments to the law a local government is authorized in accordance with the procedure and the amount prescribed in the regulations binding to the town council to award a lump-sum allowance for vacating residential space to the tenants of denationalized dwelling-houses also in cases of eviction (Section 26.of the law On Assistance in Solving Housing Issues). The state participates by providing 50% of the allowance for vacating residential space that the local government has awarded.
The Cabinet Regulations No.237 Procedure, According to Which Local Governments Are Allocated Earmarked Subsidies for Solving Housing Issues, passed on April 5, 2005, specifies also the opportunity to receive a subsidy for purchasing denationalized housing from its owner totaling 30% of the purchase value, yet not exceeding five thousand lats.