New government in Latvia

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On Thursday, November 5, 2014, the Latvian Parliament (Saeima) with 61 votes in favor and 31 votes against approved the new government led by Laimdota Straujuma and her center-right party Vienotība. Vienotība managed to retain and increase a majority in the Parliament for her of 3 center-right party coalition.

On Thursday, November 5, 2014, the Latvian Parliament (Saeima) with 61 votes in favor and 31 votes against approved the new government led by Laimdota Straujuma and her center-right party Vienotība. Vienotība managed to retain and increase a majority in the Parliament for her of 3 center-right party coalition. Even after coming in second place behind the Harmony Centre, a pro-Russian party, in the October 4th elections (for a more detailed analysis: http://www.kas.de/lettland/en/publications/39221/)

Vienotība, The Greens and Farmers Union and the National Alliance signed the coalition agreement and the declaration of intent which outlines the main goals and principles of the new government. The new government has many task ahead as the country prepares for the EU Council Presidency starting in January 2015. A role first time held by Latvia. In her acceptance speech to the Parliament, L.Straujuma outlined the main topics of the upcoming Presidency. EU competitiveness, growth, the EU digital agenda and the EU`s role on the international stage will all be on the table during the 6 month rotating Presidency.

Apart from the EU Presidency, Mrs. Straujuma reaffirmed her countries commitments of spending 2% of GDP to defense and security by 2020, a goal made unanimously in to law by the previous Parliament following the events in Ukraine. “It is important to us and to our strategic partners”, said L.Straujuma. Ensuring stronger economic growth is also on top of the new governments agenda. L.Straujuma stressed that this government will continue the fiscal prudence and policies of macroeconomic stability introduced by Valdis Dombrovskis, who is now the vice-president of European Commission. that had provided for a quick recovery after being hit hard by the 2009 economic crises. Latvia already is among the fastest growing economies in the EU and its aim is to increase the GDP growth to 5% a year. An ambitions task considering the low growth rates of Latvia’s main trade partners in the EU and the situation in Ukraine, which has an unfavorable influence on the investment environment in the region.

In the past years Latvia has seen an increase in living standards, the average wage has risen to 750 €. The government intends an increase of the minimum wage to 360 € in the next year and continue with a 40 € rise every year until 2017. This policy is aimed, firstly, to discourage undeclared income, second, to increase the incomes of the lowest wage earners. Further policies aimed at reducing income inequality will be an increase in the untaxable minimum which will also be varied according to a person’s level of income. Important for economic growth and future competitiveness will be the prestige of education and science. “Teachers have to be able to captivate the young generation in achieving excellence”, said L.Straujuma in her acceptance speech. Latvia needs new investments in science and research but it also needs the skilled labor - the knowledge based economy is already driving the demand for new and talented kids. It’s important that Latvia can provide them, said the Prime Minister.

The average length of a government in Latvia is not long and rarely one government works a full 4 year term. Already one of the lenders of the Greens and Farmers Union Augusts Brigamins has said that this will not be the only government in this Parliament. In the past the Greens and Farmers Union have never been loyal coalition partners, building majorities with the opposition, while still in the government. Such situation cannot be excluded also this time. Also Laimdota Straujuma herself has indicated several times that she would like to retire at one point not giving a clear date.

Authors

Krisjanis Buss, Norbert Beckmann-Dierkes

Publication series

Country Reports

published

Latvia, November 11, 2014

Saeima