Latvia s National Action Plan for Employment 2004

Transcription

1 Latvia s National Action Plan for Employment 2004 September 2004

2 2 Contents Abbreviations... 3 Introduction Economic development and labour market Economic development Labour market Labour force Employment Unemployment Salaries and wages Employment policy Objectives and priorities Conformity of Latvian employment policy to the overarching objectives of the EU Employment Strategy Implementation results of the National Employment Plan 2003 and funding for the National Action Plan for Employment Measures of the National Action Plan for Employment Good governance and partnership in the in implementation of the employment guidelines Institutions responsible for providing information and reporting on the implementation of the measures of the National Action Plan for Employment Appendix Appendix Appendix

3 3 Abbreviations CSB Central Statistical Bureau of Latvia LEC Latvian Employers Confederation (LDDK) CM Cabinet of Ministers EISL Education Information System of Latvia ERDF- European Regional Development Fund ESF European Social Fund EU European Union LFTUC Latvian Free Trade Union Confederation(LBAS) GDP gross domestic product ILO International Labour Organisation IT information technologies LAATC Latvian Agricultural Advisory and Training Centre LAEA Latvian Adult Education Association LFS labour force surveys LHZB Latvijas Hipotēku un zemes banka 1 LIDA Latvian Investment and Development Agency MoA Ministry of Agriculture MoE Ministry of Economics MoES Ministry of Education and Science MoF Ministry of Finance MoJ Ministry of Justice MoW Ministry of Welfare MRDLG Ministry of Regional Development and Local Governments NAPE National Action Plan for Employment NEP National Employment Plan NTCC National Tri-partite Cooperation Council PA Prison Administration PCCC Professional Career Counselling Centre PHARE European Union initiative providing grant finance to support its partner countries in the East and Central Europe RSS Rural Support Service SAPARD European Union pre-accession financial instrument for providing financial assistance to agriculture and rural development (Special Assistance Programme for Agricultural and Rural Development) SEA State Employment Agency SME small and medium-sized enterprises SPD Single Programming Document LHZM Latvijas Hipotēku un zemes banka the name of a mortgage and land bank operating in Latvia. Translator s note

4 4 SPA State Probation Administration TSCVEE Tripartite Sub-council for Cooperation in Vocational Education and Employment TSCVEE Tripartite Sub-council for Cooperation in Vocational Education and Employment ULRGL Union of Local and Regional Governments of Latvia (LPS) VEC Vocational Education Centre

5 5 Introduction The EU Employment Strategy predicts elaboration of National Employment Plans on an annual basis (since 2004 National Action Plans for Employment). To adjust Latvian employment policies to the above requirement, a Concept On promotion of employment was adopted by the Cabinet of Ministers in 1999 predicts for the development of an annual National Employment Plan of Latvia in conformity to the EU employment policies. The NEP 2004 is already the fifth document. In accordance with the EU requirements the NEP is substituted by the National Action Plan for Employment as of The employment promotion measures of the plan are closely related with the employment policy priorities for Latvia set in the Joint Assessment Paper of the European Commission and Latvia and the Single Programming Document , Employment Guidelines adopted by the Council of European Union, priorities proposed by the European Employment Taskforce chaired by Wim Kok. The structure of the NAPE is largely organised in accordance with the recommendations of the Employment Committee (EMCO). The measures aimed at promoting employment and the respective objectively verifiable indicators are organised by specific employment guidelines. Information on the system of the NAPE employment indicators, legislative acts on employment in Latvia, projects for the EU Structural Funds and other labour market issues is provided in the appendix to the NAPE. The NAPE 2004 was drafted by a steering group consisting of the representatives of the following institutions and organisations Ministry of Economics, Ministry of Welfare, Ministry of Education and Science, Ministry of Agriculture, Ministry of Regional Development and Local Governments, State Employment Agency, as well as from the Union of Local and Regional Governments of Latvia, Latvian Free Trade Union Confederation and Latvian Employers Confederation. During the drafting stage of the present document due consideration was given to proposals, clarifications and specifications submitted by the Ministry of Finance, Ministry of Justice, EU experts and other organisations and entities. The development of the plan was supported by experts and consultants of the Phare project Employment Strategy. The development of the draft National Action Plan for Employment was coordinated by the Ministry of Economics.

