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Latvia - National Level

Short overview of the labour market

 

At the beginning of the first quarter of 2020, the population of Latvia was approximately 2 million (1 908.1 thousand), of which around a half or 1 million people (976.7 thousand in the third quarter of 2019) were economically active. At the beginning of 2019, 1 196 578 or 62.3% of the total population were Latvian, 478 667 or 24.9% were Russian, and the remaining 12.7% were from other ethnic groups. Economic activity is mainly concentrated in Riga and the surrounding areas, where around 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 economic activity and the reduction of unemployment. The registered unemployment rate has continuously decreased from 17.3% in March 2010 to 6.2% at the beginning of 2020. There are still considerable differences among regions: the lowest registered unemployment rate (in the Riga region) is more than three times lower than the highest registered rate (in the Latgale region). At the beginning of 2020, the registered unemployment rate in the Riga region was 4.3%, whereas in Latgale it was 13.8%.

The Ministry of Economy 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), 917.8 thousand or 65.6% of the population aged 15 to 74 were employed in Latvia during the third quarter of 2019. During one year, the employment rate increased by 0.3 percentage points, while the number of employed persons decreased by 2.3 thousand. During this period, the population decreased at a faster pace than the number of employed persons. 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/secondary vocational and general secondary education as the required level (in each case, 31% of all new jobs). By comparing current year data on the level of education for new jobs with the respective 2018 data, it is clear that for the second year running, general secondary education has been indicated as the required level; furthermore, there is also a higher demand for higher academic 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 willing 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 driving licence, user-level computer skills, organisational/managerial skills and English are required or at least desirable in 41 to 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 decline in demand for labour will be in 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 automation. 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 (79%) at the beginning of 2020 were registered in profession groups requiring a medium-level qualification (lorry drivers, builders, concrete workers, workers performing finishing works, painters, electricians, bricklayers, plumbers, cooks, metal welders) followed by occupations with a low-level qualification (12%) (unskilled workers, construction workers, workshop workers, packers (manual work), cleaners, product labelling workers, order pickers, warehouse workers, loaders (manual work), seasonal workers). 9% of the total number of registered vacancies are for highly-qualified professions (programmers, construction managers, nurses (medical nurses), sales experts, database programmers, welding process engineers, dentists, physician’s assistants (paramedics), application developers, construction engineers). In comparison with the respective period last year, the highest increase in the number of vacancies has been in the construction sector – builders, unskilled workers, bricklayers, workers performing finishing works, construction workers, tilers, concrete workers – as well as in administration and service organisations – lorry drivers, builders, concrete workers, cooks, painters, electricians, car mechanics.

1 Information Report from the Ministry of Economy ‘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 Economy ‘Medium and long-term labour market forecasts’, 2018.

 

Text last edited on: 04/2020


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