Course THE GOVERNMENT ROLE IN
THE MARKET ECONOMY
Essay The Government Role in
The Day Care Services Development in Latvia.
professor
Andrejs Skaburskis
Laima
Līpace, 3SEA2, BizVB96018
Evita
Noriete, 3SEA2, BizVB96410
Ildze
Voita, 3TVV2, BizVB96074
Rodžers
Jānis Grigulis, 3SEA1, BizVB96062
Riga,
1999
Latvia is a
country that is moving from the Soviet style of socialism to a democratic
government and a market-based economy. The country ratified its participation
in the United Nations Convention on the Rights of the Child in 1992. Activities
connected to the ratification by the Latvian legislature has created an
impressive database on current conditions for Latvian children. The change from
socialism has been difficult when measured by the availability of services
provided to children in need. The following information is taken from the 1998
Alternative Report to the United Nations by the Latvian Save The Children
organization.
The number of
families below the minimum subsistence level has risen to 85% in 1996 compared
to 15% in 1991. This decrease in family incomes has affected the quality of
family life in Latvia. In 1996, only 20% of the children are in good health.
Such diseases as tuberculosis, rheumatism, diphtheria and tick encephalitis
have spread rapidly. Juvenile crime, alcoholism, narcotic drug addiction and
prostitution have risen sharply. As a result, more and more children are
abandoned, physically or sexually abused, become pregnant or homeless.
Services to
support children who are at risk are virtually non-existent. The government of
Latvia is under tremendous pressure to balance its budget. It is a struggle to
maintain existing human services and it is impossible for the government to
fund new services. The existence of a sizable population of abandoned, abused,
handicapped and homeless children is only now beginning to be officially
recognized.
The network
of social services that Canadians take for granted does simply not yet exist in
Latvia. The government is working to develop these services, but the pressures
of the national budget and difficult economic situation have brought any
progress to a standstill.
The government
budget is made from private sector taxes and it is diverted to municipal governments
and then channeled to social services. Every year amount which is channeled to
the social services is different, because of pressures of the national budget
and difficult economic situation. These social services are merit good
when society members are refusing to have some amount of their own money for
giving it to preschool and other Latvia’s children. This leads to situation
where people who are using private day care services instead of municipal are
paying again.
Also current
situation in Latvia is that you have to wait on a line for a years to get officially
in a municipal day care center, at the same time municipal government are
abolishing existing day care services because of money shortage. This leads to
situation where people have to use their private money and they are having two choices
whether send their children to private day care centers or have a baby-sitter
to look after them. Practically it means that our social service system is not
able to maintain existing amount of children who are in need for day care.
Customers of day
care services are parents that have preschool age children and that want to
work in daytime and therefore or for other reasons want to leave their children
in a professional care.
Output mix of
day care services is:
·
education and safety of the children;
·
less bother and “peace” for their parents.
As these social
services are having technological externality effect and neighbourhood effect
government role is make people understand that solving day care services problem
they will have better environment and more educated people around. It also
affects crime because most criminals are those people who were left unattended
while they were kids. This also means that community has to be more informed
about current situation in the country and given more information about problem
in day care services.
Also current
government problem in this situation is whether they have to decide to make
these services into completely private social services or completely public
social services or maybe find something between them - make a mix of both. This
means that there is a market for each of production/distribution sectors.
·
Sector one - public production/public
distribution will be forced to use those high risk families which should be
given with gift voucher which can be spend only for day care services.
·
Sector two - public production/private
distribution is sector where market is families with an income more than
minimum, when they can afford to make choice themselves for taking their
children into public day care services
·
Sector three - private production/public
distribution is sector where private day care service companies will provide
day care services and government will enforce to use them through its channels
of distribution.
·
Sector four - private production/private
distribution is sector which is most common for high income people who can
afford to use private day care services with higher quality.
Private sector
in production can provide wider range of options (more specified preschool
education including different sports, language and arts). Competition within
private sector can ensure higher quality of this service and faster response to
demand change. At the same time government should be controlling day care services
as proper children care is very important for society and the future of nation.
We can see that
all of these sectors have its specific market and government goal is to
determine through the analysis which of this market should be most supported
and what kind of support programs should be used.
Some solutions
which government can be using for proper children care are given below:
1.
regulation - some kind of legislative
regulations which prescribe attend day care services for a certain age
children. Here we can not forget cost factor which is very important. To
implement this regulations government will have to have an institution which
has to ensure correct implementation.
2.
standards - setting up different kind of social standards,
such as income level at which one should be provided by a certain amount of a
gift voucher which can be used for day care services. This has to be integrated
with an analysis of a regional day care services infrastructure imperfection.
3.
compensate those families which are using
private day care services instead of public day care services as they want to
have a greater quality. Municipalities should provide subsidies for children
from high-risk families to attend those day care services free of charge or for
partly payment.
4.
voluntary action
·
direct - when someone understands that he can
help society with helping and educating these children at day care service
institutions
·
indirect - this can also be brought under
section regulations where we mean by making appropriate legislation where one
will be completely tax deductible for amount of money which one donate to a day
care service field. We want to call this as voluntary action instead of tax or
regulation action because those companies have to make their own voluntary
decision whether they will be using tax deduct or appropriate law.
And finally I
have to mention that solving problem with day care services you have to always
look in overall situation in the country. Because you have to measure other
social and financial factors of the country. Governments role is make decisions
considering overall situation and find the most suitable decisions.