6 6 1. Economic development and labour market 1.1. Economic development Since the middle of the 90-ies the economic activity of Latvia has been growing, and the living standards are increasing, while unemployment - decreasing. During the period from 1996 to 2003 the average annual GDP growth in Latvia was 6.1% (the figure is two times higher than the EU-15 average (in the EU-15 member states) and 1.5 times of the respective average indicator in the new EU member states). As regards the EU-15 member states, only Ireland has experienced a faster development tempo during the period. Despite the considerable slow-down of the global economy during the recent years, the economy of Latvia has been significantly growing. The GDP growth in 2001 was 8%, %, while in %. The main factor determining the accelerated economic growth is the high domestic demand and ability to adapt to changing external conditions. The economic growth in Latvia was achieved in a stable macroeconomic environment. The exchange rate of the national currency lats to the SDR (Special Drawing Rights) has been stable for many years. Consequently, it increases stability, averts currency exchange risks and creates a sound basis for corporate planning and price setting. Table 1.1 Latvia: Key Indicators of Economic Development f (changes over the preceding year, in percent) GDP Private Consumption Public Consumption Total fixed capital formation Exports Imports Consumer prices (in percent of GDP, unless indicated otherwise) General government budget fiscal balance Central government debt Current account balance Annual Foreign Direct Investment 5, Source: CSB data f-forecast The inflation rate in Latvia is one of the lowest among countries characterised as transition economies. For the last four years the average annual inflation rate has fluctuated only within the range of 2-3%, while in 2003 it

7 7 stood at 2.9%. The inflation rate recorded growth in the beginning of 2004 due to the increase of regulated prices, excise tax rates and inflation expectations triggered by the accession to the EU. The fiscal deficit of the consolidated budget has not exceeded the ceiling of 3% of GDP since 1996, except in 1999, thus meeting the Maastricht Treaty criteria. The objective of the government is to ensure fiscal deficit of the consolidated budget within the limit of 3% of GDP, while the mid-term objective is to keep to a balanced budget. As for 2003, the fiscal deficit of the general government budget reached 1.6% of GDP. The Saeima 2 has adopted the new budget for 2004 with a deficit of 2% of GDP. The priorities of the state budget for 2004 include the integration of Latvia in the European Union and the NATO, in order to become a fullfledged member of the above organisations; furthermore, particular regard is paid to implementing socially responsible policies to increase the quality of life of all inhabitants of Latvia. The public debt of Latvia is comparatively low (at the end of 2003 the public debt of Latvia stood at 15% of GDP). On the basis of an assumption that the fiscal deficit will not exceed the limit of 2% of GDP, the Ministry of Finance is planning a gradual increase of the public debt to 16.5% in a medium term till One of the main economic problems of Latvia is the relatively high current account deficit determined by the high domestic demand, especially, the considerably high increase in investments. As the current account deficit is mainly compensated with incoming foreign direct investments and long-term borrowing, its level cannot be considered critical. The net foreign currency reserve assets of the Bank of Latvia continue to increase gradually and fully balance the local currency in circulation. The main foreign trade partner of Latvia is the EU. Since regaining independence the net value of foreign trade with the EU-15 has been continuously growing and currently approximately 60% of Latvian imports and exports are made with the old European Union member states (80% with EU- 25). For the past several years Latvia has seen continued growth in wage and salaries and old-age pensions. The net work payment of the employed have increased by 89% in 2003 compared to 1995, and by 11% compared to 2002, while old-age pensions have grown by 99% and 4% respectively. The incomes of residents continued to grow in the last year, however, this increase irregular and the polarisation in material welfare is on the rise. The Gini index has gone up from 0.30 in 1996 to 0.34 in The number of poor residents is relatively high in the country. 2 The Saeima the Parliament of the Republic of Latvia. Translator s note

8 8 The potential of economic growth is best characterised by the increase of investments. During the period from 1996 to 2003 the total capital formation indicator saw an annual growth of 16.2%. The growth rate of investments as a proportion of GDP is one of the highest among the new EU member states. Investments are facilitated by a number of factors: stable macroeconomic environment, inflow of foreign investments, decreasing credit rates and strengthening banking sector, increase in overall economic activity and optimistic future expectations etc. Provided there are no adverse external influences, the mid-term GDP growth is expected to reach 7-8% on an annual basis Labour market Labour force According to the Labour Force Survey, the proportion of economically active population (labour force ) stood at the level of 69.2% of inhabitants aged 15 to 64 in The total number of economically active population increased by 0.4% in 2003 if compared with the previous year (see Table 1.2. and Key Indicator 24, Appendix 1). Table 1.2 Labour Force Indicators Population in working age group (aged 15-64, thousand) Economically active population (thousand) Source: LFS According to the Labour Force Survey, the average education level of labour force is relatively high. In 2003, 18.7% of economically active population had higher education, 66.5% secondary education, while 14.8% - only primary education or lower. The proportion of economically active young people is relatively low and it comprised 38.6% of the respective age group of young people in 2003 due to the high percentage of students (539 students per inhabitants), while economically active population aged was 47.9% of the respective age group. In Latvia, like in many other European countries, the process of ageing of population continues to grow, but the demographic burden does not increase due to decreasing birth rates and raising average exit age from labour market (increased legal retirement age).

