We hear complaints from employers about difficulties in finding suitable employees almost continuously. And this is also understandable, because good employees do not hang around in any industry. The protests against raising the retirement age in France and the subsequent statements of our Prime Minister that Latvia will also have to revise the retirement age in order to improve its economic situation gave a fresh spark to the issue.
The statements of the head of the government encouraged us to do a little research on the situation in Latvia in this matter and what we can do to solve both the workforce problem and economic growth. Registered unemployment in Latvia is 6.3% in February, it is not increasing and means that economic activity is currently increasing and the demand for labor is increasing. Therefore, I would like to focus on a hitherto undervalued, but large group of potential workers, which will become larger as the overall survival rate increases – the so-called silver generation.
What is the ‘Silver Generation’?
It is customary to call people who have reached retirement age the silver generation. Currently, the retirement age in Latvia is 64 years and 6 months, but in 2025 it will be 65 years. For comparison, for example, in France, the retirement age is 62 years, and in some European countries – even 67 years. It should be noted that economically developed countries have not experienced such a drastic transition from one economic system to another, as Latvia experienced at the turn/beginning of the 1990s, therefore a faster raising of the retirement age would not be permissible in our country, as the generation born in the last generation is currently approaching retirement age. in the 60s of the century.
In Latvia, more than one fifth of the population, or at least 350 thousand people, are over the working age (65 years). Taking into account the aging of the population, the proportion of elderly people will continue to increase. Even now, some retirees continue to work and are very good employees who perfectly know the specifics of their work, are loyal to the employer and, what is no less important, do not come to work just for the salary. It is important for them to be active and useful to society. According to available data, older people are more employed in education, administrative and service services, health care and agriculture.
Pensioners with higher education use the opportunity to continue working more often. A higher level of education increases a senior’s competitiveness and is one of the factors that indicate an employee’s potential productivity. Not all people who have reached retirement age cannot type on a computer. Those people who are currently retiring are more or less tech savvy.
There are tax credits, but they should be increased
Small discounts are already applied to the employment of pensioners. If the employee has not reached retirement age, then in the case of an employment contract, the total social tax contribution is currently 34.09% and the employer must calculate 23.59% from the gross salary. On the other hand, if the employee has reached retirement age, these social contributions decrease slightly. The total amount is 30.02%, and the employer’s share is 20.77%, which is almost 3% less. These may seem like small amounts, but they add up to annual savings. At the same time, taking into account the lack of existing employees, it would definitely be recommended to make this reduction more substantial, for example at least 5%, in order to stimulate employers to employ more people of retirement age who are already receiving a pension. Research conducted in old European countries also confirms that pensioners do not work only for money. It is much more important for them to feel useful to society, and the earned pension already serves as a source of livelihood.
It should be noted that retired persons can also perform those jobs for which the gross salary cannot be calculated in the amount of the minimum salary in all months, and entrepreneurs will not have to pay social contributions for it. Similarly, the workload of a position can be divided into several parts. Of course, a person of retirement age is not capable of doing hard physical work. Part of the society and colleagues themselves may not be enthusiastic about people of retirement age, but the employer is the one who creates traditions in the company and can create a favorable environment for people of retirement age.
It is worth looking in other directions as well
In order to increase the possibilities of quality workforce from our own internal resources, it is worth looking in other directions as well. So, for example, to activate the young people in the regions by developing the rental apartment market. A number of young people whose place of residence is in one of the regions of Latvia would also like to stay in this region, for example in the cities of the region, however, the issue of place of residence – the rental apartment market – has not been resolved. There are entrepreneurs who try to solve this problem themselves – both by offering paid transport and by providing a place to live. This is essential, taking into account that unemployment in Riga is twice as low as in Latvia as a whole, thus allowing less economically active regions to develop.
Foreigners in Latvia also have labor potential, but the lack of knowledge of both the place of residence and the national language is relevant for them. Also, we should not forget about students – we have a wide range of higher education institutions, some foreign students also need work, and they can certainly be involved in the labor market, at least part-time. Ukrainian people who are actively looking for work can also be included in the labor market, however, they are often women with small children, so they will not be hard physical workers.
Legislation also allows persons who take care of a child up to the age of 3 to work without losing benefits, that is, receiving a part of it. Of course, this applies most of all to new mothers.
Likewise, persons who have children with problems can work part-time, part-time, and the employer does not have to pay social contributions from the minimum wage. People with disabilities can also work, with employers receiving tax credits.
As can be seen from what is described here, all labor resources are far from exhausted. How we will use these opportunities in the future depends both on the smart and far-sighted policy of the state, as well as on the entrepreneurs themselves and their attitude towards the employee, creating an attractive and welcoming work environment. And it is no less important to try so that the existing people do not leave, as well as those who have left to return, then there will be no need to think about importing labor from other countries.
The author is a business graduate Wealth Lecturer at the Faculty of Business Management
2023-05-03 03:30:23
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