LMI of LV0

 

At the beginning of the second quarter of 2019, the population of Latvia was approximately 2 million (1 916.2 thousand) of which around a half or 1 million people (976.0 thousand) were economically active. At the beginning of 2018, 1.2 million or 62.2% of the total population were Latvian, 487 thousand or 25.2% Russian, and the remaining 12.6% were composed of other ethnic groups. Economic activity is mainly concentrated in Riga and the surrounding areas, where around a half (52%) of the country’s population lives. Many residents of the surrounding territories work in Riga.

The decline in economic activity caused by the financial crisis which began at the end of 2007 had a negative impact on employment indicators from late 2008 onwards: the number of economically active persons and the employment rate decreased, and there was a rise in the level of unemployment. Since the beginning of 2010, however, the economic downturn in Latvia has been halted and growth has resumed. Since mid-2010, the situation in the labour market has been slowly improving alongside a gradual increase in the economic activity and the reduction of unemployment. The registered unemployment rate has continuously decreased from 17.3% in March 2010 to 6.3% in April 2019. There are still considerable differences among regions: the lowest registered unemployment (in Riga region) is more than three times lower than the highest registered rate (in Latgale region). In April 2019, the registered unemployment in Riga region was 4.1%, whereas in Latgale it was 14.9%.

The Ministry of Economics notes that sound economic growth has resumed in Latvia with rates higher than the EU average. The situation in the labour market continues to improve: unemployment is declining and employment is on the rise. At the same time, demographic trends and regional disparities are hindering further increases in the number of those employed. Whereas supply factors mostly conditioned trends in the labour market in the preceding years, in 2017, with resumed activity in the construction sector, ever greater pressure was also felt from the demand side. Meanwhile, the dwindling pool of employees was mostly offset by the higher economic activity of the population.[1]

According to the Labour Force Survey of the Central Statistical Bureau (CSB), 909.4 thousand or 64.5% of the population aged 15 to 74 were employed in Latvia in 2018. During one year, the employment rate has increased by 1.6 percentage points, and the number of the employed by 14.6 thousand.

An analysis of information provided by employers as to the necessary level of education for workers in the newly created job vacancies demonstrates that employers prefer vocational/vocational upper secondary education as the required level (in each case, 31% of all new jobs). By comparing 2019 data on the level of education for new jobs with the respective 2018 data, it is clear that for the second year running, vocational upper secondary education has been indicated as the required level; furthermore, there is also a higher demand for higher education (without any qualification awarded). In comparison with 2018, in 2019 a significantly smaller number of new jobs will require a level lower than primary education. On the labour market, there is a demand for flexible and competent workers, who are ready to perform duties related to several positions and who, in addition to specific occupational knowledge, also have some general skills, for example, knowledge of foreign languages. Interaction and communication skills, as well as knowledge of the official language, are most frequently listed as the key skills needed in addition to specific knowledge/skills for a job. In almost all (86%; 88%) of the new and available jobs, these skills will be required or at least considered desirable. Knowledge of Russian is the third most sought-after additional skill: it is required or at least desirable in 69% of all vacancies. The highest demand for knowledge of Russian is in the metropolitan area of Riga, as well as in Zemgale and Latgale. A driver’s licence, user-level computer skills, organisational/managerial skills and English are required or at least desirable in (41–68%) of the available vacancies.[2]

Both in the medium- and long-term, the demand will mostly increase for employees in highly-skilled professions. The fastest growing demand for labour will be in the low-skilled occupations. It will affect all sectors. Considering the demographic trends, the supply of adequately skilled workers could significantly decrease in future; hence, the importance of secondary vocational education will continue to increase. On the basis of an existing higher education supply structure, the most significant workforce shortage in the higher education group is expected to come from specialists with education in engineering, science and ICT (STEM). By 2025, the deficit of adequately skilled workers could exceed 17 thousand, mostly in such areas as energy, computer sciences, construction and civil engineering, as well as in electronics and automatics. Furthermore, due to the ageing of society and higher demand for medical services in both the internal and external markets, a noticeable shortage of healthcare and social care professionals will continue to plague the labour market.[3]

More and more entrepreneurs complain about the shortage of workers. For vacancies that have proven hard to fill, mostly specific professionals are required: in construction and IT sectors, as well as welders and cutters, drivers of passenger vehicles and lorries.

Data of the State Employment Agency show that most vacancies (69%) in the first quarter of 2019 were registered in profession groups requiring a medium level of qualification (construction workers, lorry drivers, cooks, workers performing finishing works, retail salespersons, bricklayers, truck drivers, builders, carpenters) followed by occupations with a low level of qualification (17%) (unskilled workers, cleaners, construction workers, unskilled road construction workers, unskilled agricultural workers, unskilled peat extraction workers, seasonal agricultural workers, workshop workers, packers (manual work), loaders (manual work)). 14% of the total number of registered vacancies are for highly-qualified professions (senior experts, customer/sales consultants, project managers, senior desk officers, programmers, chefs, legal advisers, sales experts, senior tax inspectors, nursery school teachers). In comparison with the respective period last year, the number of vacancies has increased in the construction sector — workers performing finishing works, steel fixers, concrete workers, bricklayers, insulation layers in buildings, unskilled workers, construction workers, and builders, as well as in administration and service organizations — construction workers, warehouse workers, assemblers of wooden structures, fish processors, lorry drivers, motor engineers, painters, loggers.

 

[1]Information Report from the Ministry of Economics ‘On medium- and long-term labour market forecasts’, 2018.

[2]Report ‘Labour market short-term forecast for 2019: employer survey’

[3]Information Report from the Ministry of Economics ‘On medium- and long-term labour market forecasts’, 2018.

 

 

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