How efforts to curb the spread of the virus by stifling economic and social activity have affected the labor market, how positively or negatively it has been affected by state support mechanisms and how people can return to work - Neatkarīgā interviews Evita Simsone, Director of the State Employment Agency (SEA).
The rise in unemployment in the second wave of the pandemic is described by the authorities as very moderate. It increased by 0.5 percentage points during the year and by 0.2 percentage points during the last quarter. So there is no need to worry, and anyone who wants to work can find a job that suits their education and experience?
The biggest question is about job opportunities that align with experience and education, but if we compare the economic crisis of 2008 with this, then the rise in unemployment is really moderate and the situation is not catastrophic. But we must also take into account the large number of recipients of downtime benefits, which in May was about 75 thousand, which is more than the registered unemployed. According to operative information, as of June 1, the unemployment rate is 7.6% or less than 69 thousand people. If there were no downtime benefits and all those people were out of work, the figures would be very different.
Is it possible to estimate how many of these 75 thousand recipients of downtime benefits might return to work after the restrictions are lifted and how many might become unemployed?
Already last year, after the first wave of the pandemic, it was assumed that with the end of downtime benefits, the registered unemployment rate would increase significantly, but this did not happen. We hope that this time will be no different, but much will depend on how freely you can work in the sectors most affected by the restrictions.
Another indicator is the employment rate, which has fallen more than unemployment has risen, reaching its lowest level since 2012 in the first quarter of this year. What conclusions does this lead to?
These statistics are largely made up of recipients of downtime benefits who are out of employment.
The growth of employment will also largely depend on the situation in Latvia and in the world, on the reduction of restrictions and on how quickly the most affected sectors will be able to resume operations - hospitality, tourism, passenger transport.
How do we look compared to other countries?
Compared to other European Union countries, we are in the middle. We are in a similar situation as Finland, Ireland, Slovakia, Sweden, where the rise in unemployment has been very moderate, while in France, Portugal and Italy it is very rapid. This is largely determined by both the structure of the economy and state aid mechanisms. In Estonia, for example, support measures were much more modest than in Latvia, Lithuania too. At one time in Latvia, there were no restrictions depending on the sector on receiving downtime benefits and working capital, the criteria were the same for everyone and everyone could receive support. It was more limited in neighboring countries.
Maybe we didn't need such extensive support?
It remains to be seen.
Can it be concluded that support measures reduce people's motivation to retrain and look for a different job? Are they right in waiting to return to the profession they worked in before the pandemic?
Very significant retraining, when a completely new profession has to be acquired, is rarely needed. It is more about skills improvement, development, acquisition of new additional skills. Are they right or wrong in waiting for that, hard to say, but yes, support mechanisms have prolonged the existence of some companies. Last year, just as this pandemic began, our German colleagues reported that the number of corporate insolvencies had fallen significantly. In their view, this indicated that normal economic processes were disrupted.
Does an artificial intervention in the market economy disrupt normal competition?
I do not know whether it can be said to have been disrupted, but these support mechanisms have prolonged the existence of potentially non-viable companies. On the other hand, employers have complained that downtime benefits make it difficult to get employees back when the company resumes operations. There are often situations when, for example, two out of four idle employees have to return to work, but the question is: "Why me, why not him?"
This support has its side effects, the question of how successfully we will get out of it.
Economists warn of a shortage of workers soon, employers are talking about it too. Are there any support measures that could prepare not only the unemployed but also those at risk or downtime support recipients to work in these professions?
These measures, adapted to the circumstances, have taken place throughout the crisis and are still ongoing. Both at this time and in the past, we called on employers to make more active use of the opportunity to train the necessary staff at the employer's request. An employer can order a certain number of employees with certain qualifications, whose training we co-finance or finance. We are calling for this service to be used more intensively, because it is very targeted at the needs of a particular employer, and there is a certain guarantee that people will have a job. There is also the possibility of receiving financial support for on-the-job training of employees in work environments where qualification documents are not required.
It is important to mention that we were very quickly able to create an opportunity to cooperate with several both domestic and international distance learning program maintainers and platforms. The most popular is Coursera, where last year it was initially possible for registered unemployed to study and freely choose from the entire wide range of the platform (3.8 thousand training courses in about 400 specializations). At the end of the year, we expanded our cooperation with everyone who feels threatened in the labor market, offering to develop topical skills. This year, this free opportunity has ended, but we have promptly achieved amendments to the regulatory enactments to be able to reimburse expenses of 150 euros for completed studies in one of the international platforms.
