Balts fear mass job losses

  • 2009-01-14
  • By Adam Mullett
VILNIUS - After months of speculation, citizens of the Baltics have begun fearing en masse that they may lose their jobs because of the economic crisis, with experts confirming that unskilled workers are justifiably scared as businesses look to trim the fat.

In Lithuania, 31.7 percent fear they may lose their jobs, a recent poll by Veidas magazine has revealed.
In Estonia, a similar poll by ERR showed that 36 percent of Estonians think they could be laid off. This figure was much higher in the ethnic non-Estonian population of the country, which is largely made up of Russians. Among this group, 37 percent feared losing their jobs, as opposed to 29 percent in the ethnic Estonian population.

Estonian labor experts believe that skills are a big consideration in the current employment climate.
"The Russian lay offs have nothing to do with their nationality, but language difficulties are important," Nele Labi, head of labor market services and benefits department at the Estonian Labor Market Board, told The Baltic Times.

"Most people suffering redundancies are Russians in Tallinn who work in factories. Smaller companies can reorganize, but big companies like factories must fire people," he said.
"In the service sector for example, people need to speak both Russian and Estonian. Before, employers couldn't choose, but now they can and they will choose the people who can speak more languages," she said, illustrating the need for basic skills in order to maintain employment.
While skill shortages in Lithuania are of a different nature 's language skills are simply not as big an issue 's the Labor Exchange told TBT that the issues for those fearing job losses are the same.
"It is important that a person can be flexible and that they have qualifications. A lot of the people who come to us do not have any qualifications at all," Inga Liuberte, head of the labor and supply division at the Lithuanian Labor Exchange said.

"Employees need to show what sort of value they can bring to the company," she added.
Olga Mescenikova, key account manager at Manpower Lithuania said this is a natural process during a recession, even though Lithuania has yet seen the negative growth rates of the other Baltic states.
"There are different strategies that employers use to cut costs. Some dismiss employees to cut costs and others try to reduce expenses by cutting wages 's this is for a temporary condition," she said.
Mescenikova said business owners in Lithuania are preparing for the worst, as Lithuania usually follows Latvia and Estonia, but is one economic cycle behind.

"We hope that the situation will not be as bad here as it is in Latvia, but we are following them. Employers are looking at this like a snowball effect and foresee losses in future, so they are acting now," she said.
Many companies are only planning optimization, and only few are going through with layoffs in response to the declining amount of work, a temporary work agency in Latvia said.
"Many companies are waiting and hoping that they will be able to weather this economic downturn, but when they start running out of their reserves accumulated during the good years, they will have to lay off workers at a much faster rate and in greater numbers 's this is going to create the seventh wave of unemployment," WorkingDay Latvia marketing director Maris Silinieks told BNS.

Experts say that thinking outside the box is a clever strategy for those who are made redundant.
Liuberte said that those fearing job losses could be right, with recent statistics showing a 30 percent rise in applicants to the Labor Exchange, whose responsibilities include finding new jobs for the unemployed.
Liuberte said "241,000 people applied to us in 2008, which is a 30 percent increase from 2007. Speaking of this statistic [31.7 percent], we see that this trend will continue into 2009."

"I think the problem of labor supply and demand will remain throughout 2009," she said.
Labi agreed, saying the redundant should cut their losses and start looking for work.
"In most cases, workers can't do anything about it 's they should look to organize themselves to get the right benefits. Then they should look for new work and look for other types of work 's also to consider changing their profile with new training," she said.

Those industries that have seen a boom in recent years will be hardest hit with lay offs. "Caretaker" industries are expected to continue as usual.
"The building sector is suffering and we have lots of builders who need retraining. The textile and wood industries are also suffering," Labi said.

Unemployment rates in Latvia could skyrocket according to WorkingDay, a popular hiring agency. They said that the rate could go as high as 20 percent by the end of 2009 and early 2010.
Tomass Barilo, managing director of WorkingDay Latvia, told The Baltic Times that their predictions are based on mass layoff announcements at the end of 2008.
"We think it will be 20 percent because there was a sharp increase in announcement of layoffs in November and December. Companies have to give staff three months notice and this was only the announcement," he said.

Barilo said businesses will continue to balance their books throughout the year.
"This is just the first wave though. We expect a second big wave in May or June that will continue until there is a balance in head count."
"More companies and the government will soon start announcing that they will let staff go and the announcements from last year will be realized soon," he said.
Financial analysts from the Bank of Latvia have given more conservative estimates, with unemployment expected to peak at 12 percent in 2010.

In Lithuania, SEB Bankas has said it expects unemployment to reach 8 percent in 2009.
In Estonia, varying estimates have been made. Nordea Pank CEO, Vahur Kraft said he expects unemployment levels of 18 percent, but SEB Pank has given more reserved estimates of 10 percent.

Even though high unemployment is expected in Latvia, it is not likely that there will be a mass outflow of workforce similar to the one observed a few years ago, said Uldis Rutkaste, Deputy Head of the Monetary Policy Department at the Bank of Latvia.
"Of course, this will depend on people. Probably some of them will leave. But there is economic downturn also elsewhere in Europe and the world. We see that the business cycle has entered the recession phase also in those countries that were the destinations for the Latvians looking for foreign jobs and the demand for labor is decreasing. Therefore I do not expect as strong outflow of workforce as it was in 2005 and 2006," Rutkaste told BNS.

Some will try their luck abroad and look for work and to garner new skills. Zivile Barkauskaite, an aerobics instructor, thinks there are greener pastures in the West.
"Things are starting to get bad here and I'm not sure if there will be work soon. I will go to America and look for work 's I don't think it will work out for me here," she told TBT.
David Wilson, an English business consultant, said the economic crisis has forced him to move back to his native home against his will.

"I have to go back to England now because I got made redundant. I don't have a job because we made the proposal to the bank, which was good, but with the state of the economy, nothing is going ahead," he said about his last employer.
"My wife, who is Lithuanian, lost her job too and so now we are going to go try in England. Ideally, I'd like to set up a business in England, then come to Vilnius, which I now consider to be my home, to run it. But I wouldn't want any business ties to this country at the moment."
"The likelihood of getting a job here without Lithuanian language skills is very low. It is normally [difficult] and now it will be even harder," he said.