Economist: Latvia must urgently confront demographic decline and immigration policy

Pēteris Strautiņš, chief economist at Luminor Bank, says the term of the next Saeima still offers a window to seriously debate Latvia's demographic future, but after that many national plans will increasingly run into the reality of a shrinking, aging population.

He argues that much of society and many opinion leaders remain in denial about the consequences of strict immigration limits. Without a change of course, Strautiņš warns, by the latter half of the century Latvia could become a country with many abandoned homes, populated mainly by middle-aged and elderly residents.

More than an economic question

According to Strautiņš, the debate over bringing in foreign labor is often framed as a trade-off between economic benefit and a decline in quality of life. But he says the real issue is different: Latvia simply lacks enough people living in the country. While adapting to immigration brings challenges, he believes the long-term benefits of well-managed immigration would extend far beyond economic effects, since what is at stake is the country's critical mass for continued development.

Risks already visible in the regions

The economist notes that in parts of Latvia, especially in the east, residents are increasingly considering leaving in search of better job offers and career opportunities for the whole family. Once a local labor market becomes too small to let people quickly find new work, development becomes much harder and can trigger a downward spiral. Strautiņš warns that Latvia as a whole risks ending up in the same position relative to Western Europe that many of its own regions currently hold relative to Riga.

He adds that making strategic decisions on immigration policy is difficult as long as society refuses to acknowledge the basic realities. If the population decline is not at least slowed, he says, the result could be a grim future scenario of many depopulated, ghost-like villages and towns.