Long-term trends indicate that population in Latvia continues to decrease. The total population decrease in Latvia since 2000 exceeds 0.5 million, which is about 1/5 of the population at the beginning of 2000. The most important factors affecting demographic trends are an ageing population, low birth rate and emigration.[1] In 2022, Latvia had an average population of around 2 million (1 875 800), around half of which or 1 million (951 300 in 2022) were economically active. At the beginning of 2022, 1 181 534 or 63.0% of the total population were Latvian, 454 350 or 24.2% Russian, and the remaining 12.8% were composed of other ethnic groups.
The COVID-19 pandemic has led to significant changes in the policies implemented so far: the government debt has increased, the budget deficit is growing rapidly, there is a risk to the balance of the current account. Inflation is rising sharply driven by growing global prices, and the Russian invasion in Ukraine on 24 February 2022 has worsened the geopolitical situation and there is great uncertainty about the impact of the war and the related sanctions on economic development.[2] Overall, the situation on the labour market is gradually stabilising. At the same time, the COVID-19 crisis has also had a tangible impact on the labour market. The number of employed people and the employment rate remain significantly lower than in 2019. The crisis has also affected the economic activity of the people, which, along with demographic processes, reduces workforce availability on the labour market and increases the risks of workforce shortages. However, the Covid-19 crisis has also brought many positive changes. It has had a tangible impact on changes in the public’s behaviour, creating new opportunities and requirements on the labour market. The use of different ICT solutions in everyday life has increased significantly, providing the necessary infrastructure for remote work, learning, shopping, delivery of goods and other processes. The crisis has also opened up much wider opportunities for remote work. It should be noted that remote work can in general have a positive impact on workers’ productivity and can also reduce costs, such as transport costs. Sectors with good opportunities of remote work show better performance during crises.[3]
The level of economic activity in Latvia still varies greatly from region to region, with most jobs concentrated in Riga and the surrounding areas, while the number of jobs in other regions is much lower. At the end of March 2023, the registered unemployment rate was the lowest in Riga (4.5%) and the Riga region (4.5%), while the highest rate was recorded in the Latgale region (12.6%). The registered unemployment rate stood at 6.2% in the Vidzeme region, 5.8% in the Zemgale region and 6.4% in the Kurzeme region.
According to the Labour Force Survey of the Central Statistical Bureau (CSB), 886 200 people, or 63.9% of the population aged 15 to 74, were employed in Latvia in 2022. During the year, the employment rate increased by 1.4 percentage points, while the number of employed persons increased by 22.2 thousand.
In the coming years, jobs are expected to be increasingly affected by automation trends, with the largest job losses expected in occupations with a high share of manual and repetitive activities, as well as in direct service occupations such as retail salespersons and cashiers, call operators and similar occupations. In the long term, automation trends are likely to have the greatest impact on the number of medium-skilled jobs. It should be noted that technologies polarise the labour market by creating high-skilled, well-paid jobs on the one hand and keeping low-skilled, low-paid jobs intact on the other hand, while forcing medium-skilled jobs from the labour market. Occupations requiring high levels of education, social interaction and the ability to manage, plan and coordinate in complex environments/conditions will be least affected by technological developments. By contrast, professions that require a relatively low level of formal education or do not require engagement in complex social interactions, as well as occupations involving routine manual work are the most exposed to automation. [4] Both in the medium-term and long-term, the demand will mostly increase for employees working in highly skilled professions. This will primarily be determined by an increase in demand for labour in commercial services, trade and construction. In the longer term, the strongest demand growth is expected in commercial services and trade, as well as in manufacturing and construction. Demand for middle-skilled occupations will decline in both the medium and long term; however, demand for skilled workers will remain high. The strongest demand growth is expected in construction. At the same time, demand will decline in all sectors in the medium term, with the exception of agriculture, processing manufacturing, construction and commercial services. In the long term, demand in the middle qualification group will decrease in all sectors except manufacturing, construction and commercial services. [5]
Statistical data from the State Employment Agency show that the highest number (54%) of vacancies in the first quarter of 2023 were registered in the professions of the medium-skilled core group (lorry drivers, concrete workers, cooks, articulated truck drivers, masons, metal welders and information entry operators), followed by low-skilled occupations (33%) (construction workers, auxiliary workers, auxiliary workers in road construction, auxiliary workers in peat mining, seasonal agricultural workers, workshop workers, repair workers). Highly qualified professions account for 13% of the total number of registered vacancies (programmers, nurses/general care nurses, logistics experts, pre-school teachers, project managers, computer operators, systems analysts).
[1] The Ministry of Economy Information Report ‘Medium and long-term labour market forecasts’, 2022.
[2] The Ministry of Economy Information Report ‘Medium and long-term labour market forecasts’, 2022.
