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Wednesday 26.10.2016 | Name days: Kaiva, Amanda, Amanta

Economic Diary of Latvia. Straujuma’s ‘prophecy’ comes true

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUAlthough only slightly, Latvia’s unemployment level continues to grow. In addition, employers find it more and more difficult to find appropriately skilled employees. This paradox was being discussed by the government throughout this week.

Latvia’s registered level of unemployment grew by 0.1 percentage point and was 8.4% of the economically active population in November 2015, as reported by the State Employment Agency. As mentioned at the institution, the slight increase of unemployment is linked to the late autumn, when seasonal jobs usually conclude in construction, agriculture, forestry and tourist services.

Unemployment levels still vary depending on the region. While Riga region’s unemployment level was 5.2%, that of Latgale was 18.3%.

Although the number of people without jobs keeps increasing, employers are finding it more and more difficult to find appropriately skilled workers. 45% of entrepreneurs interviewed by CV-Online Latvia have said that they now face serious problems in this matter. They say there are either no appropriate candidates or potential employees are not too eager to work. So much, in fact, that they sometimes do not even show up for interviews.

The situation on the labour market keeps worsening each year and demands more and more effort from employers, notes head of CV-Online Latvia Aivis Brodins. According to him, this is because the work-ready population keeps decreasing by 20,000 people every year. This leads to increased competition in the field of worker hunting.

Most Latvians who now live in foreign countries are certain that the Latvian government is not the least bit interested in their fate. According to authors of the book ‘Latvian emigrant communities. Diaspora of hope’, 81% of Latvians living abroad and 90.7% of Russian-speakers from Latvia believe this.

Straujuma’s ‘prophecy’

Losses have been estimated in other areas. Due to Russia’s established food product embargo, Latvia’s economy has lost EUR 60 million or 0.25% of GDP this year. Considering the losses caused by the recession of Russia’s economy, the total size of losses exceeds EUR 200 million. These calculations have been presented in the report by Latvian Foreign Ministry about completed work and plans for the country’s foreign policy and European Union policy.

Some experts say loss indexes for Latvia’s economy are made to look smaller than they actually are. This is because the loss of EUR 200 million was previously predicted solely in the country’s fish processing industry caused by the Russian ban on Latvian sprats.

Laimdota Straujuma had previously warned that the adoption of EU sanctions against Russia would negatively impact Latvia’s economy. One year ago, when the exchange rate of the Russian rouble started to decline, Straujuma had also said there is no reason to be happy about the weakness of Russia’s economy, as it would undoubtedly affect Latvia as well. Now her prophecy has come true.

Through the back door

Saeima deputies have decided to support amendments to the Immigration Law in the second reading this week. This also applies to the proposal to delegate the right to assess the issue of residence permits and their possible effect on Latvia’s national security and economic development as well as establish temporary restrictions to the Cabinet of Ministers. Criteria may include the number of foreign residents living in Latvia or their concentration in a particular area. Restrictions will be applied only in exclusive cases.

In addition, deputies have supported amendments that state how residence permits are allowed to be issued to foreigners that invest EUR 50,000 in a Latvian company and pay EUR 10,000 to the state budget. Foreigners will be able to retain their residence permits only if the company that receives investments carries out actual business activity, pay taxes and employ no more than 50 employees.

It seems Saeima deputies have opened another door to Latvia and with a reasonable entry fee, no doubt. It is possible that this is why this particular residence permit issue option is not advertised in Latvia as popularly as the option to buy real estate and invest in company capital.


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