The prosperity of any society rests on human labour.

Over the space of a few years, several thousand employees have "disappeared" in Latvia, which on the face of it should be treated as an alarm signal, yet there is no real sign of concern anywhere in the country.

The working person is the state's most valuable asset. Without them there is no job either, no consumer with purchasing power, no demand for services — and the job itself may vanish as a vacancy. Put simply, if a person has work, they also have a wage, which they spend to cover their outgoings, and taxes are paid that politicians can redistribute to meet the need for public services. If workers disappear from the private sector, that has consequences on the public side too, because the overall tax take shrinks. And if jobs disappear, before long whole areas will be left empty. What is happening at the moment, and who cares?

Signals from the labour market

Figures from the State Revenue Service database show that the number of employees (those paying mandatory state social insurance contributions) in May 2025 was 808,605, whereas at the equivalent point in 2024 it was 810,195, and in 2023 higher still — as many as 815,556, while in 2019 the figure stood at 822,925. At the same time, according to Central Statistical Bureau data, there were 64.7 thousand registered unemployed in May this year, 67.4 thousand in May 2024, 60.4 thousand in May 2023, and 61 thousand in May 2019. Looking at these figures, one can draw not just a single conclusion but a great many more about what exactly is going on in the labour market and how. The labour market is, in a sense, one of the most dynamic generators of change, and the one that best characterises the situation, because at the end of the day no business owner will keep staff on simply for the sake of having them, since labour taxes have to be paid to the state for each of them and the employee has to be paid a wage as well. Alongside the private sector, of course, the labour market also includes the public sector, where changes as dynamic as those in the commercial sector are not to be seen. If the fall in the number of employees has come at the expense of the commercial sector, that is not a good signal for anyone.

Even Covid-19 did not "devour" that many

The lowest number of registered unemployed in this period was recorded in October 2019 — 54,300 — which during the pandemic rose to 84,000 in June–July 2020, while the number of employees was 824,659 and, in mid-summer 2020, between 808,522 and 811,673 respectively. But in May 2025 the number of employees was 808,605, an almost identical figure to the level of the pandemic's first summer.

It is precisely this aspect that raises a question worth sounding the alarm over — what is happening to employees, given that alongside this the official number of unemployed is almost 20,000 lower than at the height of the pandemic. The pandemic is behind us, and the unemployment figures show as much, yet the number of employees has not returned to its pre-pandemic level! Are employees really no longer needed, or have some of them become pensioners with no young people taking their place, or have some simply "moved" into work in the shadow economy, or are some simply unable to meet the qualifying requirements for registering as unemployed and therefore do not show up in these statistics? These are all serious questions. Alongside them there is talk and speculation of every kind. There are forecasts that, under the influence of digitalisation, artificial intelligence and robotisation, the total number of people in employment in Latvia and elsewhere will inevitably shrink over the coming years. The number of employees is also affected by the fact that every year several thousand people die who should still have had years to live before reaching pension age. There are also well-founded forecasts that people are growing older and retiring in far greater numbers than young people are entering the labour market.

There is one further explanation for the falling number of employees: young people obtain diplomas in professions that are said not to be in demand in the Latvian economy as it currently stands, leaving them with only two options — to find work in their profession abroad, or to stay and work in Latvia but not in their own field. Many employers also speak of a shortage of workers, yet want to hire ready-made specialists with work experience, which for young people with a diploma but no work experience is essentially mission impossible. Some of these accounts lack any statistical basis and some are more in the nature of guesswork; setting aside the ratio of deaths to births, which does provide grounds for clear forecasts over time, they still do not fully explain the loss of workforce in the post-pandemic period.

Fewer payers, more spenders

If one sets the causes aside and speaks only of the consequences, then the decline in the number of employees in the private sector, and overall, has been going on all along, and the post-pandemic hole in the workforce is best regarded merely as the flare-up of a nationwide illness.

The overall picture is that there are fewer people working, and that means there is less value to be taxed. If this trend continues, it is inevitable that ever larger borrowings will be needed to pay for state functions and services, while the number of those who might repay them keeps shrinking. Going by current practice, the state sees only one solution, and that is a fresh wave of tax rises, or faster growth in debt, plus further cuts in spending. As long as the problem is not too dramatic, one remedy is used more and another less; but once the infection has taken hold, all three measures are applied at once, as the financial crisis of 2008–2010 showed. Surprisingly, though, a number of figures paint an improbable picture — on the consumption side the number of people is growing. It turns out that the number of public transport users is rising steadily, despite there being fewer people travelling to work, and that in health care in Latvia we are serving not 1.8 million people but 2.4 million.

Not losing focus

Work is already under way on the draft of the state's principal financial document for 2026, and once again one can only repeat the reminder that the prosperity of any society rests on human labour. There is no longer any point in sorting out which kinds of jobs have declined in number, because the consequences are already visible. That is to say, talk of ever higher value-added production and better-paid jobs is no reason to become arrogant and to belittle the base, the very foundations, or the simple work in which education matters less. It is rather like saying that all that matters to a person is their head and that their legs no longer count. Every worker, in buying goods and services on the market, pays consumption taxes, which in turn generate revenue for the state budget from which to fund the services society needs. In short, the size of the economy matters greatly, and it is made up of every possible job. Creating those jobs requires investment — capital, which domestic companies often lack, so its availability (the terms, the interest rates on loans) will also determine the pace of growth or development. The Latvian state should be thinking urgently about the well-being of those who create its wealth, because they are the ones who produce exportable goods or increase the number and availability of the services they provide, thereby creating favourable conditions for business development. In short, it should not only reduce the state's bureaucratic burden but also cut public administration spending outright, rather than doing the opposite — raising taxes and the budget deficit and thus adding to the national debt. Both of the latter lead to workers disappearing. That is, as the amount of tax payable on wages rises, so does the motivation to leave the country and work elsewhere. The early shape of the current budget suggests that the state will once again try to collect at least the same amount from a smaller number of private sector workers, which at the level of individual logic means only one thing: "Save yourself, whoever can and however you can!"