PM disagrees with IMF, still opposes opening of Latvian labor market

Latvian Prime Minister Maris Kucinskis (Greens/Farmers) disagrees with the opinion of the International Monetary Fund (IMF) that Latvia’s limited labor market may impede the country’s growth in the long term and said he was still opposing opening of the labor market.

Speaking on the public Latvian Television this morning, Kucinskis said it would be premature to speak about letting into Latvia cheap labor. Instead, Latvia should be thinking about how to use the existing resources more efficiently and how to bring back to Latvia the experts, who have gone to work in foreign countries.

As reported, Latvia’s limited labor market may impede Latvia’s growth in the medium and long term, Iva Petrova, head of the International Monetary Fund’s mission to Latvia, said at a press conference on July 2.

Due to continuing emigration, the level of employees’ skills in Latvia is deteriorating while, on the other hand, wages are growing due to the decreasing availability of labor, which in turn affects Latvia’s competitiveness. Furthermore, aging population of Latvia may affect productivity in the future, the IMF representatives concluded.

The IMF believes that reforms have to target elimination of restrictions on the labor market by fostering greater involvement of certain labor categories in the market, reducing structural unemployment and encouraging immigration of labor. Reforms fostering productivity will be crucial to tackling problems that demographic changes pose to the economy.

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