Tuesday, August 25, 2009

Latvian PM--wave of emigration inevitable

Latvian Prime Minister Valdis Dombrovskis has told reporters (item in Latvian) that a wave of emigration is inescapable as European economies recover ahead of Latvia and the wage gap between Latvia and Western Europe is widened by recent sharp wage cuts.
Dombrovskis said the problem was no longer emigration, which was inescapable, but how to get migrant labor back to Latvia. While some people returned from abroad at the height of the credit-fed boom in 2007 and early 2008, I think such efforts will fail. In any case, with what I would call a "drooping L" scenario likely for the Latvian economy, the return of emigres is a problem for the late 2010s at the earliest (say, 2015 -2018 at the earliest). By drooping L, I mean a sharp drop followed by stagnation with a noticeable downward slide.
The PM has essentially confirmed (at least in general) the analysis posited by this blog and others, that the errors of earlier governments have pushed society past some tipping points and further irreversible decline is inevitable. What Dombrovskis didn't say much about was the profound destruction of trust and reliance on Latvian governance caused by the policies he has been forced to implement -- cutting funding for education, implementing de facto health care for cash only, and cutting pensions.

No comments: