On the dole: Latvians work on the unemployment blues

  • 2009-10-28
  • By Philip Birzulis

RIGA - Adversity sometimes brings out the best in people 's and these are far from easy times in Latvia. The can-do spirit is epitomized by Signe Senfelde, a journalist who found a creative solution to being out of work.

Senfelde was the editor of Labu apetiti (Bon Appetite), a popular gourmet magazine, until the publisher closed it down in January in a round of cost cutting and she found herself unemployed for the first time in 20 years. But within three months, she found an investor for a monthly recipe journal, Garsigs (Delicious), and hired a number of former colleagues.
"I had braced myself for the possibility of losing my job, but when it happened it was like a death in the family," admits Senfelde. "I've undertaken to do this for the sake of the others, because a good team is extremely valuable."

Not every termination has such a happy ending, of course. The official national unemployment rate at the end of September was 13.2 percent, and would be higher if people who have stopped looking for work or whose wages are in arrears were counted. The figure is around 20 percent in parts of eastern Latvia, with the town of Rezekne particularly hard hit after machinery maker Rebir laid off 533 workers in June. And the pain is being felt across the community, with 14.5 percent of the jobless holding tertiary qualifications, and teachers and doctors who previously felt secure getting the axe.
This is a far cry from just a year ago, when unemployment was below 5 percent and labor shortages prompted debates about importing workers.

"This recession is harder on ordinary people than the Russian crisis (in the late 1990s), and the fact that it follows a period when life was getting better makes it a double blow," said Livija Marcinkevica, Vice President of the Free Trade Union Confederation of Latvia.
Martins Prodnieks knows all about boom and bust. An electrician by trade, he lost his 1,000 lats (1,400 euros) a month construction job in Riga in June 2008 and could no longer afford a city flat. So he moved with his wife Solvita and three-year-old son Marcis to Viesite District, 130 km southeast of Riga, where they live rent free in one half of an old farmhouse. A vegetable garden supplies much of their food and family members in the area help where they can. A part time job running the local parish's water system that nets him 150 lats is supplemented by occasional odd jobs.

Prodnieks says that despite their strained finances, the family prefers rural life to Riga and will stay put. His brother, however, has taken a factory job in the UK, joining an estimated 100,000 other Latvians who have left the country since the crisis began. Prodnieks believes that neglect by the government will increase emigration.

"Their thinking is absurd, they have forgotten about the countryside and everyone is fleeing," he said.
Marcinkevica also blames successive governments for the situation. They overheated the economy during the good times, and now, under pressure from international lenders, the current administration is worsening unemployment through cuts that make little sense.
 "The reforms should be directed towards reducing administration, not against the people," she said. "And while education needs to be reformed, it is being done clumsily, and the same goes for healthcare."

In Latvia, the amount of unemployment benefits is based on the number of years a person has worked and how much they and their last employer paid in social tax. This summer, the government extended from four to nine months the period that workers with less than nine years' work experience could receive benefits. But for the last five months they only get 45 lats a month. Marcinkevica also points out that many people who lost their jobs in early 2009 are now losing all benefits, while those becoming unemployed later have lower benefits because their salaries and social tax payments were reduced.

There are some programs creating low paid "practice" jobs so that people don't lose all connection with the workplace. Ultimately, Marcinkevica said the key to recovery is the revitalization of financial markets, but the government needs to do more to develop export industries. And she says that bureaucracy must be reduced 's there are four state institutions supervising the disbursement of EU structural funds, for example, putting the brakes on a vital avenue for stimulating the economy.

This frustration with red tape is shared by Inese Olafsone. She lost her job as the financial manager of KNAB, Latvia's anti-corruption bureau, in June this year. Around the same time, her husband Johann Olafsson, an Icelander, was blocked from starting a business in Latvia. His plan was to refit Toyota Landcruisers for use in rally driving and rescue work, then export them to Latvia's neighbors. But while such vehicles are legal everywhere else in the EU, Latvia's Road Traffic Safety Department refuses to certify them. The couple has gone from potentially creating jobs for 20 to 30 people to considering working abroad themselves. Olafsone's 19 year old daughter is already studying in Canada, and her 23 year old son plans to go abroad after finishing business school in Riga.
She believes bodies like the Investment and Development Agency of Latvia do nothing to improve the business climate.

"They're either useless or a hindrance, and they certainly don't help development," she said.
Signe Senfelde said she and her colleagues earn considerably less than before, but they are happy doing jobs they love. Likewise, the new magazine's investor is prepared to accept losses initially because it sees its future potential. The advertising market is dead, but Garsigs already has a monthly circulation of 5,000 and rising. However, they are hesitant about hiring more staff until the economic climate improves. Senfelde says that structural problems prevent small businesses from growing. The requirement to pay company income tax in advance ties up scarce financial resources, while Latvia Post is an inefficient monopoly that makes life difficult for the publishing industry. She contrasts the situation in Latvia with the experience of a Latvian friend planning to open a youth hostel in Berlin.

"The government there goes out of its way to help businesses so they create jobs, but I haven't heard any stories like that here," she said.
Perhaps the best thing Latvia's government could do to reduce unemployment would be to get out of the people's way.