Flash comment: Latvia - May 22, 2018
Labour market tightening continued in the first quarter

Strong economic activity supported further labour market tightening at the beginning of this year. The number of unemployed decreased by about 11 thousand or 12% in the first quarter of this year compared to a year earlier. The fall in the unemployment was mainly attributed to the job creation, while the effects of shrinking population were compensated for by an increase in the labour force participation rate (69.2% in the first quarter of 2018 vs. 68.0% in the first quarter of 2017). The unemployment rate fell from 9.4% in the first quarter of last year to 8.2% in the first quarter of this year. It was 0.1 percentage point up from the end of last year, which is nothing unusual and reflected a decrease in seasonal jobs during the coldest months of the year.

The number of employed increased by about 15 thousand or 1.8% compared to a year earlier. The number of employed at the age of 55-64 saw the largest increase, which can be explained by the gradual increase in the retirement age and the phenomenon of ageing society (this is the only age group that saw its population increasing). The number of employed increased also in other age groups, except youth (which saw the largest population decrease).

The working age population (15-74) continued shrinking – down by about 18 thousand people or 1.3% compared to a year earlier, but the rate of the decrease slowed (1.9% previously). It might be the case that the emigration flows have slowed on the back of strong economic growth and rapidly increasing wages.

Nevertheless, the population decline will continue, which together with increasing economic activity will support further labour market tightening this year. Labour shortage is expected to increase further, as the labour force reserve – the number of unemployed and economically inactive – shrinks. The labour costs will go up, as employers try to attract/retain employees.

For more information please contact Ms. Agnese Buceniece, +371 67445875, agnese.buceniece@swedbank.lv 


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