Concerns about capacity to use EU funds in Latvian industry

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Minister of Finance Arvils Ašeradens (New Unity) said earlier in the week that the construction and ICT industries are unable to properly use the European Union (EU) funds due to a lack of capacity. The construction sector agrees with this, whereas the other denies concerns, Latvian Television reported on March 22.

“Two things that cause us concern. It's the construction industry. When discussing with the construction industry, we see that, at a number of meetings, the construction industry says it has insufficient capacity to cope with this [EU funds]. The second is what our fellow colleagues are also saying that a similar situation with the ICT sector could arise. We are experiencing a very large flow in the system and it may be problematic for the sector,” the Minister for Finance described the main problems of absorption of European Union funds at a government meeting.

The construction industry agrees with the Minister. The Latvian Association of Builders reported that some of the industry's employees had abandoned the sector during the Covid-19 pandemic because they had not had a Covid-19 vaccination certificate. The impact on the sector and its reputation have also been felt by unveiled crimes in the sector, like the construction cartel.

Also with the significant inflation, part of the projects remain “half-finished”.

The Latvian Chamber of Commerce and Industry (LTRK) also stressed that there are indeed problems in the construction sector and there is a risk that it could also have an impact on the absorption of EU funds. One of the main factors is the lack of labor.

"For example, it looks like it could be a shortfall of at least 10,000 qualified employees in the construction process in 2025. Given these ambitious projects ahead, it is clear that it will be necessary to consider how to facilitate the entry of third-country labor force here in Latvia. Certainly in the construction sector.

"Otherwise, it will simply come to an end that we will not be able to build the things that need to be built on EU fund projects," said Jānis Endziņš, Chairman of the LTRK Board.

In the field of information and communication technologies (ICT), the situation is different. Although the Minister mentioned that the absorption of EU funds could also be affected by a lack of capacity in this area, the industry association rejected the claim.

"Our businesses are competitive, as evidenced by the fact that our export performance is growing. I suppose it's some sort of misconception or miscommunication. We therefore ask the Minister for a call to discuss this matter," said Signe Bāliņa, president of the Latvian Information and Communication Technology Association.

At the same time, the association emphasized the need for long-term planning, including the absorption of European Union funds.

 

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