LMI of LV0

 

At the end of the second quarter of 2018, the population of Latvia was approximately 2 million (1 929 200), of which around a half or 1 million (978 000) was economically active. At the beginning of 2018, 1.2 million or 62.2% of the total population were Latvian, 487 000 or 25.2% Russian, and the remaining 12.6% came from other ethnic groups. Economic activity is concentrated mainly in Riga and the surrounding areas, where around half (52%) of the country’s population lives. Many residents of the surrounding districts work in Riga.

The decline in economic activity caused by the global financial crisis, which began at the end of 2007, had a negative impact on the employment indicators from late 2008 onwards. The number of economically active residents 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, situation in the labour market has been slowly improving alongside a progressive increase in economic activity and the reduction of unemployment. Since March 2010, when registered unemployment was 17.3%, it has decreased annually, reaching 6.4% in June 2018, which is the lowest level in the last 10 years. 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 June 2018, the registered unemployment in Riga region was 4.2%, whereas in Latgale it was 14.9%.

The Ministry of the Economy underlines that Latvia is back on a path of stable economic growth, with its rate exceeding the EU average. 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 hinder further increase 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 with higher economic activity of the population.'1'

According to the Labour Force Survey of the Central Statistical Bureau (CSB), 898 000 or 63.5% of the population aged 15 to 74 were employed in Latvia during the first quarter of 2018. Year-on-year, employment has increased by 1.9%, and the number of those employed by 15 500.

Evaluation of information that employers have provided about the level of education required for the newly created vacancies means that in 2018 vocational education will be generally more sought after than general secondary or academic education: the plan is to fill 34% of all new vacancies with workers having a vocational/secondary vocational education, compared with 14% of all new vacancies with workers having a higher vocational education. The labour market demands flexible and competent workers, who are able to perform simultaneously several duties and who, in addition to required specific professional skills, also possess some basic competences, for example, knowledge of foreign languages. Interaction and communication skills, as well as knowledge of the official language, are most frequently listed as key skills needed in addition to specific knowledge/skills for a job. In almost all (87–89%) of the new and available job offers, these skills will be required or at least preferable. Knowledge of Russian is the third most sought-after additional skill: it is required or at least preferable in 73% of all vacancies. The demand for proficiency in Russian is the greatest in Riga and Latgale, and the smallest in the regions of Vidzeme and Zemgale. Driver’s licence, user-level computer skills, organisational/managerial skills and English are required or at least preferable in approximately half (53–56%) of available vacancies in 2018. The highest demand for English language skills is in Riga.'2'

Both in the medium- and long-term, the demand will mostly increase for employees working in highly-skilled professions. Low-skilled professions will experience the sharpest drop in demand. It will affect all sectors. Considering the demographic trends, the supply of adequately skilled workers could significantly decrease in the future; hence, the importance of secondary vocational education will continue to increase. If the current structure of higher education is maintained, the workforce shortage in the higher education group will mostly affect the pool of professionals educated in engineering, natural sciences and ICT (STEM). By 2025, the shortage of adequately skilled workers could exceed 17 000, mostly in areas such as energy, computer sciences, construction and civil engineering sectors, as well as in electronics and automatics. Furthermore, due to ageing of the 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 of employee shortage. 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.

According to the statistics of the State Employment Agency, during the first six months of 2018, most vacancies (62%) were registered in the core group of intermediate skills (retail shop assistants, lorry drivers, concrete layers, cooks, home builders, shop assistants-consultants, construction finishing workers, till operators, carpenters, builders), followed by low-skilled professions (20%) (auxiliary workers, janitors, road building workers, construction workers, plant workers, peat production auxiliary workers, sales area workers, loaders (manual), agricultural auxiliary workers, product markers). Highly-skilled professions amount to 17% of all registered vacancies (sales experts, customer/sales consultants, nurses (medical), lawyers, project managers, senior tax inspectors, construction managers, senior desk officers, programmers, social workers). Year-on-year, the largest increase can be observed for skilled workers and artisans (in particular, concrete layers, home builders, construction finishing workers, masons, builders, pavers, carpenters, plasterers, painters).

 

'1'  Informative Report of the Ministry of the Economy “On medium- and long-term labour market forecasts”, 2018

'2'  Report “Labour market short-term forecast for 2018: employer survey”

'3'   Informative Report of the Ministry of the Economy “On medium- and long-term labour market forecasts”, 2018

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