Unemployment continues on a downward trend, whereas people struggle to find jobs meeting their expectations

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Latvia's unemployment continues on a downward trend, shrinking to 7.7% of the economically active population in the second quarter of 2018. Is this a sharp or a marginal decline? Everything, of course, depends on the point of view.

The Eurobarometer data suggest that 22% of the population believe unemployment to be one of the main problems in Latvia. According to the paper "Baltic International Bank Latvijas barometrs", 58% of respondents believe that the opportunities of finding a job in Latvia are poor or very poor. But is it really true? Could it be that the blame is simply put on others without actively looking for a solution? The unemployment rate of 7.7% may, indeed, seem high when compared to that of 2.2% in the Czech Republic or 3.5% in Germany. Nevertheless, unemployment can also take various forms, and it is necessary to assess whether it is caused by seasonal changes, cyclical fluctuations or structural effects or whether it corresponds to natural unemployment, i.e. the unemployment rate reflecting the share of the people simply changing their jobs from time to time and, during the change, are temporarily registered as unemployed.

The situation where the expectations of employers and those of the employed do not match is characteristic of Latvia. Looking through rose-tinted glasses or not, everyone determines their preferred remuneration and working conditions. Many employees still calculate their preferred wages from the other end, i.e. by assessing how much money would be sufficient to afford a decent living standard, including everyday spending and other needs. Therefore, the minimum wage job-seekers are willing to accept is rather high, but it does not necessarily correspond to their skills and potential productivity. In Latvia, real compensation has risen at a more rapid rate than productivity. However, this development is not sustainable in the long run.

A sufficient number of job vacancies are currently available both in the public and private sectors. The State Employment Agency's register contained 22 thousand job vacancies in July, twice as much as a year ago. Are there no good employees in Latvia? Yes, there are. However, structural unemployment is also relatively high, indicating that the qualifications of the unemployed fall short of the vacancy requirements. Becoming a specialist is key for all types of occupation. Specialists who keep learning and follow the structural changes in the labour market are highly demanded among employers, and they will always find a job.

APA: Opmane, I. (2018, 21. sep.). Unemployment continues on a downward trend, whereas people struggle to find jobs meeting their expectations. Taken from https://www.macroeconomics.lv/node/4211
MLA: Opmane, Ieva. "Unemployment continues on a downward trend, whereas people struggle to find jobs meeting their expectations" www.macroeconomics.lv. Tīmeklis. 21.09.2018. <https://www.macroeconomics.lv/node/4211>.

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