Last year there was even an overheating of the labor market, but the COVID-19 pandemic changed it dramatically, with unemployment rising from around 6% last year to 8.6% in the second quarter of this year. The situation stabilized slightly in mid-July, when unemployment rates started to fall gradually.
Ozols acknowledged that a “V” scenario was expected initially: a sharp decline in the economy and a rapid growth afterwards, but it is now sufficiently clear that this situation will continue over the next year. It may leave structural problems in the labor market, sectors that have suffered will not be able to recover as quickly as expected in general, and a slower “U” type development scenario is expected.
There is a high degree of uncertainty at present, and this affects both domestic demand and export markets, which pose risks to economic growth and reduce labor market activity accordingly, explained Ozols.