Flash comment: Latvia - February 22, 2012
Latvian employment will continue to grow, but slower
- Labour market dynamics remain positive. Unemployment rate diminished marginally in the fourth quarter 2011, but mostly because decreased number of inactive/discouraged persons (which is not typical for the fourth quarter). Employment continued to grow even despite falling number of participants in active labour market programs. In 2011 overall employment increased by 3.2% (3.4% if to exclude those in labour market programs).
- Job creation is expected to slow down this year. An increase in registered unemployment rate in January-February 2012 is most likely seasonal. Employment expectations of companies in manufacturing, retail trade and other services were still positive in January meaning that there are more companies planning to increase number of employees than those planning to shed labour.
- However, it should be taken into consideration that uncertainty about economic developments globally and locally can change the confidence of employers quite quickly. If they become more pessimistic, they might postpone increasing number of employees.
- It is also clear that with existing economic policy job creation will be too slow to solve current problems of inequality, emigration and regional imbalances. Economic growth per se will not be able to solve those – tax, education, and social policies should be set going.