The story of Latvia's extinction has more dimensions than it might seem at first glance, and for that reason, it is worth looking at population changes against the broader European backdrop.

The basic picture, without extensive commentary, is the information on population changes in European Union (EU) countries compiled by Jānis Hermanis, a finance and tax expert at the Employers' Confederation of Latvia, using Eurostat data, which he published on his Twitter account this year. Since 2000, we have lost the highest percentage of our population of all the EU countries. It is just as if there had been a front line in Latvia, only without a single shot being fired.

Children are born in Latvia

In the introduction, it must be emphasised that children are born in Latvia and we are not in last place in terms of births per woman. Of course, no European country can boast the ability to reproduce itself. Specifically, the statistical average must be 2.1 children per woman in the country. The highest rates, according to data from the company Statista, are in France and Sweden – 1.84 children per woman. Latvia is closer to the top of the list if we look at the EU as a whole. In 2021, we had 1.75 children per woman, according to Statista.

For comparison, in Finland this figure is 1.44, in Lithuania – 1.7, and in Estonia – 1.6. One can take other statistical compilation companies or Eurostat, which says that the reproduction rate in Latvia is 1.55 children per woman (the EU average according to Eurostat is 1.5), but the figures in other countries are also proportionally lower. In other words, the numbers are slightly different, yet the overall picture and conclusion are the same. Children are being born here, more on average than in Germany, Italy, or Spain, but fewer than in France or Sweden. Moreover, this trend has generally persisted throughout the entire period since 2000. However, the picture compiled by J. Hermanis shows that, despite everything, we are the biggest losers because entire families are leaving the country. The average birth rates say that we could reproduce ourselves, if only people would not leave.

If we were to assume a situation where migration of people between countries did not take place, the demographic lines of all European countries would be gently declining in accordance with natural birth rates. Everywhere, slightly fewer children are being born than are needed for a nation to fully reproduce itself, yet nowhere is the picture catastrophic—so critical as to claim that a nation will immediately go extinct.

Income matters

“In homespun sandals, but free! Money doesn't matter, the motherland comes first!” – there are such statements, and then there is reality. One can clearly see a correlation between the level of the average wage and changes in the population of a country. For example, in Luxembourg, the population has increased by 49% in 22 years. The average monthly wage in Luxembourg before tax in 2020 was 5143 euros, in Denmark – 5179 euros, in Germany – 4035, but in Latvia – 1152 euros. In 2022, the average monthly wage in Denmark was 6173 euros, in Luxembourg – 5143 euros, in Germany – 4168 euros, and in Latvia – 1379 euros.

Roughly speaking, throughout Europe, half of one's salary must be given away in taxes, and housing costs are proportional to the salary; as a result, one is left with fixed costs that were more or less the same everywhere until February 14th of this year. Namely, food, fuel, electricity, and, with slight differences, other retail goods. The point is that from an average wage in the old European countries, people have significantly more money left over for daily food expenses and everyday needs—which cost the same, or nearly so, everywhere at a basic level, and actually provide confidence in a basic quality of life—than we do here in Latvia.

We can speculate that there is a large segment of people in Latvia who have far fewer funds for quality food and no money left for any weekend leisure spending. Those people who buy their own tickets to go to Denmark, Germany, or other European countries do not run around boasting about their decision. We simply do not see them anymore. What can be done to change the situation? In virtually all European countries, VAT on food is reduced, thus increasing its availability, but in Latvia, we have budget revenues exceeding the plan instead. There are countries where the tax-free minimum wage is significantly higher than in Latvia.

In short, the state makes life possible through targeted tax policy. A situation must be achieved where, even with a low salary, a person can afford the basic cost of living. Yes, today we can say that in recent months labour costs have grown much faster than elsewhere in the EU, yet life for those receiving low wages has only become harder. Furthermore, state benefits for continued survival will arrive in a while, but the labour shortage in Germany is here today. That is the tactical description of the situation from which a strategy for action should be formed.

Like after a war!

Latvian population measurements have been available since 1900. In every world war, we have lost up to a million inhabitants, and then Latvia recovers. At the moment, the population of Latvia is comparable to the level of 1925, when 1.84 million people were counted in Latvia. Admittedly, losses of the nation's living force in wars can be measured over a five-year period, followed by recovery. The population grows rapidly, increasing to approximately two million in 20 years.

