The creation of new jobs shows the recovery of Latvia’s job market, which reflects not only in the reduction of unemployment, but the increase of employment as well. At the same time, given seasonality, winter currently rules over Latvia, bank economists note while commenting the latest data of the Central Statistical Bureau of Latvia.
Bank of Latvia economist Oleg Krasnopyorov:
The opinion that unemployment is reducing only because people are leaving the country is not true. Quite the opposite – the number of economically active residents is growing. Even though the increase of economically active residents is a good thing and reflects larger hopes of residents to find a job, we need to remember that this worsens unemployment statistics in a short-term perspective. If the number of economically active residents had not gone up in the last two years, the proportion of job seekers would have been 11% at the moment.
Latvia’s job market’s recovery is illustrated best by the dynamics of the number of employed. The rise in employment rates is currently the most rapid one in the EU. The possibility that the recovery of the job market is happening only “on paper” or under the influence of some short-term factor is unlikely.
Even though the natural unemployment level is often evaluated differently by different researchers, it is clear that Latvia’s high unemployment rate is mainly a structural problem. The current unemployment reduction is mainly cyclic. Therefore, further developments in reducing unemployment will be less and less related to the wide and general demand stimulating progress of this program and more and more dependent on how effective different employment programs are in regard to specific groups of residents.
SEB Banka macro-economics expert Dainis Gaspuitis:
When looking into the development of the job market, we need to follow not only the unemployment reduction trend and values, but also the changes in employment. This is important in terms to the ageing of society and preservation of economic potential.
The currently observed increase of unemployment can be explained with the characteristic influence of seasonal jobs, which means that, with air temperature going up, there will be an improvement of the situation on the job market. In addition to that, similarly to last year, there is a notable increase in economic development this year. The active creation of new jobs could take place on the services market, which is expected to be contributed by the development of domestic consumption. However, the inability to find work in a long period of time has become a chronic employment problem. Such job seekers form 53.8% of the total number of job seekers, which notes the depth and complexity of the problem. There is still a large number of job seekers that have work experience, which reflects structural problems in unemployment. This is why the availability and effectiveness of re-qualification and education programs is as important as ever.
Swedbank senior economist Lija Strasuna:
As it was expected – the proportion of job seekers slightly increased from 13.5% to 13.8% in Q4 of 2012. This is mainly due to seasonal factors. In comparison to the last quarter of the previous year, the number of job seekers has reduced by 10 thousand. In total, there were around 40 thousand new jobs created in 2012, especially in the financial and real estate sector. The most rapid employment reduction rates were noted in IT and communication services and administrative services ( a total of 5% of all employed individuals in the country). The number of employed in manufacturing industry has increased by 8%, while domestic trading decreased by 5% – these two are the largest industries in terms of the number of workers.
It is expected that the situation on the job market will be improving slowly in the next several quarters. Surveys indicate that some enterprises in the main industries plan to slightly increase the number of employees. However, employers remain careful in regard to workforce cost increase. It is expected that the proportion of job seekers could drop from 14.9% last year to 13.6% this year. Creation of new jobs is expected to be slower than it was last year.