[3] The Ministry of Economy Information Report ‘Medium and long-term labour market forecasts’, 2022.
[4] The Ministry of Economy Information Report ‘Medium and long-term labour market forecasts’, 2022.
[5] The Ministry of Economy Information Report ‘Medium and long-term labour market forecasts’, 2022.
In view of improvements on the labour market, as well as growing workforce shortages, gross wage growth has remained stable above 4.5% per year since 2013, with the fastest growth over the recent years achieved in 2021 when gross wages grew by 11.7 %. In 2021, the average gross wage amounted to EUR 1 277. Its growth was largely driven by an increase in demand for labour and, at the same time, by a decrease in the working-age population, which put pressure on wages. Compared to the pre-pandemic level of 2019, gross wages have increased by 18.7 percent. The wage gap between private and public sectors has been decreasing rapidly in recent years. The gross wage remains the highest in financial and insurance sectors, amounting to EUR 2 282, which is almost twice the national average. At the same time, the lowest wage in 2021 was in accommodation and catering services sectors, amounting to EUR 795.[1]
9 928 vacancies registered by the NVA at the end of Q1 2023 offered a salary of EUR 1 277, which indicates a willingness to employ people from third countries. These account for 41% of open vacancies. From a regional perspective, 88% of these vacancies are in the Riga region. Among the regions, the Riga region also accounts for the highest proportion of the total number of open vacancies, i.e. 47%.
According to the information provided by the Central Statistical Bureau, on average, there were 25 900 vacancies in Latvia in 2022, which is an increase of 1 400 or 6% on 2021. The largest increase is in the following sectors: other services; agriculture, forestry and fishing; and mining and quarrying. The largest decrease in jobs was seen in the following sectors: real estate operations, processing manufacturing and construction.
Highly qualified applicants with ICT skills and knowledge of numerous foreign languages (particularly Nordic languages) still have good opportunities of finding a suitable job in Latvia.
According to the data of the State Employment Agency, the highest number of vacancies at the end of the 1st quarter of 2023 was in the construction/real estate sector (40%), transport/logistics (14%) and manufacturing (11%).
[1] The Ministry of Economy Information Report ‘Medium and long-term labour market forecasts’, 2022.
According to employers, they mainly require qualified employees with higher education, social skills (contact, communication, presentation, negotiation and other skills), computer skills (both general and specific), good knowledge of Latvian and foreign languages. (This has also been demonstrated during the crisis, when employers chose to retain workers with professional skills as a matter of priority when considering reducing workforce).
Among the total number of unemployed people registered with the State Employment Agency at the end of the 1st quarter of 2023, people with vocational education accounted for the largest share (33% of the total number of registered unemployed people). Unemployed people with general secondary education accounted for 26%; those with higher education – 22%; primary education – 17%, below-primary education – 2%. The number of registered unemployed people by occupational group after last occupation at the end of Q1 2023: medium-skilled occupations (48%), high-skilled occupations (28%), and low-skilled occupations (24%). Analysis of the vacancies registered by the State Employment Agency indicates that, at the end of the first quarter of 2023, the highest overproduction of unemployed people was observed in simple occupations, while there was a demand for skilled workers and craftsmen. The number of registered unemployed persons by desired occupation exceeds demand (the number of registered vacancies) most of all in the low-skilled occupation group: auxiliary workers, cleaners, street cleaners, occasional workers, cook assistants; medium-skilled occupation group: lorry drivers, car drivers, retail shop assistants, wardens, sales assistants; high-skilled occupation group: office administrators, project managers, clerks, assistant accountants and sales assistants.
Overall, the number of high-skilled jobs has increased significantly in recent years against the backdrop of a reorientation of the national economy towards higher value-added activities. The demand for high-skilled labour has been reinforced by the Covid-19 pandemic, as forms of work have been changing and technology has been increasingly entering the labour market, and the entry of technology into the labour market and the automation of jobs have had and will have the greatest impact on workers in medium- and low-skilled jobs (it is expected that there will be a surplus of workers with general secondary and primary education).[1]
Latvia experiences increased ageing of the workforce in some sectors and occupations, which may lead to a reduction in the workforce in the future. These trends have intensified over the years. Among the sectors, the highest proportion of employees aged over 50 is in other industrial sectors (in particular water supply, sewage, waste management and rehabilitation) and in public services (in particular education and health and social care), as well as agriculture.[2]
Links:
State Employment Agency | |
Central Statistical Bureau | |
Ministry of Economy |
[1] The Ministry of Economy Information Report ‘Medium and long-term labour market forecasts’, 2022.
[2] The Ministry of Economy Information Report ‘Medium and long-term labour market forecasts’, 2022.