Crisis puts squeeze on employment services 

  • 2009-03-18
  • By Kate McIntosh

PLACEMENT: Even though unemployment levels are on the rise, few are turning to employment agencies to help find a job.

RIGA - As local employment markets dry up, Latvian recruitment services are facing dwindling demand for their services.
Recruiters told The Baltic Times that many companies specializing in Latvian recruitment had cut staff or closed down as employers increasingly tighten their belts and demand slows.
Unemployment in Latvia is growing exponentially, at a rate significantly higher than job vacancies.
The sheer volume of job seekers in the Latvian labor force now means there is less value for employers to use recruitment services.

In some recruitment sectors demand activity has decreased some 50 to 80 percent in the past 12 months.
Internationally employers are also being more cautious and hiring less.
"Market activity in Latvia has basically stopped," GP Recruitment director Ginters Purins (pictured right) told TBT.

"Many employment agencies are just closing down. When you look at the Web site, the address is still there, but no one is answering e-mails or picking up the phone. When the market is so tight like it is now, many employers are asking 'why do I need to use recruitment services, when a small advert can get the same result,'" he said.

In Latvia the number of unemployed has more than doubled to reach a nine year high since the onset of the crisis, with the jobless rate expected to rise to at least 15 percent by the end of the year.
From December to February Latvia's unemployment rate rose by 2.5 percent, reaching 9.5 percent in February.  
According to recent statistics from the State Employment Agency the number of vacancies has shrunk by 82 percent in comparison with the beginning of 2008.
Currently there are about 76,000 unemployed persons and only 3,200 officially registered vacancies in Latvia, meaning on average, about 24 people compete for one job position.
Recruiters are seeing an unprecedented level of candidates in recent months, many in increasingly desperate situations.

Purins, whose company supplies recruitment services to U.K., Norway, Denmark, Germany and the Netherlands, said their four offices across Latvia were flooded with between 240 and 400 jobseekers each week.
"In my experience I have never seen so many candidates. Some are very desperate. They can't pay their mortgages and accommodation costs," said Purins.

"We can feel that and see that many people are willing to accept any job," he added.
He said staff was unable to respond to the high volume of e-mails and inquiries from potential job applicants.
"Of course for our business it's a positive, but for all of Latvia, it's not a good situation," Purins said.
Purins said the high numbers of jobseekers in the market at the moment had almost negated the need for advertising.

In the past, expensive advertising campaigns to attract menial, unskilled contracts abroad in Latvia's leading daily newspapers generated only mild interest.
In comparison a small advert for similar positions now generates phenomenal interest way above demand.
According to Purins, the company now spends 10 times less on advertising than 12 months ago by simply sourcing candidates from its expanding database.

The global economic slowdown meant many companies had become increasingly selective in their recruitment practices.
"Company management are very cautious about expanding their head count," said Viesturs Viksna, managing partner of ARIKO ReServ.
"It's a discrepancy in the market right now, that there are many people in the market, but many that still might not qualify. When companies are being squeezed they have to be harder on themselves and on their people. It's not just about filling the position, but about finding the right fit for the organization that represents the best value," he said.

Viksna said growing uncertainty in the job market had also seen an increase in the numbers of people actively looking for work while still employed elsewhere.

However, it's not all doom and gloom in the recruitment sector.
Viksna, whose company specializes in management recruitment services for international subsidiaries in the Baltics, said while market activity was down, overall there was optimism for the future.

"Certainly there are less openings for jobs and recruitment is becoming a more selective process. But, I think soon we will start to see companies coming out of the shock [of economic recession] and look at what they can do to utilize the situation. Overall I think we can expect slow business for a year and then more activity starting to develop again in 2010," he said.
Board member of Eiro Personals Arta Biruma said the recruitment downturn was not being felt across all sectors.

The company, which specializes in sourcing employees for global Latvian based IT companies, had been largely cushioned from the economic downturn, according to Biruma.
"The situation in recruitment is critical where companies have been outsourcing recruitment and are not involved directly in the screening process," Biruma told TBT.

"In IT services they are not feeling the slowdown. There is still a decent amount of companies looking for motivated leaders, with the right experience and competence," she said.
Despite the deep and wide-reaching effects of the global economic slowdown, Purins said recruitment companies servicing overseas markets retained a distinct advantage.

The weakened pound exchange rate and decline in the farming and construction sectors has affected recruitment activity in the traditional markets such as the U.K. and Ireland.
However, Purins said there remained growth in demand for workers in the food industry.
"The market is not dead. Some industries are doing better than others. I believe in the next 12 months we will also see more recruitment business and a lot more potential," he said.

Latvia's comparably low labor costs and strong work ethic mean Latvian workers remain attractive to international companies.

"Latvian workers will be happy to work for seven to nine euros an hour, compared to local workers [who] will want at least one and a half euro more. When you have 300 employees, that's a big difference," said Purins.
"We also hear from employers that productivity [of Latvian workers] is very high and the quality of work is better… Latvian workers will work as much as possible to send as much money home. They take less sick days. Maybe it sounds like a bad thing to say, but our people are more hungry for money."