9 9 The proportion of population in the working age group* in 1995 and 2003 Population in the respective age group as a proportion of total population, % Total population of which: under working age working age group over working age Source: CSB data *in accordance with active working and retirement age criteria set in legislation of the respective period Table 1.3 Taking into account the demographic situation and the baby-boomers of the 1980-ies (the birth rate of the period was twice as high as it is today) starting to enter the labour market, as well as the high proportion of studying youth, an influx of well trained new work force in the near future can be forecasted. Demographic forecasts indicates that the labour force of the country will remain stable in numbers until However, the number of economically active population could decrease during the period from 2010 to The decline will be accelerated by substantial changes in the age structure of labour force characterised by a sharply falling proportion of young people aged and growing number of people aged Employment The development of Latvian economy during the recent years has had positive impact on the situation in the labour market and fostered the growth of employment (see Table 1.4). Table 1.4 Key Employment Indicators Employed persons (thousand) Employment rate (%)* Source: LFS * the proportion of employed persons of the total number of persons in the economically active age group (aged 15-64) All quarters of 2003 saw a year-on-year increase of the number of employed in annual total growth by 19 thousand, and the main increase was in

10 10 construction, transport and communications sectors (see Key Indicator 13, Appendix 1). In almost all sectors of economy there is a sustainable tendency,where growth of the sector has a small impact on the growth of employment. The developing and strengthening private sector fosters competition in the postprivatisation period. Competition forces enterprises to cut costs, one of the key cost items to be cut is labour cost often resulting in reduction of the number of employees. These processes for national economy of Latvia are caused by the low level of productivity of the economy. In 2003 employment rate has increased by 1.4 percent points comparing with previous year. However, employment rate differs significantly by region. In 2003, highest employment rate was in Rīga region (66.0%), followed by Zemgale (62,2%) and Kurzeme (60.8%), Vidzeme (60.6%), while Latgale showed considerably lower indicator (52,1%). In 2003 due to recent economic developments Kurzeme has experienced a significant improvements in its situation and the employment rate in the region has increased by 3.1 percent points and the same indicator in Zemgale region was 1,2 percent points, while employment rate in Vidzeme region has decreased by 1,5 percent point comparing with previous year. The main reason for the differences in employment rates in the regions is the low economic activity in areas remote from the capital city Rīga The low geographic mobility of labour force, caused by insufficient transport infrastructure in economically less developed regions and relatively high housing costs (if compared to the salary) in areas of increased economic activity prevents further improvement of the current situation. Taking into account structural changes in the economic sectors of the country, characterised by fast development of sectors traditionally employing a large proportion of women (e.g., trade, public catering and other services), the employment rate of women shows a rapid increase standing above the average EU level, while the employment rate of men is currently behind the respective average indicator in the EU. Compared to the EU average indicators, Latvian labour force has relatively long working hours averaging 41,9 hours per week (2002), while the respective figure in the EU is only 36.1 hour a week. Latvia has a relatively low number of people employed part-time. For example, only 9.6% of employed population worked part-time in Latvia in 2003 (9,1 % - in 2002). The respective EU indicator is approximately twice higher. There still is a serious problem related to illegal and undeclared employment in Latvia. Employing people without an employment contract and paying wage in envelopes is still common practice. In many cases the trend appears as partly declared employment, when employees are contracted and paid contractually fixed salaries while still receiving supplementary black payments that are not subject to taxation..

11 Unemployment Despite the positive trends observed in the recent years, the unemployment rate is relatively high in Latvia (see Table 1.5). Key Unemployment Indicators Table Unemployed persons (thousand) Unemployment rate (%)* Registered unemployed persons ( at the end of the year, thousand) Registered unemployment rate (as at the end of the year, %)** / Source: LFS, CSB and SEA data *total unemployed persons as a share of total economically active population (aged 15-64) ** registered unemployed persons as a proportion of economically active population (starting from 2002 the indicator is calculated using new methodology) According to the Labour Force Survey, the proportion of the long-term unemployed (looking for a job for more than one year) is still considerably high in Latvia. In 2003, the proportion of the long-term unemployed was 43,9 % of all unemployed. The youth unemployment rate is higher than the respective indicator among older inhabitants. In 2003, the youth (aged 15-24) unemployment rate was 18.5%, decreasing by 2.3 percent points compared to the previous year (in 2002, the indicator stood at 20.8%). The unemployment rate of people aged was 7.9 percent in The opportunities to find a job are largely dependant on the educational level of unemployed. The lowest unemployment rate is among people with university level education (4.9% in 2003). The respective indicator for persons with primary education was 17.5% in An important issue in Latvia is the relatively high number of economically inactive inhabitants and discouraged persons that have any hope to find a job (see Context Indicator 18, Appendix 1). With the SEA registered unemployment rate is approximately 1.3 times lower than unemployment rate calculated in accordance with the ILO methodology. There are several explanations. Not all persons are entitled to unemployment benefit as they have not been paid (declared) social insurance contributions; many unemployed are not interested or able to participate in retraining programmes, especially, it is in the case with pre-retirement age persons; sometimes unemployed find it difficult to meet all requirements for registered unemployed. It should be mentioned that the status of an unemployed

