RIGA — One factor that could make or break Latvia’s economic recovery is how much emigration it experiences.

The Baltic states were plagued with a so-called “brain drain” even during the boom years when unemployment was at 4 percent or less as young people, often university-educated, took advantage of accession [private_supervisor]to the European Union and headed west in search of higher salaries. Wages in all three countries are only about two-thirds of the EU average.

Today Latvia’s unemployment is currently the highest in the European Union at over 20 percent, according to Eurostat, and given its weak internal demand that is unlikely to ameliorate significantly this year it may increase further.

Although Western European economies are not exactly in peak form, both Latvia and Lithuania experienced record emigration last year. The trend could help ease competition for scarce local jobs, especially in Latvia, but analysts point out that it could also lower tax revenue for the cash-strapped government.

“Emigration is a safety valve that can help overcome Latvia’s severe unemployment problem,” Mark Griffiths, the International Monetary Fund mission chief for Latvia, said Thursday. “But if entrepreneurs and the most skilled workers leave in big numbers, Latvia will lose the very people who could be creating new companies and jobs. And by reducing the labor force, emigration will also reduce output in Latvia. Unless it is offset by substantial remittances, emigration will reduce tax revenues and make it harder to finance government spending, such as pensions.”

According to Latvian Statistics, emigration in 2009 peaked in September with nearly 1,000 Latvians leaving that month. The rate has nearly halved since then, though.

A total of 7,200 Latvians emigrated in 2009, while nearly 20,000 Lithuanians left.

[/private_supervisor] [private_subscription 1 month]to the European Union and headed west in search of higher salaries. Wages in all three countries are only about two-thirds of the EU average.

Today Latvia’s unemployment is currently the highest in the European Union at over 20 percent, according to Eurostat, and given its weak internal demand that is unlikely to ameliorate significantly this year it may increase further.

Although Western European economies are not exactly in peak form, both Latvia and Lithuania experienced record emigration last year. The trend could help ease competition for scarce local jobs, especially in Latvia, but analysts point out that it could also lower tax revenue for the cash-strapped government.

“Emigration is a safety valve that can help overcome Latvia’s severe unemployment problem,” Mark Griffiths, the International Monetary Fund mission chief for Latvia, said Thursday. “But if entrepreneurs and the most skilled workers leave in big numbers, Latvia will lose the very people who could be creating new companies and jobs. And by reducing the labor force, emigration will also reduce output in Latvia. Unless it is offset by substantial remittances, emigration will reduce tax revenues and make it harder to finance government spending, such as pensions.”

According to Latvian Statistics, emigration in 2009 peaked in September with nearly 1,000 Latvians leaving that month. The rate has nearly halved since then, though.

A total of 7,200 Latvians emigrated in 2009, while nearly 20,000 Lithuanians left.[/private_subscription 1 month] [private_subscription 4 months]to the European Union and headed west in search of higher salaries. Wages in all three countries are only about two-thirds of the EU average.

Today Latvia’s unemployment is currently the highest in the European Union at over 20 percent, according to Eurostat, and given its weak internal demand that is unlikely to ameliorate significantly this year it may increase further.

Although Western European economies are not exactly in peak form, both Latvia and Lithuania experienced record emigration last year. The trend could help ease competition for scarce local jobs, especially in Latvia, but analysts point out that it could also lower tax revenue for the cash-strapped government.

“Emigration is a safety valve that can help overcome Latvia’s severe unemployment problem,” Mark Griffiths, the International Monetary Fund mission chief for Latvia, said Thursday. “But if entrepreneurs and the most skilled workers leave in big numbers, Latvia will lose the very people who could be creating new companies and jobs. And by reducing the labor force, emigration will also reduce output in Latvia. Unless it is offset by substantial remittances, emigration will reduce tax revenues and make it harder to finance government spending, such as pensions.”

According to Latvian Statistics, emigration in 2009 peaked in September with nearly 1,000 Latvians leaving that month. The rate has nearly halved since then, though.

A total of 7,200 Latvians emigrated in 2009, while nearly 20,000 Lithuanians left.[/private_subscription 4 months] [private_subscription 1 year]to the European Union and headed west in search of higher salaries. Wages in all three countries are only about two-thirds of the EU average.

Today Latvia’s unemployment is currently the highest in the European Union at over 20 percent, according to Eurostat, and given its weak internal demand that is unlikely to ameliorate significantly this year it may increase further.

Although Western European economies are not exactly in peak form, both Latvia and Lithuania experienced record emigration last year. The trend could help ease competition for scarce local jobs, especially in Latvia, but analysts point out that it could also lower tax revenue for the cash-strapped government.

“Emigration is a safety valve that can help overcome Latvia’s severe unemployment problem,” Mark Griffiths, the International Monetary Fund mission chief for Latvia, said Thursday. “But if entrepreneurs and the most skilled workers leave in big numbers, Latvia will lose the very people who could be creating new companies and jobs. And by reducing the labor force, emigration will also reduce output in Latvia. Unless it is offset by substantial remittances, emigration will reduce tax revenues and make it harder to finance government spending, such as pensions.”

According to Latvian Statistics, emigration in 2009 peaked in September with nearly 1,000 Latvians leaving that month. The rate has nearly halved since then, though.

A total of 7,200 Latvians emigrated in 2009, while nearly 20,000 Lithuanians left.[/private_subscription 1 year]

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