average of 24 percent) and prime age men (Latvia: 78 percent; EU-15 average: 87 percent). Increases in employment rates amongst prime age men are therefore a very desirable development.

# **D. COMPOSITION OF EMPLOYMENT**

**Service sector growing but still smaller than in the EU-15.** As elsewhere, transition resulted in a labor reallocation between the main sectors of the economy. Figure 7 shows that this reallocation was not as rapid in Latvia as in Estonia. Still, reallocation in Latvia was more widespread than in Lithuania. Sectoral change also resulted in more fluctuations than in the other two countries. This comparison with the other Baltic countries suggests that Latvia is not lacking in labor market flexibility.

In recent years the share of employment in industry and construction has remained more or less stable. Compared with the EU-15, the agricultural share of employment (15%) is still high and the services share (59%) relatively low, although it is among the highest among the accession countries. Figure 8 compares these shares across EU accession countries. Labor productivity in agriculture is just 28 percent of that in the other sectors (year 2003 data).

The occupational distribution of employment has stayed almost unchanged since 1996.<sup>2</sup> Managerial, professional and technical occupations account for 34 percent, skilled and unskilled manual occupations for 48 percent, and clerical, sales and service occupations for about 18 percent of employment in Latvia. Clerical and service jobs still account for a much lower proportion of overall employment than in the EU15 countries, where 27 percent of all jobs belonged to this category in 2000. Clerical and service jobs also make up a lower fraction of employment in Latvia than in Hungary, the Czech Republic, Bulgaria or Poland.

**Self-employment is underdeveloped.** Self-employment in Latvia is concentrated primarily in agriculture (see Box 2 and Appendix Table 2). It is less common than in the EU-15 in all sectors (35.8% vs 52% in agriculture, 4.7% vs 11% in industry, and 6.5% vs 13% in services). As shown in Figure 9, selfemployment is also is less common than in most Central and Eastern European countries.

**Too few part-time jobs or too few full-time ones?** The proportion of part-time workers has declined from 13 percent in 1997 to less than 10 percent of all workers employed in 2002. In the EU-15 this fraction is 18 percent.  While the decline of part-time employment was particularly strong for men (see Appendix Figure 4 and Appendix Table 3 for more details), the contrast between Latvia and the EU-15 is especially sharp for women. Only 12 percent of women workers are part-time in Latvia, while 33.5 percent are in the EU-15. In other Central European countries, except Romania and Poland, the proportion of part-time workers is even lower than in Latvia, in some cases substantially. Latvia also has one of the highest shares of temporary and seasonal employees among the accession countries; in 2002 this share has reached 14 percent (Figure 10 displays a lower proportion, 12 percent, for the second quarter).

While the proportion of part-time workers among employed females has been stable during the last 5 years, for males this fraction has dropped from 12.5 percent to 7.7 percent. Part-time employment is an important way of enhancing labor market flexibility, so the relatively low percentage of part-time workers, together with low youth activity rates might suggest that there are too few part-time jobs on offer for young people. Part-time work, however, does not only indicate labor market flexibility. According to LFS 2002 data, 45 percent of part-time workers in Latvia would have preferred to work full time in their main job. Such acceptance of less-than-desired hours of work is one of the most common definitions of

> 2 According to enterprise survey on occupations, however, share of manual workers among employees declines slowly but steadily at the expense of the two other groups.

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