The Ministry of Economics forecasts that employment in Latvia will increase slightly in 2026, while unemployment will continue to decrease. At the same time, employers are becoming more cautious with hiring, and the labor market is increasingly facing a shortage of people.
The Ministry of Economics believes that the labor market in Latvia will remain stable at the beginning of 2026, despite more cautious behavior from employers and external economic uncertainty.
According to the ministry's forecast, the number of employed individuals may increase by about 0.1% this year, while the unemployment rate may decrease to 6.7%.
According to data from the Central Statistical Bureau, in the first quarter of 2026, 871,200 residents aged 15 to 74 were employed in Latvia. This is 3,200 more than a year earlier. At the same time, the employment rate also increased to 63.8%. This is 0.6 percentage points higher than the figure for the first quarter of last year.
A particularly noticeable increase was recorded among young people. The employment rate for residents aged 15 to 24 reached 31.6%, increasing by 3.6 percentage points over the year. This is an important signal for the labor market, as in recent years employers have increasingly faced a shortage of employees, especially in certain sectors and regions.
At the same time, the ministry notes that the pace of employment growth has begun to slow compared to the second half of last year. The reason is the caution of businesses amid rising costs and an unstable situation in the external economy.
At the same time, unemployment continues to decline in the country. In the first quarter of this year, the unemployment rate was 7.1% — 0.3 percentage points lower than a year ago.
A total of 66,400 residents were looking for work at the beginning of the year.
In terms of the unemployment rate, Latvia is currently at about the same level as Estonia, where the rate also stands at 7.1%, and slightly ahead of Lithuania, which has an unemployment rate of 7.4%.
The ministry also draws attention to the demographic problem. Although the economic activity of the population remains stable, the total number of residents continues to decline. Over the year, the total population decreased by about 2.4%, while the number of working-age residents decreased by 0.6%. This means that even with job vacancies, employers find it increasingly difficult to find workers.
In fact, the labor market is currently growing not so much due to an increase in population, but rather due to more active participation of people in work and job searching.
In the coming quarters, the Ministry of Economics expects moderate growth in demand for labor. However, further development will still be hindered by a shortage of workers, structural problems in the labor market, and external economic uncertainty.
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