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Monday 23.10.2017 | Name days: Daina, Dainida, Dainis

Economy Ministry: the number of economically active residents will drop by 70 000 in 2018

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Depending on economic growth and the demographic scenario the number of economically active residents will drop by 50 000 – 70 000 people in 2018, as concluded in the information statement of the Economy Ministry (EM) on medium and long tern projections on the job market.

EM’s information states that there are currently 1.028 million economically active residents in the country, 861 600 of which are employed and 166 600 – are not.

This reduction will be mainly affected by the demographic tendencies. The same, relatively slow improvement of the situation on the job market in the nearest years will not sufficiently contribute to the fast increase of the residents’ economic activity, so that it can compensate for the reduction of the number of residents who are of working age. Starting from 2019, on the other hand, the situation of the job market will improve, slowing the reduction of working-age population and restoring the supply of workforce.

A significant decrease of workforce in expected to take place in the 15 to 24 age group by 2020. It is mainly due to the low birth rates of 1990. The mentioned demographic tendencies will have a notable impact on the 35 to 44 age group in the nearest decade.

Even though economic growth tendencies are expected to be relatively rapid, demand for workforce will grow moderately, because the increase of productivity will be the main contributor. This is especially important to trading industries and processing industries that operate on open goods and service markets where the deciding factor is competitiveness.

The EM notes that almost two thirds of the entire workforce demand increase will take place in two industries by 2020 – processing industry and trading and commercial services.

Agriculture and forestry can expect a slight increase of workers, as a result of the increase of demand. However, the number of employed people will decrease in the industry, as it is in other developed countries, in a long term perspective.

With a rapid increase of production volumes in the processing industry, demand for workforce will also increase. It will also be rapid in the next two to three years. However, to make sure that the industry is competitive in a medium and long term perspective – more than 80% of the total industry increase should be ensured for the increase of productivity, technology transfer in production, research development and innovations.

Demand for workforce will gradually increase in construction in the future. But the fact that the number of workers in construction significantly declined during the crisis should be taken into consideration. It is expected that there will be a relatively large increase of employed people in the commercial services industry in the future. Demand for workforce will exceed the level of 2011 by 15% in 2030, which makes up one fifth of the total number of employed people in the national industry.

«Demand for low-skilled labour will decline in all industries, especially after 2020,» the ministry projects.

In total, the supply of workforce will exceed demand by approximately 7% in 2020, while this difference could decrease by approximately one percentage point by 2030 – 6%.

It is expected that the number of residents could increase by 7-8% (64 000) by 2020, which will absorb some part of the current job seekers. However, a number of residents that will not be able to adapt to the new environment will, most likely, leave the job market by retiring early (one possibility).

It is also expected that unemployment rates will remain relatively high until up to 2015-2016. Unemployment rate could go under 10% in 2014. This will not contribute the activity of residents on the job market.

EM notes that, in a medium term perspective, requalification necessity with higher education will be required for 10% of humanitarian and social sphere specialists; 10% of trading and commercial services specialists; 5% of education institution specialists with a professional secondary education; 5% of specialists related to construction; 5% of specialists in the sphere of services, as well and 20% of economically active residents with primary education.


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