Flash Comment: Latvia - November 23, 2011: Latvian unemployment rate down to 14.4% in 3Q 2011

1. Flash comment
Economic commentary by Economic Research Department November 23, 2011
Latvian unemployment rate down to 14.4% in 3Q 2011
Labour market indicators, Latvian unemployment rate declined from 16.2% in 2Q 2011 to
% of econ. active 14.4% in 3Q 2011, according to Labour Force Survey’s results
25 69 published by Latvian Central Statistical Bureau. This was mostly
20 68 due to job creation, although part of these jobs is likely to be
15 67 seasonal. Number of inactive persons increased only marginally
10 66
(participation rate at 65.6% from 65.7% a quarter ago).
5 65 In 3Q 2011 there were by 24 thousand more employed comparing
0 64 to 3Q 2010. Of that, number of participants in labour market
-5 63 programs decreased by 2 thousand compared to 3Q 2010
-10 Unemploym. rate 62 (currently comprising 2.7% of total employment). Employment
-15 Employment, yoy 61 growth slowed down to 2.5% in annual terms from 3.3% in 2Q
Participation rate (rs) 2011. At the same time, employment rate continued to increase, to
-20 60
1Q 06 1Q 07 1Q 08 1Q 09 1Q 10 1Q 11 56.1% from 55.1% a quarter ago.
Source: CSBL
Despite quite a substantial fall in unemployment (by 45 thousand
Unemployed by duration, persons during the year), there are still 165 thousand job-seekers.
thsd persons 55% of them is seeking for a job for more than a year already. In
250 10 addition there are 42 thousand inactive persons, who lost hope to
find a job.
200 8
150 6
Outlook
100 4
Job creation is likely to slow down next year (below 20 thsd). The
main reason for that is uncertainty both with respect to external
50 2 development (e.g., how eurozone performs and what will be the
demand for Latvian exported goods and services) and internal
0 0
factors (e.g. how employers’ and employees’ needs match with
1Q 06 1Q 07 1Q 08 1Q 09 1Q 10 1Q 11
Lost hope finding a job, %
respect to skills, wages, motivation, still existing opportunities to
>12M
6-11M of total inactive(rs) increase effectiveness of companies).
<6M Source: CSBL
Employment expectations in September-October in retail and
Employment expectations, construction became negative again, meaning that there are more
points companies planning to shed labour than those planning to increase
40 number of employees. At the same time, employment expectations
in manufacturing and services are still positive. Consumers’
20
unemployment expectations have increased during the same
0 period, reflecting growing concerns about safety of existing jobs.
-20
Unless there are changes in economic policy to more actively
-40 promote employment, (supporting economic growth, re-education
-60 unemployed etc.), job creation is likely to remain sluggish and thus
emigration risks high.
-80
2007 2008 2009 2010 2011 Lija Strašuna
Manufacturing Services Senior Economist
Retail Construction
Source: DG ECFIN + 371 6 744 5875
lija.strasuna@swedbank.lv
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