In the coming years the level of unemployment in Latvia will go down to 5%, according to the Ministry of Finance.
The ministry adds that data from the Central Statistical Bureau of Latvia on employment in the country shows that, despite slower economic growth and declines in certain quarters, the level of unemployment in Latvia continued going down in 2023 when compared to the year prior, dropping by 0.4 percentage points – to 6.5%.
Nevertheless, the negative impact of the economic downturn from recent months has also started to be reflected in the labour market with a time lag: in Q4 2023 unemployment went up to 6.8% of the economically active population when compared to 6.5% of Q3.
The ministry explains that this increase is at least partially associated with seasonal unemployment rise in winter months.
Nevertheless, unemployment in Q3 was slightly higher than unemployment in the same period of the year prior. Monthly data also show an upward trend, including an unemployment rate of 7.1% in December 2023, which is 0.5 percentage points more than in the same month a year ago.
The ministry notes that a slight increase was also observed for registered unemployment in recent months and last week. The State Employment Agency reports the number of registered unemployed persons has gone up from 47 000 in October 2023 to 51 500. However, this growth, according to the minister, does match regular seasonal fluctuations.
Last year, the number of people employed in national economy went down by 0.2% or 2 000 – to 884 200.
Nevertheless, the situation in the labour market, despite the slight worsening and growth of unemployment, remains largely influenced by the drop in the number of people of working age due to demographic processes, the ministry admits.
The ministry’s estimates indicate that unemployment in 2024 could remain on the same level as last year. After that, however, with more rapid economic growth and recovery of demand in foreign markets and residents’ growing consumption in Latvia, unemployment will continue going down.
According to the forecasts of macroeconomic indicators updated by the Ministry of Finance at the beginning of February, the unemployment rate could drop to 6% in 2025, but in the coming years it would come close to 5%. The number of employees will be more significantly affected by the depopulation, and it is projected to be stable in the coming years with a slight 0.3 percentage points annual decrease from 2026.
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