European Structural and Investment Funds in Latvia

Excerpt from the COM(2015) 639 final, ANNEX II: Country fiches:

1. ESIFs in Latvia

Economic and social challenges in the ESIF context

The Latvian economy began to grow again in 2011. The labour market improved and the employment rate, at 70.7 %, is above the EU average (2014). Long-term unemployment, youth unemployment and the share of young people not in employment, education or training have fallen below the EU average. The Youth Employment Initiative is available to Latvia. Inadequate public funding for research and innovation (R&I) and the fragmented nature of the R&I system cause poor performance in scientific research and damage competitiveness. Latvia has high rates of poverty and social exclusion and a high level of inequality in society. More needs to be done to make vocational education attractive to young people. The quality and access to the healthcare system, energy efficiency of transport, buildings and heating systems need to be improved. ESIF investments will support implementation of the European Semester policy recommendations in these areas.

Main priorities and results

ESIFs support research and technological development (RTD) and innovation, helping the country reach its national target of 1.5 % of GDP invested in RTD (0.66 % in 2012), increasing the proportion of innovative SMEs to 40 % (from 29.9 % in 2010) as well as addressing weaknesses in its innovation system and facilitating cooperation between businesses, science and education, which will improve innovation potential.

Ensuring access to high-speed broadband for at least 80 % of households and developing online services will promote the growth of an information society. Broadband with at least 30 Mb/s will be provided to rural areas to narrow the digital divide.
The EUR 762 million of investment in SMEs, including in the agricultural and fisheries sectors, aims to increase
their competitiveness and innovation by supporting new businesses, promoting private investment and creating at least 1 800 jobs. The main areas targeted will be SMEs' export capacity, access to finance, matching workers’ skills with labour market demands, increasing competitiveness and assistance to new businesses. Nearly 4.5 % of farmers will receive support to modernise and restructure their farms, and increased funding will help to attract more young farmers to the sector. The competitiveness and productivity of the aquaculture sector will also be supported. This is expected to treble production and will contribute to food supply and employment. ESIF will be used to increase the institutional capacity of public administration and the effectiveness of the judiciary. ESIF will support the shift towards a low-carbon economy in all sectors, helping Latvia reach its national Europe 2020 target of 40 % of energy coming from renewable sources (35.8 % in 2012). Funds will concentrate on energy efficiency in housing and commercial premises, the use of renewable energy sources in district heating and low-carbon transport. ESIF will be allocated to the sustainable use of natural resources and adaptation to climate change. The investments will mitigate risks caused by climate change, mainly by reduction of coastal erosion and flood prevention. Measures will be taken to increase recycled waste by 423 120 tonnes a year and to reconstruct sewerage and waste water networks incompatible with quality requirements. A total of 1.3 million inhabitants will be connected to the centralised waste water management network. Preserving and enhancing ecosystems related to agriculture and forestry as well as aquaculture providing environmental services will be co-financed. The Common Fisheries Policy objective for conservation of marine biological resources will be supported.

The ESIFs will be used to develop a sustainable and efficient transport infrastructure. Priority will be given to the TEN-T rail and road infrastructure, connecting urban areas with the TEN-T networks, and reconstructing regional roads. This will involve the reconstruction or renovation of 998 km of railway and 574 km of roads (345 km on TEN-T).

Measures to boost employment and increase the mobility of the workforce will allow 22 950 currently unemployed people to find a job. More than 11 000 young people not in education, training or employment will receive an offer of employment, a place in continued education, or an apprenticeship or traineeship.

Funds will be invested in education, skills and lifelong learning. The reform of higher education will involve the creation of a national accreditation agency, accreditation of 80 new study programmes, the introduction of results-based governance in 20 higher education institutions and the modernisation of the learning environment. Vocational education and training (VET) will be improved by extending the use of work-based learning. This will allow 70-80 % of students receiving support to obtain a professional or other qualification. The qualifications of 4 500 VET staff will be improved and 70-80 % of VET institutions modernised. Farmers and owners of agricultural and forestry businesses will be trained to improve their knowledge of efficient production and climate-friendly resource management. Cooperation with researchers will be promoted.

Measures designed to improve social inclusion and tackle poverty will help almost 4 000 disadvantaged unemployed people to find a job. Transition to community-based care of children and adults with psycho-intellectual disabilities will be supported, as well as better access to health care for the entire population of Latvia.

Use of financial instruments and territorial tools

Financial instruments worth EUR 185 million will be made available to support businesses and finance energy efficiency measures. Loan, guarantee and equity instruments will mainly be used to support SMEs and energy efficiency in buildings.
Sustainable urban development will be promoted via integrated territorial investment. Local partnerships will become more active thanks to community-led local development, as part of which projects being run by 34 local action groups across Latvia will receive funding. Measures focusing on a sustainable development of fisheries regions will be implemented in the territories significant for fisheries by applying multi-fund approach.

Key information

2. Pre-conditions for effective and efficient use of ESIFs

Developing strategic frameworks for the R&I strategy for smart specialisation, addressing early school-leaving and improving environmental policy were the most important ex ante conditionalities that were not fulfilled at partnership agreement and programme adoption and action plans were agreed for their fulfilment by the end of 2016. We suggest to add that a mapping of healthcare needs should be the basis for any decision on which infrastructure investments are made (as is the case for other countries, such as Romania or Poland).

3. ESIF management

A ‘one-stop’ agency for concluding contracts has been set up and the work of the joint ESF, ERDF and CF monitoring committee is being supported by thematic subcommittees. The EAFRD and EMFF monitoring committees are managed by the Ministry of Agriculture.

4. Simplification for beneficiaries

Beneficiaries will benefit from a simplified institutional set-up, unified standards, greater use of online administration, an electronic procurement system and increased use of simplified costs options. 

Source: COM(2015) 639 final, ANNEX II: Country fiches to the Communication from the Commission Investing in jobs and growth - maximising the contribution of European Structural and Investment Funds, Brussels, 14.12.2015.