“The new economic barometer of Latvia indicates that Latvian exports are becoming increasingly difficult,” Latvijas Avīze states. “It is gradually becoming more uncompetitive. The reason is high production costs, including labor costs, but productivity growth is not keeping pace with them.”
“One of the striking reasons why the economies of neighboring Baltic states are developing differently is the different attitude towards labor migration,” the publication continues. “Specifically, Lithuania has been much more open to accepting Belarusian and Ukrainian refugees, especially after the latest wave of protests and repression in Belarus… About 40,000 Belarusian citizens live in Lithuania.”
Migrants from the neighboring country are helping Lithuanians develop their IT sector, while in Latvia, “the procedures for acceptance and state support were slower and more meticulous than in Lithuania and Poland.” As a result, last year, GDP per employed person in Latvia was 55.8% of the EU average, or, in purchasing power parity, 70.4%.
“Despite the slow growth of productivity rates, wages in Latvia are rising significantly faster, currently outpacing… by about five times,” the publication reports. Janis Lielpeters, a board member of the Latvian Chamber of Commerce and Industry, believes that the main obstacles to export growth are labor migration restrictions and excessive state regulation.
For his part, entrepreneur Girts Rungainis believes that there is a “perfectly normal level of bureaucracy” in Latvia, and there is nothing to complain about. “Instead, the entrepreneur should ask – why is the labor productivity in my company not at the level of Sweden?”
