According to the Labour Force Survey data of the Central Statistical Bureau, in the fourth quarter of 2023 there were 879.9 thousand employed people aged 15-74 in Latvia. Compared with the corresponding period of the previous year, the number of employed people has fallen by 0.1%, or 0.5 thousand, while the employment rate among people in the relevant age group rose to 64%, exceeding the first-quarter figure of the previous year by 0.3 percentage points.
The year-on-year decline in the number of employed people has been influenced both by the slowdown in the pace of economic growth and by the continuing effect of the falling working-age population on the overall dynamics of employment.
It should be noted that the employment rate in Latvia still remained lower than in its neighbours - 4.4 percentage points lower than in Estonia (68.4% in the first quarter of 2024) and 0.7 percentage points lower than in Lithuania (64.7% in the first quarter of 2024).
Despite the decline in labour market activity, participation in the labour market continues to rise. The economic activity rate of the population increased to 69.4% in the first quarter of 2024, which was 1.1 percentage points higher than in the first quarter of 2023 (68.3%). In the first quarter of 2024 the number of economically active people aged 15-74 was 948.6 thousand, which is 8.4 thousand more than in the first quarter of 2023.
Given both the decline in labour demand and the increase in the overall labour supply, the unemployment rate in the first quarter of 2024 rose by 0.8 percentage points overall (to 7.2%). In the first quarter of 2024 there were 68.7 thousand people aged 15-74 looking for work, which is 8.9 thousand more than in the first quarter of 2023.
Despite the rise in unemployment and the generally lower employment rate, Latvia also had the lowest unemployment rate among the Baltic states in the first quarter of 2024. In the first quarter of 2024 the unemployment rate in Latvia was on average 0.6 percentage points lower than in Estonia (7.8% in the first quarter of 2024) and 1 percentage point lower than in Lithuania (8.2% in the first quarter of 2024).
Given the continuing high level of uncertainty in external markets and the tense geopolitical situation, labour market activity is expected to remain limited over the year as a whole. A slight increase in labour market activity may be seen during the summer season as seasonal demand for labour rises, but no substantial increase in new jobs and employment is expected in 2024 overall. At the same time, the labour market situation in 2024 will increasingly be shaped by supply-side factors, given the negative demographic background and the decline in the overall labour supply, thereby keeping unemployment low. Overall, the unemployment rate in 2024 could fall to an average of 6.3%, while the number of employed people could rise by an average of 0.1% compared with 2023.