The labour market gradually becomes more favourable for employees

As predicted earlier, unemployment continues to drop in Latvia. At the beginning of 2015, 10.2% of the economically active population were jobseekers. Year-on-year, the drop is worth noting– 1.7 percentage points, but over the last three quarters, the proportion of jobseekers changed very little. The unemployment level thus remains slightly above 10% - close to its natural level.

Data indicate that both the actual unemployment and the natural level of unemployment are gradually decreasing and will continue to slowly go down in the future as well. The drop in natural unemployment will result from both better employment opportunities (natural unemployment reflects the actual unemployment with a delay) and active labour market policy measures (retraining, competency development courses). Thus the situation of macroeconomic balance will remain: the wage rises will not exceed labour productivity increases to a significant degree.

The increase in the number of recipients of unemployment benefits (up to 40 thousand in March) reflects the largest number of registered short-term unemployed. It does not point to a deteriorating situation in the labour market, for the number of long-term unemployed dropped more. Operational statistics for April 2015 likewise do not point to a changing trend. For instance, the drop in registered unemployment in April was 0.4 percentage points – the same as in April 2014 (excluding the impact of updating the number of economically active population [1]). Year-on-year, the number of registered unemployed dropped by 10% – the pace is similar to the indicator in the spring of last year.

The fact that Latvian labour market has been becoming more favourable to the employees several years in a row is reflected also in the expectations for the future. Consumer survey data (seasonally adjusted data of the European Commission) indicate that in April 2015, the number of people, which, in the coming 12 months, expects a drop in unemployment has for the first time since 2007 exceeded the number of people expecting a rise in unemployment.