RIGA - Latvia's Cabinet of Ministers agreed on Dec. 19 that no restrictions would be placed on Bulgarians and Romanians after they become citizens of the European Union on Jan. 1. Welfare Minister Dagnija Stake said that there was no reason to fear "a flood" of Romanians and Bulgarians after the New Year. "Why would they come here if wages are 10 times higher elsewhere?" she asked.
The decision came after a number of statements from ministers about attracting foreigners to bolster Latvia's depleted work force.
During a jaunt through the provinces last week, Prime Minister Aigars Kalvitis told journalists that Latvia would not welcome so-called gostarbeiters, or guest workers. The tight labor market is forcing employers to raise wages and boost productivity, he explained, which is good for the economy.
"By relaxing the limits [on migrant workers] all this will be ruined," he said.
This contrasted with an assessment offered by Transport Minister Ainars Slesers, who said in an interview this week that Latvia should open its markets to foreign workers. Specifically, he said the country needed 4,000 road workers and 10,000 laborers in the construction sector.
Foreign Minister Artis Pabriks has been one of the government's leading advocates of the free movement of labor. Speaking at a conference last week, Pabriks said that Latvia would continue to support open labor markets and therefore would not place any restrictions on Romanians and Bulgarians when those two countries join the European Union on Jan. 1.
Both Kalvitis and Pabriks are members of the ruling People's Party. The two spearheaded efforts to defend the right of a Latvian construction contractor to use Latvian laborers on a project in Sweden, a confrontation that crystallized divergent opinions 's and stereotypes 's in the EU on the question of migrant laborers.
Many large Latvian companies are lobbying the government to ease rules on inviting guest workers, as the dearth of laborers has had a detrimental effect on many companies' output, particularly in construction. Several projects have been halted, while others never got off the ground.
But as far as productivity, the numbers don't seem to be in Kalvitis' favor. The first-half of 2006 shows that real wages grew 13.5 's 14 percent, while productivity gains were only 8 percent, which points to a diverging trend that, if continued, could spell macroeconomic trouble.
Estonia is suffering the same symptoms. Productivity, which is measured in terms of sales per person, increased 16 percent year-on-year in the third quarter, while labor costs per employed person increased 21 percent, the country's statistics bureau reported last week.
Latvia's GDP soared 11.9 percent in the third quarter of 2006, while Estonia's was just behind at 11.6 percent. The two countries lead the EU 25 in terms of economic expansion.
Part of the private sector is also against opening the country's labor market. While unemployment is low in Riga 's approximately 4 percent, according to statistics 's joblessness is still high in the provinces and plagues regions such as Latgale. Employers should tap those regional resources, experts say.
The Employers Confederation of Latvia (LDDK), which unites companies employing some 25 percent of all Latvian workers, supports filling low-skilled vacancies with domestic workers, while companies needing high-skilled specialists may have no choice but to scout abroad.
Regardless, the employee-crunch is likely to worsen before improving. Latvia's statistics bureau reported last week that 2.1 percent of all jobs in the country were vacant as of the end of September, which is up compared with the previous year's result. In the third quarter alone the number of vacant jobs increased by 15.3 percent 's or 2,700 jobs.
The problem is most acute in the public sector. There the number of vacancies amounted to 9,600, or 3 percent of all jobs in that segment. The highest percentage of vacancies was in public administration and defense, at 4.7 percent, or 3,700 vacancies.
Teachers and doctors, in other words, are leaving en masse for better paying jobs in the private sector at home or abroad.
In the meantime, Latvia's manufacturing (800 vacancies), trade (500 vacancies) and construction (400 vacancies) industries continued to see the number of job openings increase over the third quarter, the Baltic News Service reported.
No reliable data exists for the number of Balts who have traveled abroad to work in wealthier EU members states. In Latvia, as many as 100,000 may be earning wages in the West, though conservative estimates put the number at 50,000.
Lithuanians have also taken advantage of accession to make more cash abroad, and the Lithuanian community in the United States has been a haven for migrant workers.
The stock number of people who have left for work abroad since the country regained independence in 1991 is 300,000.