Major reforms of social protection policies in the 1990s addressed the pressing fiscal challenges arising from a relatively generous social protection system during the transition to a market economy. The reforms also aimed to strengthen work and reporting incentives by introducing strong links between earnings histories and support entitlements. Today, Latvia’s weakly redistributive government taxes and transfers are one reason why income inequality is significantly higher than in most OECD countries. Public perception echoes the limited effectiveness of government policies in this area, and making social protection more effective and adequately resourced should become a more central element of the government’s inclusive growth strategy. Volatile economic growth and periods of substantial long-term unemployment underline the role of needsbased assistance benefits and associated services as essential complements to contribution-based social provisions. Unemployment benefits for active job seekers should be made more accessible, and a comprehensive review should analyse the consequences of the expected pensions gap for poverty and income adequacy during old age.