Situation in Latvian job market improving gradually

Job market – Latvia

Latvian job market in brief:

* The number of employed persons in Latvia was 895,000 or 61.8% of the population aged 15-74 years in the third quarter of 2016

* The registered unemployment level was at 9.5% of the economically active population in the third quarter of 2016

* Unemployment in 2020 is planned at 8.2% (the Finance Ministry projects)

* The average gross monthly wage in Latvia was EUR 847 in the third quarter of 2016, or by 2.2% higher than in 2015

Unemployment level and structure

* Unemployment in Latvia ballooned since 2008, when the jobless rate rose 46% compared to 2007 – from 52,321 registered unemployed persons in 2007, to 76,432 registered unemployed in 2008. In subsequent years, the unemployment level began to fall. At the beginning of 2017, there were 78,357 unemployed persons registered at the State Employment Agency, up by 80,016 people from the month before.

* Overall, 895,000 people were employed in Latvia in the third quarter of 2016, or 61.8% of the working age population (aged 15-74 years).

* In the third quarter of 2016, the majority of employed persons worked in manufacturing (14%), followed by wholesale trade and retail trade (13.9%), education (9.5%), and transport and warehousing (8.2%).

* At the beginning of 2016, the most popular professions among youngsters were physicians, lawyers and seamen while employers recommended them to choose IT, finances, construction, tourism, law, business administration, communication science, logistics, energy and electronics.

Supply and demand on job market

* Demand for skilled workers in Latvia continues to increase. The Latvian parliament has passed amendments to the Vocational Education Law to straighten out the vocational education system and improve the quality of vocational education. Nevertheless, a survey conducted among employers in 2016 showed that 70% of them experience constant, frequent or rather frequent shortage of skilled workers and 85% had difficulties finding personnel that they considered "good". When looking for employees, 47% of companies would prefer to hire people with professional qualification and secondary or higher education.    

* The surveys carried out by the several online recruitment companies show that the companies fully or partially owned by the state remain 2015 the most desirable employers in the eyes of employees. The state-owned power utility Latvenergo was at the top of the list of the most desirable employers in several surveys, followed by telecommunications companies Latvijas Mobilais telefons (LMT) and Lattelecom.

* The number of job-seekers aged 15-74 years was 110,000 in the third quarter of 2016, down by 8,200 from the same period in 2015.

Wages

* With the growth returning to the Latvian economy after the crisis, the situation with wages is also improving. The average gross monthly wage in Latvia was EUR 722 in the third quarter of 2013, EUR 772 in the third quarter of 2014, EUR 829 in the third quarter of 2015 and EUR 847 in the third quarter of 2016.

* Wages increased in all sectors – the public sector, the private sector and the general government sector. The wage growth is due to the rising demand for skilled labor.

* In the third quarter of 2016, air transport and finances remained the sectors where employees receive the highest wages but other traditionally highly-paid sectors are IT, pharmaceutical industry ad manufacturing. The lowest-paid jobs are in the services sector – repairs of computer hardware, security services and catering.

Migration of workforce

* The relatively low average wage in Latvia, as well as unemployment and credit liabilities have contributed to the migration of Latvian residents to other European Union countries. The results of the 2011 national census showed that Latvia’s population has decreased by 309,000 persons in 11 years, with approximately 190,000 persons or more than a half migrating to other countries.  According to latest official statistics, migration to other countries has not slowed down. Latvia's population has decreased from 1,957,200 in the fourth quarter of 2016 to 1,953,000 in the first quarter of 2017.

* In order to help solve workforce problems and appeal to compatriots to return to Latvia, the Economics Ministry in 2012 produced a four-year re-emigration support plan. At the end of 2015, it was decided to work out a new plan in cooperation with business representatives of the Latvian diaspora. So far, Latvians living abroad have been complaining that the information about the re-emigration support measures was fragmented and difficult to find.

Good to know:

* Minimum monthly wage – EUR 380

* Work week – 40 hours, five working days and two days off

* Public holidays in 2017 – 14

* Retirement age – 63 years, while early retirement age in 2017 is 61 years

* The state social insurance mandatory contributions rate is 34.09%, of which the employer and the employee pay 23.59% and 10.5% respectively

* Persons can be employed from the age of 13, but there are several Employment Law requirements for employing persons under the age of 18

* Payment for night shifts is set at no less than 50% above the fixed hourly or daily wage set in the employee’s contract, while remuneration for overtime and weekend hours is set at no less than 100% above the fixed wage

* Vacation – every employee has the right to an annual paid vacation, and the time period cannot be less than four calendar weeks, excluding public holidays

* The rights of employees in Latvia are protected by the Latvian Confederation of Free Trade Unions (LBAS), which is the biggest non-governmental organization in Latvia that protects the interests of trade union members and employees on the sectoral and cross-sectoral levels. The confederation coordinates the cooperation between about 20 trade unions in Latvia.