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Latvijas Bankas ekonomista Ulda Rutkastes prezentācija

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Latvijas Bankas ekonomista Ulda Rutkastes prezentācija par Baltijas valstu darba tirgus izaicinājumiem un iespējām.

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Latvijas Bankas ekonomista Ulda Rutkastes prezentācija

  1. 1. 1 LABOUR MARKETS IN THE BALTIC COUNTRIES: CHALLENGES AND OPPORTUNITIES Uldis Rutkaste Head of Monetary Policy Department, Latvijas Banka 2 October 2019
  2. 2. 2 Labour shortage has again become an important obstacle to expanding business Labour shortage as an important obstacle to business (%; seasonally adjusted) 0 10 20 30 40 50 60 70 80 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 2018Q1 2019Q1 0 10 20 30 40 50 60 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 2018Q1 2019Q1 0 10 20 30 40 50 60 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 2018Q1 2019Q1 Manufacturing Construction Services Estonia Latvia Lithuania Sources: EC and Latvijas Banka staff calculations.
  3. 3. 3 -5 0 5 10 15 20 Greece Spain Italy France Croatia Cyprus Latvia Finland Portugal EU28 Slovakia Sweden Lithuania Belgium Ireland Estonia Luxembourg Bulgaria Slovenia Denmark Austria Romania UK Poland Netherlands Hungary Malta Germany Czechia Natural unemployment Cyclical unemployment Headline unemployment rate (%) Unemployment decomposition into natural and cyclical components (pp; 2018) This is not a cyclical story Sources: AMECO and Latvijas Banka staff calculations.
  4. 4. 4 Unit labour costs, aggregate in the Baltic countries (index; year 2000 = 100) 85 90 95 100 105 110 115 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Tradables Non-tradables Tight labour market pushes up labour costs Source: Eurostat.
  5. 5. 5 Export unit value to nominal unit labour costs in manufacturing (2011 = 100) So far, corporate profitability remains healthy, but the cost pressure will bite eventually Sources: Eurostat and Latvijas Banka staff calculation. 70 80 90 100 110 2011 2012 2013 2014 2015 2016 2017 2018 European Union - 28 countries Estonia Latvia Lithuania
  6. 6. 6 There are only two ways around it • External sources • Domestic sources Labour supply • Accumulate capital and knowledge Labour demand
  7. 7. 7 External sources
  8. 8. 8 Average monthly gross wage in selected non-EU countries and in their regions (euro) Wage differentials with eastern neighbours are substantial… Sources: Statistical offices of the respective countries. 0 200 400 600 800 1000 1200 1400 Estonia Latvia Lithuania Russia Kazakhstan Georgia Belarus Armenia Moldova Ukraine Moscow Murmanskregion St.Petersburg KomiRepublic Moscowregion Arkhangelskregion Leningradregion KareliaRepublic Kalugaregion Minsk Kaliningradregion Tularegion Vologdaregion Yaroslavregion Novgorodregion Ryazanregion Belgorodregion Voronezhregion Lipetskregion Tverregion Kyiv Kurskregion Vladimirregion Smolenskregion Oryolregion Kostromaregion Bryanskregion Tambovregion Minskregion Pskovregion Ivanovoregion Gomelregion Grodnoregion Brestregion Vitebskregion Mogilevregion Donetskregion Kyivregion Dnipropetrovskregion Zaporozhyeregion Nikolaevregion Poltavaregion Odessaregion Lvivregion Transcarpathianregion Harkovregion Vinnytsiaregion Ivano-Frankivskregion Cherkasyregion Rovnoregion Sumyregion Khmelnitskyregion Luganskregion Volynregion Khersonregion ZhytomyrOblast Kirovogradregion Chernihivregion Chernivtsiregion Ternopilregion Ukraine Belarus Central and north-east regions of Russia
  9. 9. 9 Share of people living in another EU country (% of population born in the respective country; age group 20-64; by education level; 2018) … as is the size of the Baltic diaspora in Western Europe Source: Eurostat. 0 5 10 15 20 25 30 Romania Lithuania Bulgaria Portugal Latvia Croatia Poland Cyprus Luxembourg Estonia Ireland Slovakia Hungary Greece Slovenia Belgium Finland Netherlands Austria Czechia Italy Germany Sweden France Denmark UK Spain total primary secondary tertiary
  10. 10. 10 Average monthly gross wage in the Baltic countries (% of the minimum wage in the UK) Average wages in the Baltics are presumably approaching reservation wage levels of migrant workers Sources: Eurostat and Latvijas Banka staff calculations. 20 40 60 80 100 120 140 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Estonia Latvia Lithuania euro euro (PPP-adjusted) 20 40 60 80 100 120 140 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Estonia Latvia Lithuania
  11. 11. 11 Domestic sources
  12. 12. 12 Participation rate in the EU countries (age group 15-74; %; 2018) Economic activity of population in the Baltic countries has been rather high Source: Eurostat. 50 55 60 65 70 75 Sweden Estonia Netherlands Germany Latvia UK Denmark Lithuania Austria Cyprus Ireland Finland Portugal Czechia Slovenia EU-28 Spain Luxembourg Slovakia Malta Hungary France Bulgaria Poland Romania Belgium Greece Croatia Italy
  13. 13. 13 The impact of population age structure on the headline participation rate (pp; compared to the age structure in 2002) However, it is partly a result of demographic tailwinds that are going to dissipate soon Source: Krasnopjorovs, O. Anatomy of labour reserves in the Baltic countries: a snapshot 15 years after the EU accession. LB Discussion paper 2/2019. -4 -3 -2 -1 0 1 2 3 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Estonia Latvia Lithuania Projection
  14. 14. 14 Conventional and broad unemployment measures (2018; % of economically active population; age group 15-74) Broad measures of unemployment suggest that the domestic labour pool is far from exhausted 7.4 5.4 6.2 12.7 10.9 8.4 0 2 4 6 8 10 12 14 Latvia Estonia Lithuania Job seekers' rate Broad unemployment rate Sources: Eurostat and Latvijas Banka staff calculations.