12 12 is not granted to people outside the active working age group set in the currently effective legislation. Registered Unemployment Table Unemployed (as at the end of the year, thousand) Long-term unemployed (unemployed for longer than 12 months) as a proportion of the total number of the unemployed, % Unemployed women as a proportion of the total number of the unemployed, % Young unemployed (aged 15-24) as a proportion of the total number of the unemployed, % Pre-retirement* age as a proportion of the total number of the unemployed, % Source: CSB and SEA data * Women from 50 years of age, men from 55 years of age to the respective age limit set in the law On state pensions According to the State Employment Agency data, during 2003 the number of unemployed persons has increased a little and their distribution structure has not significantly changed. It should be mentioned that a fall in the number of the long-term as well as young unemployed can be observed. Registered unemployment rates in the rural area of Latgale region are still high, reaching the highest level in Rēzekne district (27.8%), but the lowest in Krāslava district (19.1%) as established at the end of The situation is better in Rīga (unemployment rate 4.4%), Rīga district (5.3%), Saldus district (5.5%), Tukums district (6.0%) and several other districts. Unemployed persons mostly represent simpler or low-skilled occupations and their number amounts to 25.4 thousand people or 28.0%. Compared to the end of the previous year their proportion grew by 0.6 percent points. The proportion of unemployed without professional qualification has increased by 2 percent points, at the end of 2003 the level was 7.7% of the total number of registered unemployed, while the respective indicator stood at 5.7 percent at the end of The correspondence of the labour market supply to its demand by occupation is characterised by the ratio calculated as the number of unemployed per vacancy as established at the end of Compared with the respective period in 2002 the ratio has not changed and stood at The lowest value of the above indicator was observed among skilled workers, craftsmen and professionals (14.2 and 22.5 respectively). At the end of 2003, the highest value of the ratio was established in the major group of qualified agricultural and fisheries professions and in the major group of low-skilled occupations resembling the situation at the end of Compared to the end of 2002

13 13 the highest growth in demand was recorded in the major group of plant and machine operators and assemblers Salaries and wages The salaries of employed have been constantly growing during the recent years. The net salary of working population continued to grow also in It showed an average yearly increase by 10.9%. In May 2003, the government adopted the Concept on Minimum Wage setting a target of increasing the minimum wage rate to the level of 50% of the average gross monthly salary of employed, undertaking to implement this principle within a period of seven years. As of January 1, 2004, the national minimum wage is increased from LVL 70 to LVL 80. In 2003 considering inflation the actual income of employed increased by 7.8%, comparing with previous year The highest average gross salary in 2003 was recorded in the air transport sector (LVL 553), financial intermediary services (LVL 478), and companies of the utilities sector specialising in electricity, gas and water supply (LVL 300). The public and private sectors continue to show significant salary differences mainly because of various shortcomings in the accounting systems of private companies. In 2003, 11.4% increase was observed in the average salary of employed. A number of sectors follow the trend of fast salary growth rates. In comparison with 2002, the average gross monthly salary had the fastest growth rate in railway transport (19.8%), health and social care sector (18.1%), wholesale and retail segment, car, motorbike, personal goods, household appliance servicing and maintenance sector (16.7%). Agriculture, hotels and restaurants and a number of other sectors still have salaries below the average national level. Developments in salaries are reflected in National Indicator 1, Appendix 1. The gender pay gap is relatively stable in Latvia and since 1994 women earn on average approximately 80% of male on a monthly basis (see Key Indicator 28 and Context Indicator 22, Appendix 1). 2. Employment policy 2.1. Objectives and priorities The main objective of Latvian employment policy is the increase of the employment rate achieving the strategic requirements set by the EU, as well as tackling the problem of unemployment on the basis of sound and successful economic growth.

