Latvian labour market is like a vacuum cleaner – workers are sucked from the most distant corners of the country to put them in offices and behind the counters in large towns of Latvia. Meanwhile, the labour force becomes even smaller. And conversely, the share of employees in Latvia beats European records.
Thus, in 3rd quarter 895,000 people worked in Latvia, accounting for 61.8% of the total population aged 15 to 74. In comparison, the EU average similar rate has remained the same at 58.9%.
An even greater gap between Latvia and Europe appears when considering the female share on the labour market.
In Latvia, the level of women’s economic activity by 4.9 percentage points exceeds the average economic activity of women in the EU. According to the latest available data (for 2015), this figure in Latvia was 63.2% while in the EU on the average - 58.3%. At the same time, the share of economically inactive women in Latvia (36.8%) in the past year was lower than the average over the EU (41.7%).
Despite the fact that women work more hours, they earn less. At least in 2015 the average gross compensation of working women was by 16.2% lower than of working men.
In recent years, big Latvian entrepreneurs are vocal about the need to import migrant workers into the country. Meanwhile, 457,900 economically inactive people aged 15 to 74 were registered in Latvia in the third quarter of 2016. These people do not work anywhere and are not looking for work.
However, the attraction of labour reserves for socially useful work will not work. The bulk of economically inactive Latvians are pensioners (about 300 thousand) as well as students and pupils (about 70 thousand). Another 50 thousand people are potential workers who have traded in Latvian labour market for Western European. Since no precise data on this category of population is available, the evaluative categories have to be used.
There are also the rentiers, downshifters, antisocial elements and other groups of population, which are unlikely to burn with the desire to fill existing and emerging job vacancies. Emergence of new jobs, in turn, is associated not only and not so much with economic growth but rather with old age of Latvian workers.
Just shortage of personnel is associated with wage growth in Latvia, which in recent years accounted for 5-7 per cent annually. Employers are forced to compete in struggle for employees. In some phase of competition it could be well appear that bringing workers from former Soviet republics will be cheaper than “forcing” local inhabitants to work.