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Monday 21.05.2018 | Name days: Ingmārs, Ernestīne, Akvelīna
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Economic Diary of Latvia. The country needs its own special flare

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUBusiness in Latvia can be established on fundamental principles of morality and ethics, actively using the country’s technological and scientific potential of the country and by attracting financial structures and government institutions, as well as unused resources of active companies. The result of such cooperation will be the creation and realization of a new economic model for the region’s economy.

This conclusion was made by participants of the spring conference of Riga Chamber for Commerce and Industry.

In general, the question ‘What to do and how to develop further?’ was being asked multiple times and by multiple people during the celebration of the 26th anniversary since the restoration of independence of the Republic of Latvia. The answer that Latvia requires its own flare, some super idea, is self-evident at this point. Unfortunately, there has not been a single person who could be able to formulate this super idea and propose a realistic plan.

An attempt was made by delegates of Riga Chamber for Commerce and Industry during the conference, which was also attended by representatives of Latvia’s business and science, financial sector and experts in the field of start-up businesses and State Agency for Development.

The main goal of this event was to establish a dialogue between the aforementioned structures, find new cooperation principles and give a boost for the development of businesses in the country.

One of the topics of this meeting was discussing the founding principles of business. It is no secret that business in Latvia is often associated with deceit and the desire to get rich quick, not ethics and morality. Now is the time for this to change.

Weak business development in Latvia is often associated with insufficient competence of politicians and state officials, who often make poorly prepared decisions, believes Chairman of Riga Chamber for Commerce and Industry Sergei Fedorov. According to him, if you truly wish for life in Latvia to change for the better, provide a decent example to follow. Treat people and business partners the same way you wish to be treated. Ask yourself: do you always follow this principle? If not, why do you demand that others do?

This rhetorical question caused a lively discussion at the conference. In particular, RISEBA representative Julia Bulatova compared the current situation in the country and business with cleaning in a family apartment – when the brother decides he has done enough to clean his room by stacking all his trash to the door of his sister’s room. In spite of a relatively clear result, the boomerang will soon return.

Reforms are ready

The need for reforms was also mentioned by representatives of the International Monetary Fund in their report on the evaluation carried out in Latvia this week. And although IMF experts predict 2.5% growth of Latvia’s economy, they also mentioned the main risks.

For Latvia, these risks lie in slow economic development of countries that are Latvia’s business partners, geopolitical tension, stagnation in the country’s crediting sector and delays with the realization of reforms.

IMF notes that Latvia has to carry out structural reforms to contribute to economic growth and maintain it in a long-term perspective. Reforms are also necessary to attract investments, increase productivity and competitiveness.

It will be difficult for Latvia’s economy to secure productivity growth in the future. Raising productivity should be a priority, because the labour force resource gradually becomes more and more limited due to problems with demography and emigration. Structural reforms are necessary to secure growth of productivity. This includes reforms in education.

What is it that workers want?

Meanwhile, employed residents in Latvia wish to be paid wages worth EUR 1,122 after taxes, according to results of a survey by TNS. This amount is significantly larger than the average wage in the country – EUR 580 after taxes.

Most often respondents mentioned EUR 1,000 as their desired wage. 21% of respondents mentioned their desired wage is around EUR 60, another 21% mentioned wages from EUR 601 to EUR 800 and 24% – from EUR 801 to EUR 1,000.

For 22% of respondents, wages had increased in 2015. Wages of 12% of respondents had decreased and wages of respondents had remained the same.

As for demographic trends mentioned by IMF, there have been no improvements in this area recently. According to the latest statistical information from the Central Statistical Bureau of Latvia, the number of births remains below the number of deaths in the country. With that, natural population growth has been negative since 1991.

Since 1990, Latvia’s population has declined by approximately a quarter and the number of young people – by 42%. In addition, the number of young people in Latvia has been declining by 5.7% every year. While in 2005 the proportion of young people in the population was 20%, their proportion declined to 14% by 2015.

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