14 14 The Lisbon Summit in March 2000 adopted the employment scenario From combating unemployment to activating economically inactive human resources for the period till At the same time the following objectives were set to be achieved by 2010: the employment rate in the EU reaching 70%, employment rate of women 60%. The European Council at Stockholm, supporting the Lisbon objectives for 2010, set intermediary objectives for 2005: total employment rate 67%, employment rate for women 57%, and supplemented the Lisbon objectives with a new indicator an employment rate of 50% of persons aged to be achieved by Measures aimed at implementing the national employment policy shall conform with the Joint Assessment Paper on Employment Policy Priorities of Latvia signed by the government of Latvia and the European Commission in Brussels on February 6, The paper sets the priorities of the national employment policy. The process of implementing the above priorities is reflected in the European Commission Communication Progress in implementing the Joint Assessment Paper on Employment Policy Priorities. The above report along with related papers developed in 2003 by the Employment Committee for an indepth review of employment problems set the following tasks for the government of Latvia aimed at achieving the priorities in employment: to develop active and preventive labour market policies and giving attention to the following measures in particular: assistance to unemployed, promoting geographic mobility and access to training; reducing high unemployment rates, especially, among the long-term and young unemployed ; improving the State Employment Agency and its services; to continue the re-structuring process of the national economy, reducing the proportion of agricultural sector employees, and strengthening the role of social partners in this process; to reduce regional disparities, as well as social and economic disparities between urban and rural areas, including disparities in the field of employment and unemployment; to facilitate faster growth of entrepreneurship and job-creation, particularly, in the services sector in regions of slower economic development; to increase integration opportunities in the labour market for young people, persons with a low education level, language learning and other difficulties; to reduce taxes and social contributions; to increase social benefits and improve social assistance services; to reduce the non-correspondence of education and training with the labour market requirements, facilitate access to education, professional

15 15 training and lifelong learning, ensure decreasing the level of drop-outs in the educational establishments of the country; to transform undeclared work in regular employment, to implement measures aimed at decreasing the level of undeclared work Conformity of Latvian employment policy to the overarching objectives of the EU Employment Strategy For successful implementation of the Lisbon Strategy requirements the EU Member States have to balance their contribution in achieving three overarching and interrelated objectives set in the Guidelines for employment policies: full employment, improving quality and productivity at work, strenghtening social cohesion and inclusion. Table 2.1 Employment policy objectives of the EU and Latvia EU Employment rate, % Employment rate of women, % Employment rate of persons aged 55-64, % Latvia Employment rate, % Employment rate of women, % Employment rate of persons aged 55-64, % Full employment In order to achieve the average EU employment rate, the government must play an active role in strengthening the annual employment growth (see Table 2.2). The labour market of Latvia will be reinforced by macroeconomic stability, employment-friendly salaries and wages, increase in professional qualification and quality of work. In order to achieve full employment, governmental institutions must play an increasingly active role in facilitating processes of the labour market, implementing measures aimed at promoting the development of knowledgebased sectors of economy. It is necessary to further develop, improve and continue the structural reforms in the labour market, tax and social benefit system. The welfare of the population of Latvia shall be promoted. The increase of employment rates in all groups of population is of high importance, especially in the groups characterised by employment rates considerably lower than the national average. In order to tackle the problem of ageing, governmental institutions in cooperation with social partners and non-governmental organisations must implement a range of measures aimed at supporting the employment of young

16 16 people and older persons, as well as facilitating the integration of long-term unemployed and economically inactive persons in the labour market. The main measures in this context should be aimed at promoting vocational training, facilitating professional and geographical mobility, reducing the negative effects of the tax and social benefit systems, and implementing efficient labour market and integration policies focussed on increasing economic activity and personalised approach to labour market participants. Improving quality and productivity at work The promotion of quality at work includes the following: lifelong learning and career development, improvement of work organisation schemes, work-life balance, gender equality, health and safety at work etc. The current level of quality at work in Latvia is significantly lower in many aspects than the respective indicator in the old EU member states. The number of accidents at work is still comparatively high (see Key Indicator 17, Appendix 1). In 2002, the number of officially registered incapacity days totalled 35,2 thousand, which is a 4% increase and a 6% increased compared to Occupational diseases also show a growing trend (see Key Indicator 18, Appendix 1). One of the trade union priorities is health and safety at work. Their influence is increasingly strengthened in this area by the growing number of trustees in safety-at-work issues (at the beginning of 2004 their number stood at 2710 persons). Concept on the tax system development provides with the optimisation of the non-taxable minimum income, in order to prevent further net salary decrease of low-wage earners. An important issue in Latvia is the need to increase awareness and understanding of employers to implement the gender equality principle in enterprises and organisations. The overall productivity level is low in the economy of Latvia (see Context Indicator 5, Appendix 1), especially in the agricultural and manufacturing sector. The main competitive advantage of the manufacturing sector is the low-cost labour force, which accounts for the large proportion of labour-intensive enterprises and, consequently, the low productivity. The task of the economic policy of the country is to foster a transition from labour-intensive to knowledge-based economy that can be achieved by investment in human capital. Developing competitiveness of the main export-oriented sectors of Latvia, i.e., by increasing productivity, will facilitate the growth of earnings in other service sectors, including those employing comparatively low-qualified and modestly educated labour force. Strengthening social cohesion and inclusion The main objective of the socioeconomic policy of Latvia is welfare based on a stable economic system, full employment of men and women, comprehensive social insurance system, social security etc. The employment policy and social cohesion processes are closely interrelated.

