188
Latvia GDP per capita is significantly lower than the upper half of OECD countries due to relatively low productivity. Catch up to high-productivity countries continues, although at a slower pace than before 2008. Income inequality has declined somewhat, but remains higher than the average of OECD countries. The income share of the poor remains low. Greenhouse gas emissions per capita are below the OECD average, owing to the high share of renewable energy, but have been stable over the past two decades. The government introduced several measures to reduce regulatory burdens to business, namely the “Consult first” initiative where authorities first provide advice on compliance, before sanctioning businesses. It also passed several laws to promote e-government services and a one-stop shop for administrative procedure for starting a business. The personal income tax system was made more progressive by lowering the rate on low and medium incomes and introducing a higher, income-dependent tax allowance. Public health expenditure is being increased from a low level to improve access to services. The labour market relevance of vocational education has been increased and modular courses were introduced, facilitating access for adult learners. Integration of the electricity and railway networks with EU neighbours is ongoing. Reducing labour taxes on low wages, strengthening minimum income support and financial assistance for low-income students would strengthen formal employment and productivity, while lowering poverty. Improving access to housing and investing in low-emission transport and energy efficiency would strengthen internal mobility, equality of opportunity and environmental outcomes. Growth performance, inequality and environment indicators: Latvia A. Growth Average annual growth rates (%) GDP per capita Labour utilisation of which: Labour force participation rate Employment rate1 Employment coefficient2 Labour productivity of which: Capital deepening Total factor productivity Dependency ratio
C. Convergence in GDP per capita continues Gap to the upper half of OECD countries5
2002-08 8.6 2.5 1.5 0.9 0.0 5.7 3.0 2.6 0.3
2012-18 4.1 2.2 0.8 1.4 0.0 2.5 0.8 1.7 -0.7
Level
Annual variation (percentage points)
-40
2016 34.6 (31.7)*
2013-16 -0.2 (0)*
-50
6.4 (7.6)*
-0.1 (0)*
-60
2016 5.3 (10.9)* 0.2 (0.3)* 0.0
Average of levels 2010-16 5.1 (11.3)* 0.2 (0.3)* 0.0
Per cent 0 -10 -20 -30
B. Inequality and environment
Gini coefficient3 Share of national disposable income held by the poorest 20%
4
GHG emissions per capita (tonnes of CO2 equivalent) GHG emissions per unit of GDP4 (kg of CO2 equivalent per USD) Share in global GHG emissions4 (%) * OECD simple average (weighted average for emissions data)
GDP per capita -70
GDP per hour worked -80
Source: Panel A: OECD, Economic Outlook Database; Panel B: OECD, Income Distribution and National Accounts Databases; United Nations Framework Convention on Climate Change (UNFCCC) Database and International Energy Agency (IEA), Energy Database; Panel C: OECD, National Accounts and Productivity Databases. StatLink 2 https://doi.org/10.1787/888933955123