Job creation decreases unemployment further

As predicted before, registered unemployment in the summer of 2013 has dropped to a one-digit number – for the first time in four years. At the end of July 2013, the State Employment Agency registers 93 thousand unemployed – half as many as at the trough of the crisis at the beginning of 2010.  

The labour survey data published by the Central Statistical Bureau (CSB) today point to a drop not only in the registered but also actual unemployment. Actual unemployment or the percentage of jobseekers in the second quarter of 2013 was 11.4% of the economically active population. Three years ago, the unemployment rate in Latvia was the highest in the European Union. Now it has dropped under that in ten other EU countries[1] and right now unemployment in Latvia is close to the euro area average. The highest unemployment indicators in Europe are in Greece and Spain (26-28%). The experience of these countries shows that delaying budget consolidation (failing to balance the government expenditure increased during the bubble period with revenue dropping under the impact of the crisis) tends to both extend and deepen the crisis.

The drop in unemployment in Latvia is promoted by creating new jobs. It is important to note that the rise in employment is taking place only on account of the private sector (CSB business survey data), with work-loads remaining stable. The rise in employment in Latvia is thus sustainable and not simply a result of artificial anti-crisis measures (e.g., temporary public works, a shorter work week etc.). A substantial role in the rise of employment (more than 1/5 of the rise, which constitutes the largest contribution of all branches of the economy) was played by manufacturing whose output, as Latvia’s competitiveness consolidated (including closing the wage-productivity gap), was substantially promoted by the growing market shares in the imports of Latvia’s trading partners.

The growing number of job vacancies also points to increased employment opportunities. The number of vacancies in the State Employment Agency registers reached six thousand in the summer of 2013 – the highest indicator since 2008.