On 11th of March, 2011 the Foundation of European Progressive Studies (FEPS) with the support of Freedom and Solidarity Foundation (FSF) held a round table discussion “Viability of progressive policies in Europe and the Baltic States” at the house of Latvian Free Trade Union (LBAS). The event brought together experts and politicians from all three Baltic States and Denmark, as well as representatives of FEPS – advisor and “Next Left” project manager Ania Skrzypek and economic advisor Matthieu Meaulle.

The first part of the discussion was started by Mr Ervins Labanovskis, Deputy Chairman of FSF, emphasizing the progressive policy issues in the Baltic States in general and in Latvia in particular. Mr Labanovskis stressed that such discussion should be held long ago, as solutions should be found for the problem that in Latvia left progressive parties have never succeeded enough to determine national policies. Therefore, this event could serve as a platform to launch a serious promotion of progressive policies to set priorities for the future and to overcome challenges of today.

In turn, in her introductory remarks Ms Ania Skrzypek noted that decline of the popularity of progressive policies is not only the problem in Latvia or other Baltic States, but throughout the Europe. Therefore the “Next Left” open discussion platform was set for seeking answers to present political and economic challenges. She pointed out that for sixty years the social policy has played a key role in European integration, but now it faces great challenges in the labor market, sub-areas of pricing policies, social policies and threats of the increasingly growing social stratification of society. That is why it is very important for progressive scientists, politicians and political forces to cooperate in finding most adequate solutions.

Deliberation of the opportunities to transform the Baltic States into welfare states, as well as searching for the best model directly applicable to Latvia, Lithuania and Estonia was the main theme of the first part of discussion. Professor Henning Jørgensen Carmo from Aalborg University was the first expert speaker. He described the theoretical background of “Flexicurity” model and actual implementation experience of Denmark, where it has become a very important element in promoting the economic growth and strengthening labour market, which is able to adapt to dynamic development, while preserving social guarantees for workers. “Flexicurity” has several elements which prove to be successful via mutual interaction – social security, active labor market through education, training and re-qualification opportunities. They ensure that market is able to adapt quickly to changes in environment. Social security system is designed so that people do not have to worry about becoming unemployed, they are guarded against hardships of losing income, while re-qualifying and enjoying benefits of good modern education system that help them get back soon into labor market. Thus, the companies receive an adequately skilled work force that ensures economic growth. Mr Carmo also pointed out that thanks to such policies Denmark is one of the leading countries of the EU in terms of economic growth, quality of employment and social security. However, due to recent economic crisis Danish economy and welfare system had suffered – unemployment rate (incl. long-term unemployment) increased, and there are problems with youth employment. But “Flexicurity” had stood the test of time and all these problems were handled. As it was noted by professor, “Flexicurity” model will overcome this crisis and will survive all the others yet to come.

In his report on the concept and challenges of welfare state Mr Matthieu Meaulle touched several aspects and possible development scenarios, while pointing out that not one model should have a one-sided judgement. For example, one of the important characterizing elements of the economy is (fluctuation of) salaries, but in different countries it can cause different consequences. In Greece, increasing the salaries may cause significant increase of GDP and vice versa – reducing of salaries impacts the fall of it. But in Germany, reduction of salaries does not directly influence significant changes of GDP. This can be explained by the fact that the Greek economy is oriented towards domestic consumption, while German – to the export. Similarly, on one side – low salaries lead to deep stratification of society and spread of poverty, on the other – increased capital investment in production (incl. transfer of production) to such countries. At the same time Mr Meaulle was very careful with this argument, because eventually the balance should be reached in environment of the global competition. In terms of tax policies, the expert stated that the Scandinavian model is among best examples – higher taxes provide vast financial resources for the state budget, which transforms them into the common good for the country and society in general. But at the same time this has to be complemented by progressive (taxation) rate, thus, creating a resource basis for welfare state, characterized by high productivity and happy people.