17 17 The policy of government aimed at strengthening social cohesion and inclusion in Latvia are reflected in the Joint Inclusion Memorandum,, defining the main political objectives, priorities, as well as mid- and long-term tasks for promoting social inclusion. In order to strengthen social cohesion, the government of Latvia have developed the National Action Plan on Reducing Poverty and Social Exclusion that conforms to the measures of the National Action Plan for Employment The development and implementation of the National Action Plan on Reducing Poverty and Social Exclusion is considered in the context of the EU social inclusion process aimed at considerable reduction of poverty in Europe by The above overarching employment objectives shall be implemented by pursuing 10 specific employment guidelines. The measures aimed at promoting employment are organised in accordance with the guidelines. The main measures to be implemented under each guideline are explained below Implementation results of the National Employment Plan 2003 and funding for the National Action Plan for Employment 2004 The implementation of employment promotion measures in 2003 was effected in accordance with the objectives of the National Employment Plan. The planned measures were largely implemented and objectives achieved. The implementation of measures had an overall positive impact on the labour market and employment. The measures implemented and targets achieved in 2003 are characterised by the following key indicators. As regards active labour market measures, young unemployed were involved (exceeding the planned number by 18,8%), 74,1% of them during the first six months of unemployment (exceeding the planned level by 4,1 percent points). After being involved in active labour market measures 1753 young unemployed persons found a permanent job within the following six months. Furthermore, adult unemployed (aged 25 and over) were involved in active labour market measures (exceeding the planned number by 22,3%), 69,2% of them during the first 12 months of unemployment (exceeding the planned level by 1,2 percent points) and 8049 unemployed found a permanent job within six months following their support programme. Training and re-training programmes were offered to 6978 unemployed, measures to increase competitiveness to unemployed, while paid temporary public work was performed by unemployed. Vocational guidance and career counselling services were ensured to persons, increase by 19,6% comparing with previous year. In 2003, which was pronounced the International Year of Persons with Disabilities by the United Nations Organisation, 2546 unemployed persons

18 18 with disabilities were involved in active labour market measures, which is a threefold indicator of the planned number. Considerable work has been done in the field of assessing, licensing and accrediting vocational continued education programmes. The development of occupational standards was continued in cooperation with brunch ministries, employers etc. The professional development of teaching staff of vocational education establishments was facilitated, and the number of state-funded students was optimised in accordance with the demand driven by structural changes in the labour market. Vocational guidance informative measures were realized in accordance with the contract concluded by and between the European Commission and Agency for Vocational Education Development Programmes. Furthermore, the activities of the Tripartite Sub-council for Cooperation in Vocational Education and Employment and vocational education cooperation councils were facilitated and developed, and the establishment of territorial vocational education councils was continued etc. As regards the business sector, the tax system reform was continued in 2003 resulting, inter alia, in the gradual reduction of the corporate income tax rate to 19%. The last year was implemented the Action Plan for Improving Business Environment, Consultative Support Programmes for Business Startups, projects of the Multiannual Programme for Enterprise and Entrepreneurship, and in particular for small and medium-sized enterprises. Creation of new jobs and enterprises start-ups was facilitated by the implementation of Non-agricultural Business Development Programme, elaboration of district (city) or local employment plans, measures of the Regional Fund etc. As regards facilitating the adaptability of enterprises and employees, the Phare project Promotion of Bi-partite Social Dialogue in Latvia was implemented by delivering lectures to employers and trade union members on industrial relations in the context of the new Labour Law etc. Nevertheless, there are still numerous employment-related issues, problems and tasks that require improvements in national and municipal institutions, non-governmental organisations and their mutual coordination activities at the same time focussing on the EU and national employment policy objectives and attracting financial resources from the EU Structural Funds. More detailed information on implementing NEP measures in 2003 is given in Section 1 ( Current situation ) of each employment guideline. NAPE 2004 includes 45 measures and activities aimed at promoting employment. The total allocations for measures requiring direct funding amount to LVL 20.5 million This amount is approximately higher by 9.6 % than the total allocations for measures implemented under the NEP The financial schemes of a number of the NAPE measures are related to the European Social Fund (ESF) and European Regional Development Fund.

