The return of an unpleasant issue

If companies are forced to pay more for their labour, they simply need to make the labour work more productive to stay competetive. They’ve done it during the global financial crisis and surprised the world. They can do it again. Goverment can watch it, but it can’t do this job for them, in free market economies companies care for productivity, not goverments.

Donde esta la figura numero tres?

1) Latvia is a small market and integrated in neighbouring markets, like Estonia, Lithuania and the rest of EU. Therefore statistics of LV should be analyzed hand in hand with several other countries around LV.

2) As country “Latvia” lacks clear statistics on how many of it’s citizens are working abroad and sending money back home (anything between 100’000 and 300’000 people and rising weekly), it is not safe to rely on available statistics. Wages “abroad” for the same positions are higher and compete with Latvian market and those who leave Latvia, make availability of needed specialists in Latvia lower, which also make salaries higher… Close the borders or count people leaving and then do wise statistics analysis.

3) P.S.there is no “Figure Nr.3” published.

According to economic theory – the decrease of supply implies increase in prices (all other things constant). The same happens in the labour market. If the number of working age population goes down (emigration, ageing), the price of labour (wages) go up.

Easy to explain, but much more difficult to suggest what to do.