RIGA - The jobless rate in Latvia is continuing to rise amid stagnant economic growth, with expenditure on unemployment benefits expected to lead to an enormous budget deficit.
Unemployment climbed 1.3 percentage points in January 2009, reaching 8.3 percent of the economically active population by month's end, according to figures from Latvia's Nodarbinatibas Valsts Agenturas (State Employment Agency).
In late January 2009, there were 90,436 people registered as unemployed in the country, 14,001 more people than the month before.
The Latvian Welfare Ministry recently warned unemployment could climb as high as 12 percent in 2009.
NVA data shows in January alone some 20,862 people registered as unemployed, an increase of more than 27 percent compared to December, 2008.
At the same time the agency has just 2,549 vacancies listed on its database.
NVA director Baiba Pasevica told the Baltic News Service that the statistical portrait of unemployment in Latvia had undergone a dramatic shift.
Statistics show about half of the unemployed have professional or higher education qualifications and for the first time the jobless rate for Latvian men is higher than for women.
"The drop in vacancies characterizes the general economic state of the country. If the number of vacancies is falling so steeply it means that businesses have been affected by serious problems that need to be tackled urgently," Pasevica said.
Valsts Socialas Apdrosinasanas Agentura (State Social Insurance Agency) PR specialist Edite Olupe said forecasts by the agency's experts suggest unemployment benefits are likely to grow by another 3.6 million lats in February as unemployment continues to soar.
If the current trend continues, unemployment benefits will likely exceed planned figures 's leading to a deficit in the special employment budget by October.
A total of 100.6 million lats has been earmarked for unemployment benefits in the 2009 special employment budget.
However, Olupe said forecasts by the Welfare Ministry suggest that in 2009 Latvia may be short 47 million lats needed for unemployment benefits.
Olupe said that analysis of the budget performance in January showed expenditure on unemployment benefits was already growing faster than expected.
"Initially, unemployment benefits in January were planned at 7.6 million lats, which would be 1.5 million lats or 24 percent more than the actual unemployment benefits paid in December 2008. In fact, though, unemployment costs in January reached 7.7 million lats," said Olupe.
Unemployment benefits paid in Latvia in the first quarter of 2009 are likely to reach 30.7 million lats, 31 percent higher than expected, the agency predicts.
In January the lowest unemployment levels were reported in Jurmala, Riga and the western Latvian district of Tukums.
Meanwhile, the eastern Latvian districts of Rezekne, Ludza and Preili posted the highest rates of unemployment.
On Jan. 10 the Latvian government approved 9 million lats in funding for a training package for job seekers and the unemployed.
This decision will enable the Welfare Ministry to provide training to an additional 9,000 people. In the coming years Latvia expects to provide training for 45,000 jobless people.
Customer consultants, shop attendants and cashiers were among the highest demand positions in January, according to NVA database sales specialists. There are also vacancies for dressmakers, ship locksmiths, welders, catering specialists, loggers and insurance agents.
