Baltics struggle to plug brain drain

After almost two years’ membership of the EU club, the Baltic states are starting to feel the reality of differences in income. They can see the effect on flows of labour. In particular the booming construction sectors in Lithuania, Latvia and Estonia are feeling labour shortages, with companies seriously considering importing workers from Ukraine and Belarus.

The construction sector in Latvia has grown by 16% over the last year, and it is one of the biggest contributors to economic growth. Growth in gross domestic product was more than 10% in 2005. Lithuania’s and Estonia’s economies last year grew by approximately 7%, with services and transport being the sectors with the greatest expansion.

But increasing demand for construction, whether new-build or renovation, can be seen in all three Baltic countries.

On the supply side, things look very different. Higher income possibilities in the ‘old’ EU keep attracting skilled workers away and create a shortage of labour at home. Approximately 5% of Latvia’s workforce is estimated to have chosen better-paid jobs abroad. In Estonia, according to official data, 10,000-15,000 people - nearly 3% of its workforce - have left, almost half of them to Finland.

Like their Baltic neighbours, Estonians have also chosen the UK, Ireland and Sweden as the most popular destinations. Construction, transport, agriculture and medicine are the fields in which labour outflow is felt most keenly.

There has been a shortage of skilled construction workers in Lithuania since 2002, with many Lithuanians working in the other Baltic countries. Yet accession to the EU has made matters worse.

Lithuania’s ministry of labour estimates that more than 350,000 workers left the 3.4 million-country for Western Europe in 2004 alone. Expecting a shortage of labour, local experts were already then proposing an increase in work permit quotas for citizens from Ukraine and Belarus. Large construction companies are reported to train local staff first in their home country and then employ them in Lithuania.

In Latvia, there has been much talk of the need to import labour from other countries but not much sign of action. Last year just over 500 work permits were granted for specialists from the third countries, such as Ukraine and Russia.

This was greater than the number of work permits that were issued in 2004 but less than the number before EU enlargement.

"Latvian companies are also interested in importing cheaper labour from Belarus and Ukraine. But when these companies find out that they would need to pay at least 212 Lats [approximately EUR 310] to these workers - which is the average salary in the country - they give up this idea because they say that such a salary is too much of a burden," says Iveta Daine from the Latvian state employm-ent agency.

She adds that many businessmen in Latvia are not ready to reward their employees adequately. It is not an uncommon practice for companies to employ workers illegally or officially pay them the minimum salary thus decreasing their level of social protection. "Employers in Latvia are not ready to motivate their employees and give them good working conditions. This is the main reason why our citizens are looking for jobs in other European countries," Daine says.

The fact that many of the best workers are working abroad raises questions about the quality of those left behind in the Baltics. "There is a debate going on in Estonia on how to keep its workers at home," Katrin Pärgmäe from the Estonian ministry of social affairs said, adding that employers were the most worried. Tallinn is considering ways to develop and strengthen co-operation with the countries where Estonia’s citizens are going, hoping to improve incentives for Estonians to find attractive jobs at home.

• Dace Akule is a freelance journalist based in Riga, Latvia.

Article reports on shortage of labour in the construction industries in the Baltic States. In spite of economic growth and high internal demand many workers have left the countries for better paid jobs in Northern and Western Europe.