The labor market situation in June was not significantly affected by downtime benefits; worries about unemployment in autumn / Article / LSM.lv

The rise in unemployment, which was particularly sharp in the first months of the Covid-19 crisis, either just stopped. The suspension of the payment of downtime benefits has not significantly affected the situation in the labor market. This concludes the State Employment Agency, where it is allowed – the trend could worsen again in the autumn with the end of seasonal work. –

In June of this year, 95 thousand unemployed were registered in Latvia. Although significantly higher than before the Covid-19 crisis, the sharp rise in unemployment has subsided. Compared to May, both the registered actual unemployment rate registered with the State Employment Agency (SEA) and the Central Statistical Bureau have increased by only 0.2 percentage points.

Out of downtime

At the same time, it should be taken into account that in June, the workers who had been helped to keep their jobs by the downtime allowance had not yet joined the ranks of the unemployed. The number of downtime recipients peaked in April and has fallen sharply since then. However, when the benefit was last paid in June, it was still received by 25,628 workers.

It will be known in July whether they will have a job after the end of the downtime benefit.

“All the participants who have resumed their work have been recruited by taking the employees who were released there. Therefore, July will be the first month that will show us the mass of employees that the industry needs, ”says
President of the Latvian Hotel and Restaurant Association Jānis Pinnis.

However, he thinks that, at least in the hospitality sector, the end of downtime benefits has not been particularly conducive to redundancies. “I know there are entrepreneurs who have kept all those who were idle. The experience of our company shows that the biggest wave when people chose to change the industry was just before the downtime, when they were told that there was downtime and we do not know for how long and what will happen at all. In mid-March, there was a wave when people chose to change the industry.

On the other hand, those who stayed idle and waited, in fact, all of them have been reinstated and even have to look at new employees, ”reveals Pinnis.

The end of seasonal work awaits with concern

A similar picture has been observed by the State Employment Agency. “We were also looking forward to the moment when the downtime benefits would end. With the idea that this will mark the situation as it will be. But it must be said that the picture is not so bad in general, ”says Evita Simsone, director of the State Employment Agency.

However, the SEA admits that summer traditionally has the lowest unemployment rate provided by seasonal work. But

a second wave of rising unemployment could be expected in the autumn. And it should be noted that the number of registered vacancies has halved during the crisis.

“There were more than 10,000 vacancies that became irrelevant during this initial period of the crisis. But the positive news is that new vacancies were registered throughout, including in April and May, and in March. And in July, we registered more than 4,000 new jobs, ”says Simsone.

The hospitality industry is also looking forward to autumn and winter, as this summer it will be possible to accumulate significantly less funds than usual. However, in August, companies in the sector could receive a new type of support – a one-time grant in the amount of 30% of the social taxes paid last year. For the time being, however, it is planned that it will be allowed to be spent only by the end of the year, and entrepreneurs emphasize that in order to retain employees, this period should be extended until the start of the new tourist season next spring.

CONTEXT:

During the crisis caused by the Covid-19 infection, the Latvian government introduced downtime benefits to curb the rise in unemployment. From 12 March to 30 June this year, during the downtime caused by Covid-19 Paid by the State Revenue Service 133,462 downtime benefits totaling € 53.6 million.

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