Unemployment is down, but what will happen next?
The third quarter of 2021 with its summer warmth, outdoor cafés and travelling around Latvia all seem like a distant dream now and we have found ourselves wide awake again in a dreary virus-ridden autumn. The lively summer developments in the economy are also reflected in the third quarter's low unemployment level, with the unemployment rate standing at merely 7.2% of the economically active population. Considering that the furloughs and wage subsidy schemes had already expired in the third quarter, the fact that unemployment did not grow is yet another proof of the sufficiently resilient economic activity despite all the Covid-19 challenges faced over the last year or so. Moreover, unemployment has rather decreased as a result of higher employment than on account of discouraged workers.
Nevertheless, regardless of how good the situation seemed just a couple of months ago, as reflected in the data we are receiving now, the question of what will happen at the turn of the year is currently more important. The data from the State Employment Agency on registered unemployment suggest that we were experiencing a continuation of the "Indian summer" in October when registered unemployment went further down. Preliminary data on November suggest a slight increase in unemployment, which is nothing unusual, considering the seasonal trends. However, we must wait and see how it all unfolds in December, when only those who hold a Covid-19 vaccination or recovery certificate will be able to continue working on site. This will affect several sectors with currently low vaccination uptake levels. That being said, it also is true that as soon as a sector becomes one of the sectors where vaccination is mandatory, the uptake goes up, which is the case in the "on-site sectors" as well. Most likely in a month's time the picture will not be as gloomy as it may seem now.
Nevertheless, the unemployed have also become slightly more interested in the opportunities of working abroad in the third quarter, and it is possible that some of the people currently employed and unwilling to comply with the vaccination requirement may also start looking for jobs outside Latvia more actively towards the end of the year. That is a serious decision, however, with quite uncertain benefits, as even if a certain country does not currently require mandatory vaccination, with the whole Europe struggling hard with the pandemic, the requirements may rapidly change. People may find themselves in a position where they have jumped out of the frying pan and into the fire, as they would have to pay more on transport, accommodation, living abroad, with no possibility to work as hoped.
Overall, no significant rise in unemployment figures is expected towards the end of the year, while some small upward movement is quite likely.