  15. 15. 15 Natural unemployment rate and labour market mismatches in the EU countries Skill mismatches account for a large part of structural unemployment Source: Krasnopjorovs, O. Anatomy of labour reserves in the Baltic countries: a snapshot 15 years after the EU accession. LB Discussion paper 2/2019. Labour market mismatch index (2016-2018 average) 0 10 20 30 40 50 60 Greece Spain Croatia Italy Lithuania France Latvia Cyprus Finland Luxembourg Estonia Portugal Belgium Sweden Bulgaria Poland Austria Slovakia Hungary Ireland Denmark Czechia UK Germany Romania Malta Slovenia EE LV LT 0 2 4 6 8 10 12 14 16 18 0 20 40 60 NAIRU(2016-2018) Labour market mismatch index (2016-2018)
  16. 16. 16 Regional differences in employment and unemployment rates (max–min in 2018 or the last year available; pp) Regional disparities also point to sub-optimal allocation of labour Sources: Statistical offices of Latvia, Estonia and Lithuania. 7.1 8.5 7.7 12.2 17.5 13.2 0 2 4 6 8 10 12 14 16 18 20 Latvia Estonia Lithuania Unemployment rate Employment rate
  17. 17. 17 Estonia Latvia Lithuania Men Women Men Women Men Women Agegroup 15-19 6.3 5.0 11.3 11.1 17.1 17.8 20-24 0.6 3.4 8.1 9.1 25-29 2.4 1.9 0.1 30-34 2.6 1.8 1.1 35-39 1.2 1.2 1.7 2.1 40-44 0.5 2.3 7.6 45-49 1.5 5.5 9.0 50-54 1.3 6.0 7.0 55-59 4.4 5.2 7.4 60-64 1.7 3.8 Total 26.9 55.9 86.3 Internal labour reserves in the Baltic countries by age group and gender (thousands of people; in 2018) Potential domestic labour reserves are rather notable Source: Krasnopjorovs, O. Anatomy of labour reserves in the Baltic countries: a snapshot 15 years after the EU accession. LB Discussion paper 2/2019.
