Table 2 displays gender-disaggregated labor market indicators for Latvia and the EU-15. Comparison shows that both participation and employment rates in Latvia are higher than the EU-15 average for women but lower for men. Unemployment rates are higher for both genders in Latvia, but especially for men. All indicators of Latvian labor market, which compare unfavorably to the EU-15, became closer to the EU level in 2002, while Latvia’s advantage in women’s activity and employment has increased. Further progress (especially strong for men) has been made in 2003, when unemployment rates went down, while employment-population ratios increased compared to year ago.

**Table 2. Key Labor Market Indicators: Latvia vs. the EU-15 (age 15-64)**

||**Latvi**<br>|**a**<br>||**EU-15**<br>|<br>||
|---|---|---|---|---|---|---|
||**2001**|**2002**|**2003**|**2001**|**2002**|**2003**|
|Activity rate, men|72.8|73.9|74.0|78.4|78.4|78.6|
|Activity rate, women|62.1|64.1|64.8|60.3|61.0|61.6|
|Employment rate, men|61.8|64.3|66.1|73.3|72.9|72.7|
|Employment rate, women|56.1|57.0|57.9|55.1|55.6|56.1|
|Unemployment rate,men|14.7|13.1|10.3|6.5|7.1|7.4|
|Unemployment rate,women|12.1|11.0|10.7|8.6|8.9|9.0|

_Source_ : Central Statistical Bureau of Latvia and OECD.

# **C. LABOR FORCE PARTICIPATION AND EMPLOYMENT**

**Activity patterns differ from the EU-15.** The “Joint Assessment of Employment Policy Priorities in Latvia” (Stake and Diamantopoulou, 6 February 2003) notes that participation in Latvia is relatively low for young people of both sexes and for prime age males.   Participation is high relative to the EU-15 among women aged 25-49. However, it should be noted that youth activity rates can be misleading. In fact, only amongst teenagers is labor force participation low (see Appendix Figure 3). Moreover, in comparison with Central European countries, only the Czech Republic, Romania and Slovakia have higher activity rates in the 15-24 age group.

Youth participation and employment rates have sharply declined in 1998-2001 for men and in 1998-2000 for women; youth unemployment rates have also declined over these periods, although there were temporary increases for men in 1999 and for women in 1998 and 2000. One potential explanation for these developments is an almost 80 percent increase in number of students in higher education institutions per 10,000 population between 1997 and 2001; a 16 percent real wage growth and introduction of students’ loans enabled more families to finance their children’s education. On the other hand, lack of jobs suitable for students can discourage them from job seeking.

Youth and the elderly are becoming more active. After declining for several years, the overall activity rate for women increased in 2001 by one percentage point due to increased participation in age groups 20-24 and 55-64. This was followed by a one percentage point increase in participation for both sexes in 2002. This increase was primarily due to a decision of the Constitutional Court which reversed previously introduced restrictions on pensions for working pensioners. It may also be related to increased activity amongst male teenagers and young females, potentially stemming from an increase in the minimum wage by 20 percent in July 2001.

**Prime age employment on the rise.** In contrast, a general increase in employment and decrease in unemployment in 2001-2002 occurred in the prime age group. Latvian employment rates are above the EU-15 average for women aged 25-64. In 2002 they were below average for young women and for men of all ages, but especially so for teenagers of both sexes (9 percent in Latvia compared to the EU-15

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