Economy Ministry: it is necessary to reduce the volume of low-skilled workforce

Employment opportunities are set to expand in the next decade. However, demographic tendencies and regional labour market differences will create an even stronger need for labour force, according to Latvian Economy Ministry’s medium and long-term labour market outlooks.

«To ensure sustainable economic development, it is necessary to raise productivity in business sector, education system and every person’s life. Business has to become productive to reduce costs and raise wages to workers. The education system should provide the labour market with appropriate labour force with an emphasis on education system and competence-based approach. Every one of us should learn modern skills to help raise our competence and competitiveness on the labour market,» says Economy Minister Arvils Ašeradens.

Shortage of medium-skilled labor will become more pronounced. This will be felt the most by processing and construction sectors. Education offer structure has become more balanced and more in line with labour market needs. However, the number of specialist that enter the labour market is still below the desired level, according to information from the ministry.

«Formation of a comprehensive adult education system is needed to reduce the disproportion on the labour market and make it easier for us to adapt to changes in the 21st century – the age of rapid scientific and technological advancement. Financial support from EU funds worth EUR 150 million to assist with education development will remain available until 2021. It is important for those funds to be used effectively to help reduce the volume of low-skilled workers on the labour market,» the minister continues.

Labour force demand grows slowly, but employment opportunities will soon expand

From now on, economic growth will be based on productivity. Because of that, it is expected for medium-term labour demand to grow slowly. The number of employed people may grow by only 11,000 by 2025. This increase is expected in four industries – commercial services, construction sector, trade and processing industry. After 2025, however, there could be a decline of available jobs. Considering ongoing automation processes, the largest job decline is expected to take place in professions dealing with manual and repeated labour. It is expected labour demand in simpler professions may decline 36% or more than 40,000 by 2035, according to the ministry.

The main labour opportunities will open up thanks to residents’ ageing and exit from the labour market. Because of that, the number of jobs may exceed 150,000 in a medium term perspective. The employment level for residents aged 15 to 74 may exceed 67% in 2025 (~63% in 2017). In a long-term perspective, it may gradually reach 70%. Employment opportunities will improve for professions dealing with new technologies. Considering continuous ageing of the population, demand will increase in different healthcare sectors, as well as services associated with rehabilitation and silver economy, ministry’s representatives say.

Education offer has become more compliant with market needs

Education offers have become more balanced and closer to future labour market demand in recent years. Most of the previously predicted labour force supply and demand problems have reduced. Although a shortage of specialists with higher education in STEM (science, technologies, engineering sciences and mathematics) is still expected (~17,000 in 2025), it will be below the previous outlook (~23,000). Experts also predict a significantly lower labour force surplus of humanitarian sciences specialists. These changes have helped balance the structure of higher education offers – the number of STEM students has grown by approximately 7% since 2008. At the same time, the number of students studying humanitarian sciences has declined by 15 percentage points, according to Economy Ministry’s labour market outlook.

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