If we look at population changes in the period leading up to 2000, we must take into account the time of economic transformation and the withdrawal of the USSR army. Namely, the first ten years could be evaluated in a dual way, with caveats. However, between 2000 and now, Latvia lost more than a fifth of its population, and such a situation is comparable to the devastation of warfare. Moreover, Lithuania, Croatia, Romania, and Bulgaria are in a similar situation. Estonia is at only
-5%, and furthermore, the last six years in that country have seen a positive demographic balance. It turns out that EU countries have a choice.

It cannot be claimed that someone from the outside is specifically forcing us to do what we are doing to ourselves. Looking through almost a decade of press publications in Diena and Dienas Bizness, one can find insights in interviews from 5, 10, and even 15 years ago by entrepreneurs, individual politicians, financiers, and economists sharing a unifying note: “Latvia is some sort of unsuccessful economic experiment, for which thousands of rescue plans, over-plans, general plans, and policies have been written, but none of them have been realised or achieved.”

Death benefits

Latvia's plan to develop the way we are doing is voluntary, as evidenced by the different curves for Lithuania and Estonia. The Estonians a little earlier, the Lithuanians later, but they have chosen to live, while we are choosing to go extinct. Just before
joining the EU, during the 2008 crisis, the national currency was not devalued, unlike in Poland or some other EU countries, but now we are the only ones who stubbornly refuse to lower taxes for our citizens at a time when almost everyone else in the EU is doing so. Namely, the Latvian government clings stubbornly to the coin, not the person. With a great deal of confidence, we can call our financial policy-makers monetarists, because it seems that this is the only instrument by which the Latvian economy is managed—that is, by limiting the amount of money in the hands of the population with all their might.

Even inflation is being curbed by collecting more in taxes and keeping that money out of circulation! Such actions have their justifications, but the consequences, and perhaps the causes, are inevitable, as it has been a continuous and unchanging practice for at least the last 20 years. Every now and then, not too often, a politician lets it slip that Latvia's residents and companies do not really form the state budget anyway. They do, but it is not significant! Where does this thinking come from? Where does the arrogance come from—that if they don't listen, we liquidate them? Entire industries without a shred of
remorse!

There is a basis for all of this! European benefits or the balance of EU funds—that is, the amount received versus the amount paid into the EU budget—average 3% of Latvia's total income, which is a figure close to the Gross Domestic Product (GDP).

Numerically, this EU contribution from donor countries to Latvia has been between 500 million and a billion euros per year over the last ten years. If we look at the changes in the number of inhabitants, we have been losing residents at an average rate of 1% of the total number since 2000, and the speed is as convincing and constant as the flow of money from the EU. In essence, the values are adjustable in a linear relationship, if only there is the courage to do so.

Why? For example, Estonia and Lithuania stopped losing inhabitants and receive only 50% of what we receive from the EU. The initial definitions and beautiful names—Cohesion Fund, free movement of labour—are not important, but the outcome is. Be stronger, get less in benefits. If you don't know how to use the funds, if you mismanage them, there is a price—people, the most valuable thing a country has!

If we were to call the free movement of labour the export of labour, tax policy stimulation, and EU fund payments salary rather than support, the participants of this working group would most likely be labelled as spreaders of fake news or inventors of conspiracy theories. Truly, one cannot speak that way! After all, Lithuania knew how to use EU money to get back on its feet, the number of inhabitants in the country is going up, and the economy pulls further away from Latvia every year.

What Latvia's representatives should understand is this: if things continue this way, it does not matter how things are named at the beginning if they look and are bad at the end. The verdict in Latvia's case is based on the consequences, and to us, EU grants look like death benefits. This must be changed, as the Estonians did 10 years ago and the Lithuanians five years ago. We must do it now, otherwise, there will soon be no people left in whose name to “export death benefits from the EU”.

Responsibility for what has happened rests with everyone—from Ivars Godmanis to Krišjānis Kariņš, from Anatolijs Gorbunovs to Ināra Mūrniece. However, one should not chase responsibility or punishment; one must change the course of the river of fate. Instead of taking and collecting, we must give, because those who give will receive, grow, and develop.
Instead of denying and punishing, we must allow—where it is allowed, it grows and multiplies! That is also what we want from our country and our politicians, without forgetting that building the future is everyone's shared responsibility. Even now, as we go to the ballot boxes, everyone should think about who is ready to change, and who only makes promises and never fulfils what they say.