After first two expert presentations the discussion was joined by representatives from all three Baltic States. Mr Armands Starzds, Board Member of SDP “Harmony” (Latvia), agreed with Mr Meaulle that a major problem for Latvia is disproportionately high taxation on labor, while taxes for real estate are ridiculously low. Mr Strazds also stressed the role of progressive taxation in shaping the welfare state and admitted that flat-rate tax system does not ensure the same effect. Mr Hanno Matto, Board Member of Tallinn organization of SDE (Estonia), tried to take the discussion into different direction by a brief note on introduction of new type of tax on financial transactions. Mr Meaulle supported the idea and informed about already on-going European wide discussions on this issue.

The second part of the round table discussion was devoted to finding strategies and policy solutions for progressive political forces of post-Soviet countries to help them gain more voter support in local elections.

The complexity of the situation in Latvia was described by Dr.sc.pol. Veiko Spolītis, who also explained in what way in Latvia the meaning of the word “democracy” has shifted from its standard interpretation and why the true problem of Latvia is the corrupt political party system. In order to improve it, there is a need for a transparent political financing mechanism, where public funding is intertwined with restricted private funding, and which is supervised by strong ombudsman institution. Fighting corruption in general is one of the most significant steps towards implementation of progressive policies. Answering the question of Ms Natalija Mickevica, representative of Latvian Free Trade Unions, as to why Latvians rarely participate in political activities, Mr Veiko Spolitis explained that it could be partly explained by low social and economical development level of Latvia, in which people have to calculate if their political activities won’t affect their financial well-being in a negative way. Ms Ania Skrzypek backed this by reminding that in regard to this Latvia is not unique, because parties all over Europe are losing both members and supporters, as well as activists. Therefore, “Next Left” programme should provide discussions on the values ​​of the European Union and the future of progressive politics in it.

Representative of Lithuania Mr Tomas Juraitis, Vice Chairman of Sports and Youth Affairs Committee of LSDP, stepped in and said that also Lithuania can still be considered as a new democracy, where society is seeking for the best parties, ideologies and political leaders. However, the Social Democrats are represented in the Lithuanian parliament, therefore, social security issues there are constantly on the political agenda. Furthermore, Lithuanian political scientist Mr Dobilas Kirvelis gave a thorough analysis of various psychological factors as important political tools, stressing that Social Democrats should be aware of the needs of society to be able to identify solutions to offer.

“In a way it is simple to understand the political situation in Estonia – in the last parliamentary elections only four parties got in: two of them are left and are currently in opposition, and the remaining are right-wing parties, being also currently in government”, told the Estonian political scientist Mr Toomas Alatalu. Although the support for Estonian Social Democrats has been unstable during last decade, good progress was demonstrated in current campaign, which means that in the next parliament the Social Democrats could form a government and fight for the position of prime minister. It should be noted that Social Democratic Party in Estonia is often seen as the guardian of democracy. However, there is an understanding that SDE should focus on attracting young voters (incl. Russian speaking youth), especially outside Tallinn, where support for SDE was insufficient.

At the end of discussion representatives of the Baltic States discussed the role of the media in the political process, and the problems of pre-election period, which is usually dominated by liberal or conservative ideas because of media bias. It was also concluded that restriction of advertising in electronic media before the elections could substantially reduce the influence of money on election outcomes. Politicians also compared their experiences on efficient models of co-operation with trade unions in each Baltic country.

Main conclusions of the Round Table:

“Flexicurity” is a successful model and could be applied to the Baltic States,
“Flexicurity” means investment into people, ensuring that they do not flee their country, because it has means for development,
Successfully functioning welfare state requires a high level of public political culture, literacy and a sense of mutual solidarity,
Each country is unique, therefore the most appropriate solutions must be chosen in order to create a true welfare state,
To build a decent political party system, a modern and progressive legal basis must be created with main focus on transparent party financing and prevention of corruption,
As mass media plays important role in strengthening or weakening of political parties in the Baltic States, it is important to increase presence of progressive ideas in the media,
“Next Left” discussions must be continued in order to restore the leading position of progressive policies in political agenda of EU and member states in the nearest future.

The round table was organized by FEPS, with the support of FSF.

All available visual and written electronic records of the round table are available on-line on the Internet website of FSF at www.bsf-latvija.lv (Latvian version).