LABOUR PRODUCTIVITY IN THE REGIONS OF LATVIA

Abstract

Labor productivity directly describes return on the labor force or contributed labor and its efficiency. Its calculation is based on the actual output per unit of contributed labor. Labor productivity can be calculated on the level of a company, branch, certain territory, state, etc.

As regards the use of human capital Latvia is one of the leading countries in Central and Eastern Europe; however, in case of Latvia employment does not mean high productivity of human capital. In 2008 in Latvia productivity per one employed person was 51.3 % from the respective indicator in the European Union. In Estonia this indicator was 64.7%, in Lithuania – 61.3%. The lowest indicators of productivity in the European Union were among the newest Member States – Bulgaria 36.5%, Romania – 47.7%. In 2008 the highest indicators of productivity were in Luxemburg – exceeding the average rate by 72.8%, Ireland – by 31.5%, and Belgium – by 24.3%.

In the context of aging society, which is very topical problem in Latvia, it is essential to pay attention to increase labor productivity timely. As it is emphasized in the Sustainable Development Strategy of Latvia till 2030 aging of society is related to the loss of labor productivity and changes in the structure of the labor force. If in the nearest years the productivity of human capital is not sufficiently improved, further investments in the basic value and use of human capital will be useless. The most significant opportunity for development in Latvia in the context of demographic burden and changes is facilitation of labor force participation and economic activity, as well as investments in education of population of all age groups and increasing productivity of human capital. Along with traditionally involved educational institutions the activities and services of libraries, cultural education institutions and creativity and interest groups can be give a significant contribution in this field.

Latvia has significant differences in regional development. Considering GDP per capita and assuming that the average indicator in the state is 100% in the period of time from 2003 to 2007, in Riga region it exceeds the average indicator and fluctuates within the range from 138.4% to 143.5%; in Latgale region in the respective period this indicator significantly lags behind the average indicator and is in the range from 46.4% to 53.4%.

Due to the economic crisis GDP in Latvia, including regions, significantly reduced; the most crucial changes were observed in such branches as construction (drop by over 30 % in comparison to 2008), trade and manufacturing industry (drop by over 25% in each), transport and communications industry (drop by over 15%).

DOI: http://dx.doi.org/10.5755/j01.eis.0.5.1093