  18. 18. 18 Vocational training is not fashionable in the Baltics, likely to depress youth employment Vocational education (% of lower secondary education enrollment; in 2017) Sources: Eurostat and Latvijas Banka staff calculations; hereinafter EU7 – Germany, Austria, Denmark, the Netherlands, Sweden, Czechia and the UK. Vocational education (% of upper secondary education enrollment; in 2017) 2.9 0.6 2.4 EU7 = 7.2 0 1 2 3 4 5 6 7 8 Estonia Latvia Lithuania 40.7 38.6 27.4 EU7 = 53.5 20 25 30 35 40 45 50 55 60 Estonia Latvia Lithuania
  19. 19. 19 Share of individuals who have at least basic digital skills (%) Older workers suffer from insufficient digital skills and are less active participants of lifelong learning programmes Sources: Eurostat and Latvijas Banka staff calculations. 0 10 20 30 40 50 60 70 80 90 100 16-24 25-34 35-44 45-54 55-64 65-74 Estonia Latvia Lithuania EU7 Baltic countries vs EU7: lifelong learning (difference in pp) -15 -10 -5 0 5 25-64 25-34 35-44 45-54 55-64 Estonia Latvia Lithuania
  20. 20. 20 99 83 81 44 40 33 9 0 50 100 Internships in firms (1.3%) Support to start entrepreneurship (0.7%) Measures for particular person groups (2.5%) Professional training and re-training (9.5%) Informal education (30.5%) Competitiveness promotion (30.2%) Temporary public jobs (25.4%) %ofallprogrammeparticipants Spending on active labour market policy (% of GDP; 2016) Capacity of the active labour market policy is rather limited Sources: Eurostat and the State Employment Agency of Latvia. 0.0 0.5 1.0 1.5 Denmark Sweden Hungary Finland France Luxembourg Austria Belgium Netherlands Spain Porugal Italy Ireland Poland Croatia Germany CzechRep. Lithuania Slovakia Estonia Greece Slovenia Latvia Malta Bulgaria Cyprus Romania Latvia: found a permanent job 6 months after participating in the programme (%; 2018)
  21. 21. 21 Self-perceived health status of upper-middle-aged men (index; age group 55-64; in 2017) Relatively poor health status of upper-middle-aged men is likely hindering their activity on the labour market Sources: Eurostat and Latvijas Banka staff calculations. Aerobic physical activity at least 5 hours per week by income quintiles (men; age group 22-44; in 2014; %) +200: very good +100: good 0: fair -100: bad -200: very bad 0 10 20 30 40 50 60 70 80 90 100 Ireland Sweden Netherlands UK Greece Italy Cyprus Belgium Finland Malta Spain Denmark France Austria Romania Bulgaria Slovenia Germany Czechia Slovakia Croatia Hungary Poland Portugal Estonia Lithuania Latvia 0 5 10 15 20 25 30 1 2 3 4 5 Estonia Latvia Lithuania EU-7
  22. 22. 22 Flexibility of wage determination (GCI 2018; component 8.04) Rigid employment protection legislation may reduce labour market flexibility with further advancements in judicial capacity Sources: GCI 2018 and OECD. Protection against dismissals (2013-2015 average; OECD) 2 3 4 5 6 Estonia Lithuania Latvia UK Czechia Malta Poland Ireland Bulgaria Romania Luxembourg France Croatia Slovakia Spain Portugal Hungary Germany Cyprus Slovenia Belgium Greece Denmark Netherlands Sweden Italy Finland Austria 1.0 1.5 2.0 2.5 3.0 UK Estonia Ireland Hungary Finland Slovakia Croatia Denmark Spain Poland Greece Lithuania Austria Sweden Slovenia Czechia Portugal Luxembourg France Germany Italy Latvia Netherlands Belgium
  23. 23. 23 Capital and knowledge
  24. 24. 24 Stock of physical capital per worker in the Baltic countries (% of Germany; adjusted for purchasing power parity) Capital stock has increased over time, but there is still some room for further convergence Sources: Penn World Tables 9.0 (Feenstra et al., 2015) and Latvijas Banka staff calculations. 0 10 20 30 40 50 60 70 80 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
  25. 25. 25 Productivity levels and labour allocation in manufacturing: Baltics vs 7 best EU performers in terms of productivity* (average over 5 years running to 2017) Increasing allocative efficiency and scaling technology ladder are both important in boosting productivity Sources: Eurostat and Latvijas Banka staff calculations; * – Austria, Belgium, Denmark, Finland, Ireland, the Netherlands, Sweden. 050100150200250300350400 -15 -10 -5 0 5 10 15 20 Wood & furniture Textiles Printing & reproduction Metals and articles thereof Construction matherials, plastic & rubber Food & beverages Machinery and equipment Transport equipment Paper Computers, electrical & optical equipment Pharmaceuticals & chemicals Average productivity Employment differentials Employment differentials in the Baltics vs 7 best EU performers in terms of productivity; pp Average productivity in 7 best EU performers, GVA per employed 0 10 20 30 40 50 Productivity level in the Baltics, % of 7 best EU performers' average
  26. 26. 26 Education quality and quantity indicators in the Baltics and the EU7 Quality of education becomes critical in this respect Sources: OECD (PISA 2015) and Global Competitiveness Report (2017, 2018). 2.5 3.0 3.5 4.0 4.5 5.0 5.5 Extent of staff training Quality of vocational training Skillset of secondary-education graduates Skillset of university graduates Digital skills among active population Ease of finding skilled employees Critical thinking in teaching Quality of the education system Quality of math and science education Quality of management schools Estonia Latvia Lithuania EU7
  27. 27. 27 • Labour shortage is here to stay if left unaddressed. • Activating domestic labour reserves may be costly, but not doing so would be penny wise, pound foolish. • Raising human capital is key to further income convergence, and it would help in alleviating labour market pressures. Main takeaways

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