Can people freely choose which one? For example, Udemy, which is also a very popular learning website?
It is no longer as free as it was last year and the number of programs available has been reduced. They are mostly related to information communication technologies. Some of the programs can still be studied at the University of Latvia. The Embassy of Finland, on the other hand, provides us with the opportunity to study in the artificial intelligence elements program. We will now complete formalities to provide free access to four Google programs: IT Support, User Experience Design, Data Analysis, and Project Management. At the end of last year, we signed a memorandum of cooperation with Microsoft, which also offers four programs to our customers.
Our traditional list also includes 10 new computer science education programs, and universities are also invited to apply for their implementation. The range is wide enough.
Do you evaluate the quality of these programs? Does the use of international platforms also force locals to improve the quality of their programs?
A couple of years ago, we performed a very serious evaluation, and we have strengthened the quality criteria with clarifying amendments to regulatory enactments. One of them is that educational institutions must be accredited for the maximum period, six years, to qualify to provide services to our clients.
But the evaluation of program content is the responsibility of the Ministry of Education and Science, and only its accredited and licensed education providers can do training programs for the unemployed.
The number of registered unemployed has increased the most in Riga. Is it possibly a small migration back to the regions or is unemployment in Riga a short-term, temporary phenomenon? Can it be predicted that jobs will return to Riga just as quickly?
Yes, unemployment rose the fastest in Riga, and recently it has fallen the fastest in Riga.
Specifically, this crisis has led to an increase in unemployment, especially among young people and women, as well as among people with a higher level of education, while the average duration of unemployment is declining. Young people, who are the most flexible and free to work in another sector, return to work particularly quickly, without waiting for the opportunity to return to their previous job. If the average duration of unemployment is 210 days, then in the group of young people aged 15-19 it is 91 days. It should be noted that this group is more employed in low-skilled, ancillary jobs and there the turnover is always higher.
Are no additional measures needed and implemented for those groups of society most affected by unemployment?
At the moment, we do not see the need for any specific support mechanisms for these groups, because they fit very well into existing services and activities, and they do not have specific needs. We are focusing more on what skills help people return to the labor market faster, and we have analyzed that the acquisition of ICT skills is what increases and accelerates the chances of getting a job. Interestingly, this year the time for finding employment has improved compared to last year's average. Last year it was on average 210 days, but in the 1st quarter of 2021 - 141 days.
From time to time it can be heard that it is necessary to extend the period for receiving unemployment benefits from eight months to nine, as before. Is that just populism?
It is a myth and stereotype that people register with the SEA only for the benefits and do not look for work until it ends. In my experience, there have been only a few isolated cases where someone does not accept a job offer just because they have unemployment benefits. Usually people do not refuse a suitable job offer just because he or she will want to receive unemployment benefits for another month or two!
And it is also a myth that the unemployed are mostly low-skilled and have social problems. Not at all! The higher-skilled work was done before unemployment, the more difficult it is to find work. The largest number of vacancies is in low- or medium-skilled occupations, and if a highly qualified specialist loses his job, he has less hope for an equivalent vacancy, but much bigger competition. Higher-skilled professionals are quicker to accept a suitable job offer, because if they are thinking of using unemployment benefits for another month, to wait and see, then there may not be anything left.
After the economic recovery in Europe and the opening of borders, are we expecting further emigrations and people being tempted to go abroad to work?
Some economists make such assumptions, but the data do not indicate that there is currently a very high level of interest in job opportunities outside Latvia. We focus more on how to offer job opportunities in Latvia to our citizens living abroad, mainly highly qualified specialists who might return.
Students are again offered the full three-month summer employment program. Is there interest on both sides or are students more looking forward to summer camps and the opportunity to finally meet peers?
There is interest from both sides, and initially it was employers who were very active in submitting vacancies. But students are also registering, and on June 1, more than 2,000 students started working. As before the pandemic and according to the funding available to us, 7,608 summer jobs for students have been approved. A very positive feature of this year is that higher qualification vacancies were offered. Of course, ancillary jobs dominate, but this year students have the opportunity to work as teaching assistants, assistant project managers, librarians, thus gaining a more professional orientation.