IMPERFECTIONS OF SOCIAL INSURANCE FOR SELF-EMPLOYED PERSONS IN LATVIA

Self-employment plays a significant role in employment. Recently, self-employment is being enhanced both by entrepreneurs' wish to reduce labour costs and wish of employees themselves to pay less for their social insurance. In Latvia, the status of self-employed allows reducing mandatory payments for personal social insurance, and a person earning less than the state minimum salary, may choose not to make social contributions at all. The object and minimum amount of mandatory state social insurance contributions (MSSIC), making which a self-employed person may become socially insured, annually increase with the increase of minimum salary. Actually, every year more and more people with low income are left outside the security system under the regulations of the current social insurance system for self-employed persons in Latvia. This causes additional risks to the social insurance system, since part of the population is subject to the poverty risk when reaching the retirement age or becoming unable to work due to other reasons. The comparison of the state social insurance system for self-employed persons in Latvia and Lithuania allows concluding that all self-employed persons in Lithuania are subject to the mandatory state social insurance system. The authors believe that the state social insurance system of Latvia requires changes to cover also self employed persons with lower income. Besides, in Latvia, pursuant to the amendments to the law "On State Social Insurance", every employee will be subject to social insurance at least for the amount of the minimum salary starting from 2017; however, no changes are planned regarding the state social insurance of self-employed persons.