Hazans warns of hazards

RIGA - In the next three to four years, another 100,000 people will emigrate from Latvia, University of Latvia Professor Mihails Hazans, the recipient of this year’s ‘Spidola Award,’ said in an interview with the business portal Nozare.lv. Hazans, in a study published this past September, said that approximately 200,000 residents had left Latvia over the past ten years. Official statistics, however, mention only 33,000 emigrants.

Hazans says that, based on the survey’s findings, 9 percent of residents aged 18 to 65 plan to leave the country in the near future, which makes up around 120,000 people. Another 17 percent (about 220,000 people) said that it was possible that they would emigrate.

“Even if we assume that half of the first group leaves the country and one-fifth of the other group, this alone makes more than 100,000 emigrants. Therefore, emigration en masse will continue for three to four years yet. And that is regardless of the economic recovery, because every third one of those who plan to leave say they will do so for reasons other than economic,” stressed Hazans.

The continuing “brain drain” is becoming an urgent problem in Latvia, because at the moment every third emigrant from Latvia has a higher education, and this proportion tends to increase (before the crisis, the proportion was just slightly over 20 percent). Moreover, it is students who are the most willing to leave Latvia.
The study also reveals that the number of residents aged 18 to 24 is by 80,000 smaller than the official figure.

“We have nothing to replace these people with, even if we allow immigration. In that case, maybe 3,000 to 4,000 people will be arriving in Latvia each year, which will not compensate for the large numbers of emigrants,” notes Hazans.

The professor also notes that, although the data on emigration to Germany after it opened its labor market are not available yet, it appears that many residents of Latvia are keen to go and work in Germany.

More people are leaving Latvia now than before the crisis. For already a third consecutive year, Latvia loses 40,000 people each year, while the average annual number of emigrants in 2004-2008 was 16,000.

Hazans points out that the composition of emigrants has changed over the past several years. During the crisis, the emigrants were mostly unemployed and without higher education. At the moment, one-third of them are people with higher education. They choose to leave Latvia for various reasons. For example, they are dissatisfied with the current processes in the country, want a better future for their children, do not believe in Latvia’s social insurance system, and so on.

He believes that, if a special program was adopted, it would be possible to return around 50,000 people to Latvia; however, the country should have a specific offer to these people for this to happen.

Morten Hansen, head of Economics Department at the Stockholm School of Economics in Riga, said at the ‘Spidola Award’ ceremony that what the government has to do is reduce taxes on labor and on the social sector. It is those who consider leaving the country that must not be overtaxed, asserts Hansen.

Solving this problem will improve Latvia’s competitiveness and reduce the proportions of the shadow economy.

Hansen emphasized the importance of fiscal discipline and measures for the stabilization of the economy that the government had agreed upon with the international lenders. Latvia cannot be compared with Greece at the moment, neither according to their debt amounts nor the structural indices. In a few years, GDP per capita in Latvia will be larger than in Greece. It is apparent now already that the East-West division is obsolete, and it would be more correct to look for differences between the North and South, said Hansen, adding he firmly believed that Latvia had chosen the North.

Although there are various obstacles to Latvia’s growth, there are also very many contributing factors, therefore Hansen believes that Latvia’s economic development has good prospects, and it will be achieved by politicians as well as active and competent public debates.

Hazans received the award for his economic research that, in employing methods that had never been used before in Latvia, calculated the number of Latvia’s emigrants over the past ten years, analyzed the effect of the demographic situation on the national development, gross domestic product, productivity, and others.

‘Economists Union 2010’ President Ojars Kehris said that Hazans was inspiring to think for change: “The research he did will serve as a catalyst for not only discussions in the academic circles but also within society, and hopefully they will urge officials to draw up and pass the necessary decisions,” said Kehris.

Winners of the ‘Spidola Award’ in previous years have been former prime ministers Einars Repse and Andris Skele, former airBaltic CEO Bertolt Flick, former Saeima Chairwoman Ingrida Bluma, ex-President Vaira Vike-Freiberga, Latvian National Opera Director Andrejs Zagars, Lattelecom CEO Juris Bikis and charity foundation Ziedot.lv (Donate.lv) Executive Director Ruta Dimanta.

The study also reveals that the number of residents aged 18 to 24 is 80,000 smaller than the official figure.
“We have nothing to replace these people with, even if we allow immigration. In that case, maybe 3,000 to 4,000 people will arrive in Latvia each year, which will not compensate for the large numbers of emigrants,” notes Hazans.
The professor also notes that, although the data on emigration to Germany after it opened its labor market are not available yet, it appears that many residents of Latvia are keen to go and work in Germany.

More people are leaving Latvia now than before the crisis. For already a third consecutive year, Latvia loses 40,000 people each year, while the average annual number of emigrants in 2004-2008 was 16,000.
Hazans points out that the composition of emigrants has changed over the past several years. During the crisis, the emigrants were mostly unemployed and without higher education. At the moment, one-third of them are people with higher education. They choose to leave Latvia for various reasons. For example, they are dissatisfied with the current processes in the country, want a better future for their children, do not believe in Latvia’s social insurance system, and so on.
He believes that, if a special program was adopted, it would be possible to return around 50,000 people to Latvia; however, the country should have a specific offer to these people for this to happen.

Morten Hansen, head of the Economics Department at the Stockholm School of Economics in Riga, said at the ‘Spidola Award’ ceremony that what the government has to do is reduce taxes on labor and on the social sector. It is those who are considering leaving the country that must not be overtaxed, asserts Hansen.

Solving this problem will improve Latvia’s competitiveness and reduce the proportions of the shadow economy.
Hansen emphasized the importance of fiscal discipline and measures for the stabilization of the economy that the government had agreed upon with the international lenders. Latvia cannot be compared with Greece at the moment, neither according to their debt amounts nor the structural indices. In a few years, GDP per capita in Latvia will be larger than in Greece. It is apparent now already that the East-West division is obsolete, and it would be more correct to look for differences between the North and South, said Hansen, adding he firmly believed that Latvia had chosen the North.

Although there are various obstacles to Latvia’s growth, there are also very many contributing factors, therefore Hansen believes that Latvia’s economic development has good prospects, and it will be achieved by politicians as well as active and competent public debates.

Hazans received the award for his economic research that, in employing methods that had never been used before in Latvia, calculated the number of Latvia’s emigrants over the past ten years, analyzed the effect of the demographic situation on national development, gross domestic product, productivity, and others.
‘Economists Union 2010’ President Ojars Kehris said that Hazans was inspiring to think for change: “The research he did will serve as a catalyst for not only discussions in academic circles but also within society, and hopefully they will urge officials to draw up and pass the necessary decisions,” said Kehris.

Winners of the ‘Spidola Award’ in previous years have been former prime ministers Einars Repse and Andris Skele, former airBaltic CEO Bertolt Flick, former Hansabank Chairwoman Ingrida Bluma, ex-President Vaira Vike-Freiberga, Latvian National Opera Director Andrejs Zagars, Lattelecom CEO Juris Bikis and charity foundation Ziedot.lv (Donate.lv) Executive Director Ruta Dimanta.