Latvia is facing a structural demographic decline, driven by persistently low fertility, high mortality, and the continued emigration of working-age residents. These trends are shrinking the labour force, undermining confidence of young people about their future in Latvia, weakening public finances, and posing serious questions about the country’s long-term economic growth, competitiveness and resilience. While the political debate on migration remains difficult and there are no easy solutions to reverse the demographic decline, the foreign investors call the new government to solve the human capital puzzle.
Facts and projections
Latvia’s declining and ageing population is becoming one of the country’s greatest long-term economic challenges. Latvia’s fertility rate has fallen from 1.57 in 2021 to 1.24 in 2024, well below both the EU average of 1.34 and the 2.1 replacement rate required for population stability[1][2]. At the same time, Latvia continues to experience one of the lowest life expectancies in the OECD. From around the age of 56, annual mortality exceeds 1% and rises rapidly with age, translating into thousands of lost working-life years[3].
Demographic pressures are further intensified by emigration: between 2015 and 2024, more than half of Latvians aged 20–40 have spent time abroad or emigrated long-term, with the highest outflow occurring among those aged 25–34 — the core of Latvia’s present and future workforce. These trends are already constraining economic growth by reducing labour supply, increasing skills shortages, weakening productivity, and limiting Latvia’s long-term competitiveness.
Healthcare underinvestment
Latvia’s demographic decline is being reinforced by chronically low investment in healthcare. Healthcare expenditure stands at approximately 4.3% of GDP, making it one of the lowest in the European Union, where the average is around 7–8%, and well below countries such as Sweden, which invests nearly 9–10% of GDP.[4] This underinvestment contributes to poorer health outcomes, lower labour force participation, reduced productivity, and increased outward migration, creating a cycle that further weakens Latvia’s workforce and economic potential.
The economic consequences of healthcare underinvestment are substantial. Studies suggest that reducing Latvia’s age-specific mortality rates to the level of the EU’s best-performing countries could save more than 4,000 lives annually, resulting in approximately 3,000 additional workers entering or remaining in the labour market. This alone could increase annual GDP growth by around 0.2 percentage points6. These findings demonstrate that investment in healthcare should be viewed not only as a social expenditure, but also as a long-term investment in economic growth, labour market resilience, and national competitiveness.
Human Capital Strategy and Governance
Latvia’s labour shortages are being intensified by the absence of a coherent strategy to attract, retain and develop skills of workers. The current Human Capital Development Action Plan 2024-2027 has a narrow scope, given limited budget.[5]Moreover, governance of the human capital issues is dispersed across the three ministries – Ministry of Economics, Ministry of Education and Science, and Ministry of Welfare. As a result, the decision-making and coordination on critical issues is lacking, the public institutions continue duplicating efforts, providing similar services to different population groups and increasing government spending.
In view of the foregn investors, human capital availability and development are existential issues. They determine economic growth, development, sustainability and resilience of Latvia. Without centralised decision-making – preferrably at the highest government level, clear and smart strategy, measurable targets and resources, Latvia risks continue losing its human resources, thereby undermining not only its economic growth prospects, but also all social systems and services, which are funded by the taxpayers, including pensions, healthcare, education and others.
Unfortunately, human capital does not appear among the four priorites of the new government, announced by the Prime Minister Andris Kulbergs.[6] In view of this, the foreign investors call on Mr. Kulbergs to review the list of priorities and include human capital as one of them. A country is not just a territory – it is its people, who raise families, grow businesses and sustain the public services we all rely on.
Sources:
[1] Dubins, S. (25.03.2026.). New study on ageing Latvia: What it means for pension by 2060. Available: https://www.sseriga.edu/new-study-ageing-latvia-what-it-means-pensions-2060
[2] Eurostat. Fertility indicators. Available: https://ec.europa.eu/eurostat/databrowser/view/demo_find__custom_21969834/default/table
[3] Eurostat. Life table by age and sex. Available: https://ec.europa.eu/eurostat/databrowser/view/demo_mlifetable__custom_21969493/default/table
[4] OECD. (12.06.2026.). OECD Economic surveys: Latvia 2026. Available: https://www.oecd.org/en/publications/oecd-economic-surveys-latvia-2026_34d15460-en.html
[5] Izglītības un zinātnes ministija. (2024). Rīcības plāns “Cilvēkkapitāla attīstības stratēģija 2024.-2027. gadam. https://www.izm.gov.lv/lv/ricibas-plans-cilvekkapitala-attistibas-strategija-2024-2027-gadam
[6] LSM. (27.10.2026). Kulbergs valdības veidošanu sarunās piedāvās jaunu darba modeli un ministru misijas vēstules. Available: https://www.lsm.lv/raksts/zinas/latvija/27.10.2026-kulbergs-valdibas-veidosanas-sarunas-piedavas-jaunu-darba-modeli-un-ministru-misijas-vestules.a669228/