19 19 ESF is the main European Union financial instrument for developing human resources and improving labour market functioning. The ESF funding, which amounts to approximately LVL 119 million for , will be used under the SPD priority Development of Human Resources and Promotion of Employment. The measures of the above priority conform to the EU Employment Policy Guidelines and Joint Assessment Paper on Employment Priorities by the European Commission and the government of Latvia. The main activity areas include the promotion of employment, development of education and continued education, reduction of social exclusion. The resources of the European Regional Development Fund (approximately LVL 26 million) will be attracted for the educational sector and development of health-care and social infrastructure..

20 20 3. Measures of the National Action Plan for Employment Guideline 1. Active and preventative measures for unemployed and inactive 1.1. Current situation Problem identification In order to promote early integration in the labour market of unemployed and inactive population, timely and effective measures aimed at employability development must be ensured to these target groups, especially those at the risk of social exclusion and unemployment. In order to prevent inflow into long-term unemployment, young unemployed must be provided with effective job search assistance or active labour market measures within the first 6 months of unemployment, while adult unemployed should be provided with the above services within the first 12 months of unemployment. To reduce the long-term unemployment, which is a serious problem in Latvia, a 25% participation rate in active labour market or other employment measures for the long-term unemployed must be achieved by Background The labour market of Latvia is characterised by a relatively high youth (15 to 24 age group) unemployment rate (18.5% in 2003), as well as relatively high proportion of the long-term unemployed (43.9% in 2003) in the total number of unemployed. The SEA in cooperation with state and municipal institutions and nongovernmental organisations undertakes implementation of the following active labour market measures: occupational training, retraining and raising of qualification of unemployed persons; paid temporary public works; measures to increase competitiveness (job-clubs) and measures for specified groups of persons. As a result of an international cooperation project, a coordinated action plan was developed in 2003 for ensuring an effective and rational three-level information exchange among the following bodies: Ministry of Welfare, State Employment Agency and SEA affiliates. In the European Union context the SEA is obliged to undertake the following new functions in maintaining an effective information exchange: ensuring international availability of the data on registered unemployment collected by the SEA; assessment of the monitoring indicators of the National Action Plan for Employment falling within the scope SEA s competence; maintaining information exchange in line with the requirements of the EURES network (European Employment Services) including information exchange on the free movement of workers; performing functions and tasks in data recording and information exchange assigned to the SEA in the framework of the ESF implementation activities.

21 21 In order to perform the above functions and increase the efficiency and speed of information exchange on the labour force demand, a number of activities are currently being implemented within the framework of projects of the PHARE National Programme. The Professional Career Counselling Centre (PCCC) is responsible for implementing national policies aimed at preventive unemployment reduction measures providing career counselling and vocational guidance services. The PCCC performs the following functions in the area of career counselling: providing free-of-charge vocational guidance services to natural entities; maintaining an up-to-date methodological basis for providing career counselling services tailored for specific target groups; providing access to information about various opportunities in education and continued education; rendering paid consultation services to legal entities related to career counselling, human resource management, recruitment, retraining, psychological support; furthermore, the centre takes an active part in developing and implementing policies aimed at increasing employment and reducing unemployment. Measures implemented in 2003 The status of the non-profit organisation state joint-stock company State Employment Service was changed and the body was transformed into the State Employment Agency in As regards the occupational training, retraining and raising of qualification of unemployed, 6978 individuals have been involved in the above measures in 2003, which is an increase by 2139 persons compared to unemployed graduated training courses during the year. As regards the participants of occupational training, retraining and qualification rising courses, 2616 persons or 51,9% have found a job. As regards the measures for increasing competitiveness, unemployed participated in 2003 (a year-on-year decrease by 396 persons compared to 2002). After receiving the above services 8989 unemployed found a job, while 3854 were involved in occupational training, retraining or qualification rising courses unemployed were involved in paid temporary public works (a yearon-year increase by 563 persons compared to 2002). In measures for specified groups of persons 1199 unemployed were involved in In 2003, SEA implemented following measures: work practice for young unemployed in enterprises; subsidized work places for pre-retirement age unemployed (for whom less than 5 years left until reaching of the age necessary for granting of the State old age pension); subsidised work places for unemployed persons with disabilities (the pilot project started in 2001); measures for subsidised employment of the unemployed persons with disabilities;

