To work or not to work? Work, work, work!
We have had a busy spring and summer. Businesses' labour demand has remained high, the number of vacancies exceeds the figures of the last two years by ten thousand, approximately six thousand refugees from Ukraine have joined the ranks of the employed, and the unemployment rate has dropped to 6.6%. At the same time, provisional data on registered unemployment by the State Employment Agency still show no significant increase also in July and the beginning of August, suggesting that the start of the third quarter has been similar, reporting high employment and low unemployment figures.
It is quite natural to have some minor unemployment, for example, due to a certain number of people being between jobs. Structural unemployment, however, is a cause for a greater concern as it characterises those unemployed who have been unable to find a job for quite some time due to a skills mismatch, their place of residence or other reasons. An equal cause for concern is also the share of unemployment more actively swinging along with the economic developments. Unemployment may shrink on account of the unemployed finding employment opportunities and on account of discouraged workers alike. Therefore, it is very important to look at the numbers of people who are actually willing to find a job and those who succeed. What has been the reason for the shrinking unemployment in Latvia?
The decline in unemployment registered in the second quarter was rather "real" than "fictitious" because the economic activity of population and employment also increased. Although the share of people who were not looking for a job due to personal or family reasons had grown during the pandemic, with the economy freed from the pandemic restrictions and previously stagnating sectors springing back to life, both employment and economically active population have increased. The rising costs of living and potential inability to pay their bills in autumn may have also had some role in making people start looking for a job and accepting various job offers. That being said, in addition to swollen bills, next autumn is also bound to bring some chill to the labour market, as, with the economic growth decelerating, the warm summer trends observed in the improvement of the economic activity and shrinking unemployment may fade.