The proportion of job-seekers in Latvia could decline by 8-8.7% in 2017, bank analysts predict. Swedbank economist Agnese Buceniece says, active realization of European fund projects will help construction sector to recover next year. The number of employed people in this industry continues to rise. Attraction of new employees will likely require wage rise.
The expected export growth could contribute to demand for new employees in the processing industry.
At the same time, according to Buceniece, retail trade companies are experiencing high employee turnover, which increases training costs. To reduce that, solutions are being added to help improve productivity and reduce the number of employees. Self-service check-out is becoming more common in stores as well.
The economist also noted that one piece of bad news for the labour market is the decline of transit cargoes. With Russia diverting cargoes to its own ports, the cargo flow through Latvia continues to decline, which means employment is surely to decline as well.
«Employment rise in construction and exports sectors will help compensate the decline in transit and other industries,» – Buceniece said, adding that the proportion of job seekers will be around 8.7% next year.
SEB Bank macroeconomic expert Dainis Gaspuitis reports that as growth recovers in 2017, unemployment in Latvia will reduce. In a long-term perspective, however, negative demographic trends will also impact unemployment. The average level will not decline rapidly because it will be maintained by a large proportion of job seekers in regions and low mobility of residents.
«Those factors will be a serious obstacle for economic growth in the future. This is why it is important to consider mechanisms that will help improve market flexibility, primarily focusing on the involvement of the economically inactive and relieving formalities for part-time employment,» – Gaspuitis said, adding that Latvia’s proportion of job seekers may reduce to 9.6% in 2017.
DNB Bank macroeconomics expert Peteris Strautins noted that economy will grow more rapidly next year. With that, it would make sense to expect a more rapid decline of unemployment. «I expect the proportion of job seekers will be close to 9.3% at the end of this year, which is half-percent point less than there was the year before. Unfortunately, this will come at the expense of the reduction of the number or residents, not the increase of jobs. Unemployment will decline more rapidly next year and it will be dictated by the increase of jobs,» – he said.
Citadele bank economist Martins Abolins noted that employment rise next year will be noted in construction because of more active realization of EU fund projects. Employment rise is also expected to rise in IT and other export sectors. Employment may also rise in food industry. Growth in processing industry will be secured by productivity growth.
At the same time, the economist said Latvia’s unemployment level will decline more in 2017 than it did in the past two years. Unemployment in 2017 is expected to come close to 8%.
«This is related to more rapid employment growth and demographic factors, because the number of pension age residents will start to exceed the number of younger people next year. Businessmen should consider improving effectiveness and productivity,» –Abolins said.