This year SMEs will focus on keeping the current staff, importing workforce is not on agenda

76% of small and medium-sized companies in Latvia will focus on keeping the current number of employees. A survey by SEB bank indicates that although the interest about attracting employees from abroad has slightly increased, entrepreneurs do not consider it as the best solution to tackle problems of workforce availability.

Due to the tense situation in the labour market, 76% of small and medium-sized companies in Latvia will focus on keeping the current number of employees. The situation is very similar in Lithuania and Estonia where 73% and 78% respectively will focus on maintaining their current staff size. A survey by SEB bank indicates that although the interest about attracting employees from abroad has slightly increased, entrepreneurs do not consider it as the best solution to tackle problems of workforce availability.

Arnis Škapars, board member of SEB Latvia: "Economists agree that the natural registered unemployment rate is around 5%. In Riga and its surroundings the current unemployment rate is closer to 4%, which indicates that the labour utilization in Latvia is rather intensive and the available reserves will be exhausted quite soon. This year the tension in the labour market will start to decelerate the pace of Latvia's economy, which will be noticeable in the SME segment as well. However, at this point importing employees from foreign countries is not the 'plan A' for addressing these problems. Entrepreneurs see more opportunities in terms of improving productivity, for example, by introducing new technologies."

16% of Latvian, 17% of Estonian and 19% of Lithuanian companies are planning to increase the size of their staff during this year. At the same time the share of those companies who intend to shrink their staff is at the lowest point in past four years. Only 8% of Latvian and Lithuanian SMEs and 4% of Estonian small and medium-sized companies are planning to decrease the number of their employees during the next 12 months.

Meanwhile 16% of SMEs in Latvia, 12% in Lithuania and 21% in Estonia are interested in attracting workers from abroad. This is a slight increase in comparison with the last year when 10% of Latvian, 17% of Lithuanian and 19% of Estonian SMEs were looking for opportunities to import workforce.

Baltic Business Outlook is an annual survey by SEB bank, establishing expectations of Baltic small and medium-sized companies in five areas: changes in turnover, number of employees, exports, innovations and investment. Baltic Business Outlook 2019 encompasses answers by 4200 small and medium-sized businesses across Baltic States, including almost 1200 Latvian companies. The survey was done in December of 2018.