The Government of Latvia has made significant strides to innovate in the face of recent crises and shocks, while continuing to pursue efforts to improve the country’s social, environmental and economic wellbeing by tackling tough challenges as climate change, the sustainable development goals, smart specialisation and more. Despite this, innovation is needed more than ever. The governance environment we operate in is becoming increasingly complex: challenges such as rising costs of living, emerging technologies, security threats and pressures on the healthcare system demand that the public sector move quickly to ensure we deliver effective services to citizens while grappling with new and emerging challenges.

The Latvian government has made significant strides to ensure its public sector works in more innovative ways to improve outcomes for citizens. Despite this, only 35% of those surveyed in this project confidently agreed that innovation is normal and expected in their organisations; demonstrating that the journey to developing a more innovative public sector is not over (OECD OPSI, 2023[1]). This is a process of constant improvement, including quick wins, bold transformations and decisive action. This report provides an assessment and stocktake of the innovative capacity of the Latvian public sector. It offers guidance on using innovation to improve both public sector performance and the relationship between citizens and government.

Challenges over the last few years including a global pandemic, war in Ukraine, energy supply issues and rising costs of living have underlined the importance of the Latvian government’s ability to innovate, anticipate and adapt to deliver effective public services to citizens. The drive to enhance Latvia’s innovative capacity and improve public outcomes is evident in the government’s recently published Public Administration Modernisation Plan 2023-2027, the creation of an ‘Innovation Laboratory,’ and joint initiatives with the European Commission.

This chapter provides an overview what innovation means in a government context and how innovative capacity has been supported and sustained through the years in the Latvian public sector. The chapter also outlines the methodology for this assessment report.

There is a continued appetite in the Latvian Public Sector to innovate: largely driven by a desire to increase efficiency and deal with time and resource scarcities. Through the Modernisation Plan and key European projects and agendas, a more strategic approach to innovation is evolving. Despite this, the potential and capacity for innovation remains weak due to barriers in the operating environment and capability issues within the public sector. Persistent challenges include perceived inflexibility of regulatory, legislative and audit frameworks, lack of explicit financing mechanisms for innovative initiatives, skill shortages, workforce retention and development issues and fear of risk and punishment in the event of failure. Momentum continues to build around measuring the impact of government policies, strategies and services with a strong emphasis on key performance indicators. This measurement approach will be enhanced by increased emphasis on measuring outcomes and identifying opportunities for innovation and transformation to improve the delivery of public services to citizens.

Latvian municipal civil servants demonstrate creativity and good will to innovate in response to key governance challenges. The public sector at the municipal level is not naturally conducive to innovation, as risk controls (e.g., audit and accountability mechanisms), limited resources and inflexible legal, regulatory and procurement frameworks often make it difficult to find opportunities to innovate. A desire for transformation and change at the municipal level could be supported with increased resources for innovative activities: including the establishment of safe spaces to test and pilot innovative initiatives, and guidance on how to innovate with citizen needs at the centre within the existing legal and legislative frameworks. Furthermore, municipal public servants could benefit from increased capacity building opportunities in innovation skills. While centralised supports from the national level for innovative activities could be a significant benefit to municipalities, such supports need to recognise the municipalities’ central role in delivering services to citizens. Finally, evaluation and learning mechanisms at the local level are largely informal and could benefit from a more routine approach, focused on impact measures to ensure policies and services are meeting the needs of citizens. A public sector innovation strategy that recognises the fundamental role of both municipal and national actors could help steer, enable and provide capability for innovative efforts to come to fruition to deliver better impact to citizens.

This conclusion highlights how the above findings on public sector innovation can be translated into action through the upcoming Action Plan and Innovation Strategy, to be co-created as part of this project.

The below list combines all of the considerations listed in the chapters of this report, including both national and municipal level considerations.