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Wednesday 18.10.2017 | Name days: Rolanda, Rolands, Ronalds, Erlends

Study: businessmen in Liepaja complain about logistics, in Ventspils – about lack of labour force

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUA study has been published on the website of Latvian Education Foundation about the competitiveness of Saldus, Talsi, Ventspils, Kuldiga and Liepaja.

The study was performed by EM metodoloģijas. As mentioned in the annotation to the study, «the ability of cities to develop and secure welfare for their residents is closely tied to the competitiveness of their businesses, investments and attraction of new people. With work and funding, municipalities are able to compensate geographical imperfections, resource deficit and other problems, as well as inertia caused by problematic processes of the past.» invited two authors of this study – economist Romans Vitkovskis and lecturer of the business, management and economics faculty of the University of Latvia Egils Fortins.

Why was this study carried out in cities in Kurzeme?

The majority of transport businesses and logistics companies, as well different associations of businesses, were curious about which cities in Kurzeme are currently experiencing growth and which of them would be appropriate for business planning in the future. It was important for us to find out the opinion of the businessmen who work or plan to work in those cities. The study encompassed only companies that have a foothold in more than one other city. This was done to find out the opinion of businesses that have the freedom of choice when it comes to business locations, as those businesses that are limited to only one city often put no thought into the possibility of working in other cities. The main objective of the study was finding out the attitude of businessmen towards work in certain cities regardless of third parties – government, municipal administration or the press. It should be noted that the method used here is not associated with methods employed by statistics, as the study focused on compiling a list of positive and negative opinions. I would like to say that modern economy is more focused on opinions, not prices. With that, competition is being performed on the level of prices for goods and on the level of opinions. This type of competition is called out-price competition. It is clear to everyone that welfare in cities is closely tied to the presence and work of enterprises. Work of businessmen creates jobs, contributes to the development of construction, services, cultural life, transports, communications and other sectors. The ability of different cities to attract businessmen is largely dictated by the will of businessmen to work in one city of the other.

Ever since the restoration of Latvia’s independence it has been established that Ventspils is one of the most successful and wealthiest cities in Latvia. Is this true from the perspective of entrepreneurs? Have there been any surprises associated with that?

We have seen one particular surprise in relation to Ventspils – we have received the most responses that are either very positive or very negative about this city. In other cities, however, we have received responses steering more towards the middle.

But that is good, right? It means there are no people who do not care…

Unfortunately, we have to conclude that Ventspils’ final verdict is one point higher than positive. In Liepaja, for example, 75% of respondents describe their work in the city as a positive experience (12% – as negative). 100% of respondents said their experience of doing business in Kuldiga is positive. 50% of respondents in Saldus said their experience is positive (25% said it is negative). In Talsi, 33% of respondents said their experience working in this city is positive (33% said it is negative). In Ventspils, positive and satisfactory rating was given by 65% of respondents, and negative – by 27%.

We also asked respondents about the factors that influence their decision to open a branch in a new city. We received the following results: businessmen in Liepaja do not open up branches because of problems with logistics, and in Ventspils – because of the lack of appropriately skilled work force, low purchasing power and low number of potential consumers. Factors mentioned by respondents in Kuldiga included high costs. No reasons were given about Saldus and Talsi.

Nevertheless, according to statistics, in 2015 only 3.5% of families in Ventspils that fell under the category of poor, and this city is said to have the highest gross income for people working in the private sector. Where does this low purchasing power come from, then?

Low purchasing power at a high level of average wages shows that Ventspils may have problems with distribution of income – a large number of households with low income and small number of households with much higher income. This is why the number of consumers or clients with average purchasing power is certain sectors may be insufficient. If a small number of residents have very high income and the rest have small income, the average index will be high, sure, but the actual purchasing power of the majority of residents will be low.

How to businessmen evaluate the work performed by municipal institutions? Admit it – relationships between municipalities and entrepreneurs is a major factor in choosing in favour of one or the other city

In Ventspils and Talsi criticisms were tossed towards municipal administrations. Specifically – businessmen believe those municipalities often intervene in the process of free competition. Businessmen that disobey them often face artificial obstacles and difficulties. Respondents mentioned that officials in Liepaja take medium to long time to respond to queries. In Ventspils, on the other hand, municipal officials take the maximum amount of time to respond. This is a bad sign for businessmen, as their opinion, which is based on experience, Ventspils municipality demands additional documents on top of the ones already required by law.

Rating of cities based on opinions of businessmen

Final verdict ‘Good’:

Liepaja 22

Ventspils 27

Kuldiga 13

Saldus 12

Talsi 4

Final verdict ‘Poor’:

Liepaja 17

Ventspils 28

Kuldiga 11

Saldus 9

Talsi 11

Average score was not used in the rating.

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