Latvia steps down as "champion" in EU unemployment

Latvia is gradually losing its front-runner position in terms of EU unemployment figures. One-and-a-half years ago Latvia had the highest unemployment rate in the EU, but now, according to the results of the third quarter of 2011, it lags behind Spain, Greece, Lithuania, and Ireland.  It must also be noted that in Spain, Greece and Ireland unemployment keeps growing whereas in Latvia it has been dropping for a year and a half.

Since the beginning of 2010, the actual unemployment or percentage of jobseekers in Latvia has dropped by 6.1 percentage points, to 14.4% of the economically active population and the same trend is supported by the registered unemployment data. Unemployment is shrinking along with job creation: according to the labour force survey data of the Central Statistical Bureau (CSB), the number of the employed in the period at hand grew by 68.6 thousand, moreover, the number of people who have a secondary job increased by 3.6 thousand.

These results serve to confirm our forecasts at the beginning of the year that the average jobseekers rate would be about 16% in 2011 (the average for the first three quarters is 15.7%).

We project the jobseekers rate in 2012 to fall by about one percentage point as compared to 2011. A more rapid drop in unemployment is hindered by several factors.

First, external economic environment is still highly uncertain. According to business tendency data, employment expectations of businesses that slid into positive territory in spring 2011 (more businesses are planning to increase the number of their employees than are planning to decrease it), dampened substantially in autumn. That reflects lack of confidence regarding expansion of production in an uncertain global environment.

Second, there is the risk that structural unemployment problem will exacerbate. Currently a pronounced lack of (qualified) labour is being observed only in construction. In October 2011 20% of construction entrepreneurs complained of a lack of labour (CSB data), and 12% considered it the main impediment to business (European Commission data).

Third, the scale of a new temporary work programme (that as of the beginning of 2012 will partially replace the "100 lats" programme) will be smaller than that of the former program; that may dampen the short-time employment opportunities for registered unemployed and thus, worsen employment statistics.

APA: Krasnopjorovs, O. (2019, 15. sep.). Latvia steps down as "champion" in EU unemployment. Taken from https://www.macroeconomics.lv/node/2277
MLA: Krasnopjorovs, Oļegs. "Latvia steps down as "champion" in EU unemployment" www.macroeconomics.lv. Tīmeklis. 15.09.2019. <https://www.macroeconomics.lv/node/2277>.

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