Unemployment has been steadily declining since mid-2020. According to the Labor Force Survey of the Central Statistical Bureau, the unemployment rate decreased to 7.2% in the 3rd quarter of 2021, which is 1.2 percentage points lower than in the 3rd quarter of 2020 (8.4%), but by 0%. , 7 percentage points lower than in the previous quarter (7.9%).
In total, in the 3rd quarter of 2021, 67.9 thousand people aged 15-74 were in search of work, which is 7.5% (5.5 thousand) less than in the 2nd quarter of 2021 and 16.6% (13.5 thousand) less than in the 3rd quarter of the previous year. At the same time, the unemployment rate in Latvia remained higher in the third quarter than in Lithuania (6.7%) and Estonia (5.7%).
The Minister of Economics Jānis Vitenbergs emphasizes: “Recent employment and unemployment figures show that the labor market has largely overcome the deepest point of the Covid-19 pandemic crisis and is gradually adapting to new circumstances. At the same time, with declining unemployment, more and more sectors of the economy are experiencing an increase in labor shortages, which in turn poses risks to their future growth. It is therefore essential to speed up the retraining and faster return to work of those who have lost their jobs during the crisis, especially in those sectors which are currently experiencing the greatest labor shortages, such as information and communication services, construction and manufacturing. “
Demographic trends in Latvia still have a significant impact on unemployment rates – declining working age population, which has a negative impact on the overall labor supply. The number of economically active population aged 15-74 in the 3rd quarter of 2021, compared to the corresponding period of the previous year, decreased by 29.4 thousand (by 3%) – to 944.8 thousand. In view of the gradual decline in labor supply, in addition to overcoming the effects of the crisis and promoting employment, the shortage of skilled labor has become increasingly significant, especially in the less affected and growing sectors of the crisis.
In the 3rd quarter of 2021, 876.9 thousand people aged 15-74 were employed in Latvia, which was by 1.8% or 15.9 thousand less than in the 3rd quarter of 2020, respectively. At the same time, compared to the previous quarter, the number of employees has increased by 15.3 thousand or 2%, which is the most significant quarter-on-quarter increase in employment since the beginning of the Covid-19 pandemic crisis.
Employment rate among the population aged 15-74 this year In the third quarter, it rose to 63.5%, 1.2 percentage points higher than in the previous quarter. At the same time, the share of the employed population is still declining on an annual basis: the employment rate in the third quarter was 0.7 percentage points lower than in the third quarter of 2020 (64.3%), but from the highest pre-crisis level (3rd quarter of 2019). lagging behind by 2.1 percentage points. In general, the employment rate in Latvia in the third quarter remained significantly lower than in the neighboring countries – in Estonia, the share of the employed population in the third quarter was 67.4% of the total population aged 15-74, and in Lithuania – 66%.
The last quarter of this year is expected to see a slightly lower activity in the labor market, which will be affected by both the measures introduced to limit the spread of the Covid-19 pandemic and the impact of seasonality on the labor market in general. The return of activity growth to the labor market is expected with the onset of next spring-summer season, which will boost job creation and further decline in unemployment, making it increasingly difficult to find skilled workers, especially in construction and manufacturing, which are even more so. may exacerbate regional labor market disparities. At the same time, uncertainty about the global economic recovery remained high. Consequently, the further development of the situation both in Latvia and in the world will largely depend on the epidemiological situation.
According to the forecasts of the Ministry of Economics, in 2021 the unemployment rate could fall to an average of 7.5 percent, while the number of employed could be 2.5% lower than a year ago.
Normunds Ozols
Senior Economist, Analytical Service, MoE
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