Because of the global outbreak of Coronavirus, on the 2nd of March, the first officially confirmed case of the Coronavirus was detected in Latvia. Since the first registered case in March and even prior the government of Latvia has been taking serious virus prevention measures, which have helped to limit the outbreak of the virus. Although by the end of March 2020 there were confirmed only 400 cases, it is already seen that the upcoming months will be economically challenging for Latvia. Only in less than a month the environment of Latvia has completely shifted – businesses are facing serious issues: education institutions are closed, unemployment is growing rapidly and the health system of Latvia is in front of a serious challenge.
Observing both the global and national trends of Coronavirus outbreak on 12th of March representatives of the Latvian government declared emergency situation. The new amendments enforced to cancel and prohibit public gatherings such as remembrance, culture, sports, public meetings and marches to no more than fifty persons. The declaration of emergency situation in Latvia has particularly impacted the education system as all of the education institutions like universities and schools have been closed and while the emergency situation will continue the students will have to obtain their knowledge remotely with the help of online tools. The digitalization process of education has so far been difficult since the current Latvian online tools for the education system have showed incapability.
As the situation continued to escalate and more people were detected to be infected with the Coronavirus the government of Latvia approved stricter regulations. The new amendments stipulate that only two members of a household can be outside the house and that a distance of two meters must be maintained. These amendments were made based on the fact that a large proportion of the population of Latvia continued to visit public places after the declaration of emergency situation and therefore the risk of the infection increased. Besides there were also made amendments to the amount of fine in case of violation of the new amendments – up to 3500 Euros for natural person and up to 5000 Euros for legal persons. To make extensive epidemiological investigations telecommunications operators will be required to provide data regarding the location of Covid-19 infected while still following the data protection rules.
In order to sustain the enterprises government has enforced support system to ensure sustainability of the companies. During the emergency situation the government will cover the costs of incapacity sheet of employee therefore reducing the costs for companies. Additional measures taken to ensure sustainability of Latvian companies are the changes in tax policies.After the request of entrepreneurs regarding the changes in total turnover, export and direct influence of the declaration of emergency situation the government of Latvia enforced amendments regarding tax payments. It is planned that the upcoming tax payment will be divided by the State Revenue Service or postpone for up to three years without payment of delay.
In the latest month, the government of Latvia has been taking strong measures to ensure prevention of deeper crisis. On March 19th 2020 during the emergency government meeting there was considered a proposal to support companies in the event of crisis downtime. On March 24th the Regulations Regarding the Allowance for Idle Time for the Employees Affected by COVID-19 was passed. Currently the enterprises who represent the sectors, which have been included in the list of the sector affected by the crisis published by the Cabinet and experienced decrement of revenue for more than 50% in March 2020 (compared to March 2019), can apply for the support. It has been determined by the government of Latvia that the allowance for idle time will amount to 75% of the average monthly salary, but not exceeding 700 Euros per month.
With the outbreak of Coronavirus and declaration of emergency situation has impacted the growth of unemployment rates in Latvia. In March 2020 the National Employment Agency received notifications from 24 employers of a total of 3858 collective redundancies. Redundancies have been reported by various sectors of economy such as transport, accommodation, wholesales, real estate, art, entertainment, forestry, finance, insurance. The representatives of National Employment Agency stated that there are still enough registered vacancies for the unemployed. Despite that the situation is incomparably more complicated with national Latvian airline company airBaltic, which intends to relieve around 700 employees from their duties including pilots, flight attendees and technical workers. To find a job in field, which is directly related to aviation, it is foreseen that people will have to wait for airBaltic to resume operation or look for a job abroad.
The current crisis has already made an impact on the labour market as the average number of new job vacancies openings has decreased by more than 60% with the introduction of a state of emergency in the country. The enforcement of emergency situation has contributed to the cool down of the Latvian labour market. Enterprises which, have been significantly affected by the Covid-19 crisis most likely will reduce the number of employees, review the salary of employees, reduce workload, apply for downtime benefits and use other available options. One of the most affected field regarding the largest drop in jobs vacancies are woodworking experiencing 45% decrement, media, marketing – 42%, transport – 33%, telecommunications – 31%.
At the same time there are some companies in Latvia, which are in search for new employees since they are facing lack of workforce because of the growing demand. These include companies whose business processes have previously involved teleworking, including ICT companies and business service centers, as well as companies that have significantly increased their operational capacity in the current situation, such as food, disinfectants and other current demand – manufacturers of goods, supply companies, retailers of food and household goods, especially those with e-commerce channels.
Along with that, additional challenge that is foreseen to be brought up is the income inequality. Even prior the pandemic, the social inequality rates have been one of the highest in European Union. The Covid-19 crisis, has in particular made the weak-points of the governance of Latvian economy, such as social protection, tax evasion even more unstable.
March 2020 has become one of the greatest challenges for the medical system of Latvia. On 6th March the first case of Covid-19 in Latvia was detected and since then the number of infected people had increased up to 446. Data from Latvian Centre for Disease Prevention and Control shows that more than quarter – 26% of the infected people are in age of 30 to 39 while other age groups such as 20 to 29, 40 to 49, 50 to 59, and 60 and older share approximately the same proportion – 17 to 19 %, 5% of the infected were children. During March 2020 approximately 15810 tests were made, from which 2,8% confirmed positive Covid-19 results. In most cases the infected people suffer from mild symptoms as in March 2020 only one death case was registered.
Despite the growing number of infected people, the public health sector has demonstrated great results. Because of the precautions taken mostly the sources of the infection is traceable and additional strategy that has been implemented it targeted Coronavirus testing, paying more attention to the risk groups. To prevent the outbreak of the virus in medical institutions there is made targeted testing on risk groups such as an example all patients with pneumonia hospitalized in the hospital admissions department, pharmacists, doctors, social care workers, with symptoms of acute respiratory infections etc. Therefore, optimising the testing and prevent the spread of the virus in public institutions. Additionally, to support medical persons, epidemiologists, social health workers and others who are involved with limiting the expansion of the virus thus working under conditions of high risk and work load will receive raise of salary up to 50% for the following three months.
During March 2020 the outbreak of Coronavirus has massively impacted social development of Latvia. Education institutions have been temporarily closed, there have been made serious border-crossing restrictions and the economy of Latvia is facing serious challenges. With the outbreak of Coronavirus and declaration of emergency situation has impacted the growth of unemployment rates in Latvia. The biggest decrement in open job vacancies has been experienced in woodworking, media, transport industries. Because of that the government of Latvia has enforced variety of financial tools to amortize the consequences of the Covid-19 crisis, such as amendments in tax policies, allowance for idle time, covering up to 75% of monthly income of employees, who worked previously in the fields that have been mostly affected by the Covid-19 crisis. At the same time industries such as ICT, business service centres are experiencing lack of workforce as the demand for their services is growing. To prevent expansion of the Coronavirus more targeted testing strategies have been implemented paying more focus to the social workers, who have contact with the infected people.
*This article has been made in cooperation with China-CEE institute and is the intelectual property of China-CEE institute