German companies optimistic about Baltic economies

RIGA - At the beginning of 2014, the mood among German companies operating in the Baltic States once again is very optimistic, carrying forward the trend of the past three years. Favorable economic conditions allow them to expect a successful business year. This optimistic assessment also shows in their plans regarding creating new jobs and increasing investments in 2014, said the German-Baltic Chamber of Commerce in Estonia, Latvia and Lithuania (AHK Baltic States) in a press release.

Estonia, Latvia and Lithuania are considered to be attractive business and investment locations in comparison to other countries in the region. However, they say that the vocational training system still urgently requires political action.
These are the main results of this year’s survey by the Chamber, in which 119 companies participated.

The current economic situation in the Baltic States continues to be assessed as good or satisfactory by the majority of German companies operating here. In fact, the economic development of all three Baltic States was once again clearly above the EU average in 2013. One-third of the participants in Estonia and almost one-fourth in Latvia appraised the current situation of the local economy as good. The opinion of the participants turns out to be most optimistic in Lithuania, with almost 60 percent of companies satisfied with the economic situation so far this year.
Like in previous years, the companies once again assess their capacity to compete as higher than that of the entire economy or of their sectors.

The companies say they mainly benefit from increasing domestic demand. Especially in Estonia and Latvia private consumption turned out to be growth engine number one: it surpassed the overall economic growth rate in all three countries.

The majority of surveyed companies expect consistent development of their investments. Despite an expected wage increase, they are once again planning to create new jobs.
However, in all three countries there still is urgent need for action from the governments regarding the transparency of the administrative institutions and the processes of public procurement, the tax burden and the efficiency of the tax authorities.

The labor market – especially the availability of skilled labor and the vocational training system in Estonia and Latvia, and the flexibility of the labor law in Lithuania – remains the biggest area with need for action by the governments.
Introducing a more practical and future-orientated dual vocational training system is still the most common suggestion made by the German companies.

An expression of commitment by the German companies and their long-term involvement in the Baltic States are also the investments into their own employees.
More than two thirds of the companies stated they carry out regular employee training programs.
“The German companies are aware that these measures are important to remain permanently attractive for their employees, and [to] also actively improve their business success in the Baltic States,” stated Ingrida Kirse, regional president of the chamber at a press conference in Riga. “This innovation and adjustment capability of the companies operating here is one of the key factors for the permanent competitiveness of the business locations Estonia, Latvia and Lithuania and their stability, even in a crisis.”