Latvia must cut public sector jobs and help workers move to private firms, central bank governor says

Latvia needs to reduce the number of people working in the public sector, Mārtiņš Kazāks, governor of the Bank of Latvia, said on Wednesday, 11 November, in an interview with Latvian Television’s morning programme Rīta panorāma.

Kazāks said the state sector had grown significantly relative to the economy as a whole in recent years: overall employment in the public sector had stayed the same, while in the private sector it had fallen considerably. “So the number of employees in the public sector should also be reduced, but, of course, for this not to be very traumatic, this transition needs to be helped,” he said.

Moving from the public to the private sector requires different skills, so the State Employment Agency (NVA) will have a bigger role, the central bank governor added.

What the figures show

According to the Central Statistical Bureau, Latvia had 904,200 occupied jobs in the second quarter of this year: 612,100 in the private sector and 292,100 in the public sector. The total rose by 12,800, or 1.4%, over the year: by 8,400 (1.4%) in the private sector and by 4,400 (1.5%) in the public sector.

There were almost 19,700 vacancies on average in the second quarter, 1.8% fewer than a year earlier. The private sector had almost 10,500 and the public sector more than 9,200, even though it accounts for only about a third of occupied jobs.

In line with the prime minister-designate’s plans

Kazāks spoke a day after Andris Kulbergs, nominated to be Latvia’s next prime minister, said he planned to find most of the savings needed over four years, about €900 million, in public administration, including by cutting posts.