22 22 measures for improving mobility of unemployed persons with disabilities; creation of social enterprises for employment of the less competitive unemployment. In 2003, the total number of persons receiving vocational guidance and career counselling services from the PCCC reached 36406, which is a year-onyear increase by 19,6% compared to Priorities recommended by the European Council Greater efforts are required to develop active and preventive policies for the unemployed, in particular measures supporting job search, entrepreneurship, geographic mobility and greater access to training. The modernisation of public employment services should be seen as a priority. Particular attention is needed to ensure a more equitable and inclusive labour market for the young and the low-skilled. Belonging to an ethnic minority and lack of knowledge of the national language are particular risk factors. Future activities In order to ensure effective implementation of Latvian employment policy in line with the European Employment Guidelines it is necessary to build the capacity of implementing institutions and improve the quality of their services and ensure the access to these services in accordance with the EU requirements. Significant improvements are required in the information system of the State Employment Agency, furthermore, a work environment suitable for providing high-quality services is needed, as well as human resources. The Mid-term Action and Development Strategy of the SEA was approved in It is planned to attract assistance from the European Structural Funds, in order to solve the above issues effectively (see Appendix 3). Within the framework of the SPD (Single Programming Document) Priority Development of Human Resources and Promotion of Employment, which is co-financed from the ESF, special activities are planned for young unemployed, long-term unemployed, as well as other groups of unemployed, including their involvement in active labour market measures and integration in the labour market. The ESF national programme Support for Implementation of Active Labour Market Measures is planned within the framework of this priority. Open calls for projects will ensure the first work practice opportunities for young unemployed in Within the framework of aid schemes training and advisory services to employed, unemployed and jobseekers will be provided in The ESF national programme Support for Capacity Building of Institutions Responsible for Labour Market and Gender Equality Policies and Support for Information Dissemination and Increasing Public Awareness provides for the implementation of the following projects Capacity Building

23 23 of the State Employment Agency and Promoting Partnerships and Development of Vocational Guidance Systems of the Professional Career Counselling Centre. The ESF national programme Research on Labour Market Issues includes studies on improving the SEA and PCCC activities. The ERDF national programme Service Quality Improvement in Labour Market Institutions is aimed at developing the infrastructure of the SEA and PCCC Objectives Prevention of long-term unemployment. Increasing the quality and efficiency of active labour market measures. Promoting jobseeker employability and fostering the integration of economically inactive persons in the labour market Expected results A reduced number of the long-term unemployed as well as proportion of long-term unemployed in the total number of unemployed. The implementation of measures aimed at administrative capacity building of the SEA completed in the framework of the Phare projects Employment Strategy (Institution Building) and Employment Strategy (Infrastructure). Increased quality and efficiency of active labour market measures. High-quality career counselling services provided to various target groups Indicators of Achievement Long-term unemployment rate : in ,5%, in ,3%, in ,0% of total economically active population. Youth unemployment rate: in ,2%, in ,8%, in ,0% of total economically active population of young people. The proportion of young unemployed persons involved in active labour market measures within 6 months after starting their job-seeking activities compared to the total number of young unemployed persons registered with the SEA. The proportion of adult unemployed involved in active labour market measures within 12 months after starting their job-seeking activities compared to the total number of adult unemployed registered with the SEA. The proportion of unemployed not repeatedly involved in active labour market measures following the specific term set for the respective group; 45% in the group of young unemployed, 50% for adult unemployed in Rate of inflow from active labour market measure participants into employment 6 months after participation in to a measure. (The proportion of persons successfully employed within the first 6 months following their participation in measures for specified groups of persons (pilot projects)

24 24 70% in 2004; the proportion of persons registered as unemployed with the SEA within 6 months following their occupational training 62% in 2004; the proportion of persons registered as unemployed with the SEA within 6 months following their participation in measures for specified groups of persons (pilot projects) 30% in 2004.) The proportion of young persons registered as unemployed with the SEA for more than 6 consecutive months compared to the total number of young unemployed 35% in The proportion of adult persons registered as unemployed with the SEA for more than 12 consecutive months compared to the total number of adult unemployed 26% in The number of long-term unemployed involved in paid temporary public works, as a proportion of the yearly average number of long-term unemployed 17% in The average number of long-term unemployed involved in measures for increasing competitiveness, as a proportion of the yearly average number of long-term unemployed 8,5% in The average number of long-term unemployed involved in measures for specified groups of persons, as a proportion of the yearly average number of long-term unemployed 1% in Measures: timelines, financial resources and responsible bodies No Title of Measure 1. Occupational training, retraining and rising of qualification of unemployed 2. Paid temporary public works 3. Measures to increase competitiveness 4. Measures for specified groups of persons 5. Measures aimed at strengthening the administrative capacity of the SEA (Phare projects): 1. LE Employment Strategy (Institution Building) ; / Employment Strategy Funding Imple- (in million LVL) menta- tion Estimated for (including grants for unemployed 0.450) (including grants for unemployed 0.367*) 7.135** (including grants for unemployed ) Responsible bodies (cooperation partners) MoW, SEA, MoES, LEC, educational establishmen ts MoW, SEA, municipalities, employers *** MoW, SEA **** MoW, SEA, employers 1.671***** 2.554***** MoW, SEA, including: including: Twining partners and experts from 0, Germany