Labour Market Indices in the Baltic

Since the three Baltic States (Latvia, Lithuania and Estonia) started experiencing fast economic growth in 2004 and in the beginning of 2005, labour market indicators have remarkably improved. The ongoing restructuring in economic, political and public sectors connected with these countries’ recent joining the EU and influence of the EU market on the Baltic States certainly have a positive impact on the situation in the labour market of these countries. Besides this, adoption of all new economic standards and changes cast upon them by the EU regulations and open EU market stimulate labour market development in Latvia, Lithuania and Estonia.

Unemployment rate in the Baltic States is said to have slightly decreased in the recent years. The critical indicators of high unemployment in Estonia and Lithuania were marked in 2000 and 2001, whereas in Latvia the figures had been more constant. Alongside with the expansion of the EU market, there is a tendency in the increase of new enterprises, both local and foreign, which results in appearing vacancies and new work places for the inhabitants of the Baltic region.

It is a widespread fact that the Baltic States have become one of the most attractive regions for foreign entrepreneurs who, in the recent years, have started up their own businesses and invested a lot of their capital in these countries. What are the reasons that attract more and more foreign businessmen to Latvia, Lithuania and Estonia?

First of all, it happens due to fairly low production costs in the Baltic States. The table below shows the expenses that are necessary to start up a business either in Latvia, Lithuania or Estonia. For comparison, in Germany, for instance, the income tax varies from 15% to 42% depending on earnings and marital status of the employee, the corporate tax is 25%, both employer’s and employee’s social insurance costs comprise 50%.

Production Costs in the Baltic States 

 Secondly, foreign companies and entrepreneurs establish their business in these countries due to highly-skilled labour force which is rather cheap in comparison with other EU countries. From the table below it is seen that average monthly net earnings in the Baltic States are 10 times less than, for instance, the average monthly net earnings in such countries as Germany and Ireland.

The economic development and overall positive growth in the main indicators of the Baltic States is quite predictable, taking into consideration the fact that a vast number of European companies are getting more and more interested in business opportunities of the Baltic Sea region. It can be proved, for instance, by the recent event Baltic Autumn 2005 that was held on October 28-29 in Riga during which German entrepreneurs had business-to-business meetings with entrepreneurs from the Baltic States (mainly from Latvia and Estonia) with the aim to expand or start their own their business in this economically developing region.