Wednesday, September 19, 2007

Latvian government finally does something!

For the last few weeks, I've been quite disappointed with the Latvian government. Prime Minister calling people to save more and spend less and, at the same time, parliament and president's office unveiling 2008 budget requests that included major pay increases for their staff. According to their logic, everyone is supposed to spend less, except for people who work in the parliament or president's office...

Latvian press was also upset (including newspapers that usually support the current coalition). As a result, on Monday, the prime minister Kalvitis came out with a sharp criticism of pay raise requests by the parliament and president's office.

Moreover, Kalvitis revealed a new set of austerity measures, which may include limiting the pay increases across the entire public sector to the inflation rate for 5 years, to create a budget surplus that would help Latvia withstand possible financial storms.

It's a major change. EU, IMF and others have been calling Latvia to restrain spending and form a sizeable budget surplus for at least half year. In response, Kalvitis government has been trying to create an appearance of doing something without actually doing much. Now, Kalvitis government is doing something substantial for the first time.

They are already running into opposition. Parliament is complaining that their staff is underpaid and need 26% pay increase. Other government offices are complaining about the plans to review their spending, as well. And, if the pay freeze extends to teachers and doctors, we may see strikes or people just leaving schools and hospitals. (Unlike already overpaid staffers at president's office, they actually need pay raises and I hope the government does not let the classrooms be empty and patients untreated.)

My opinion of Kalvitis' government is now a bit higher than a week ago. But it may take a few more rounds of public criticism to get them to do what they should be doing.

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