Latvia’s next government will have to adapt to a fast-changing world

29 November, 2017 Daunis Auers, Latvian University

2017 has been marked by an increase in the number and frequency of public debates on the future direction of Latvia.

This is largely because the economy has been heating up, with the European Bank for Reconstruction and Development (EBRD) forecasting GDP growth of 4.7% in 2017 and 4.1% in 2018. This has put the labour market under the spotlight, with major employers – from the construction companies seeking labourers to endlessly rip up the streets of Riga through to large ICT enterprises looking to recruit highly paid programmers – complaining about a shortage of qualified workers.

This, in turn, has led to a sustained focus on Latvia’s demographic challenges – a shrinking and ageing of the state’s inhabitants, as well as rural depopulation and urbanisation – as well as an increasingly emotional and polarising discussion on addressing these issues through increased benefits for families with children, re-emigration of Latvia’s diaspora and, most controversially, controlled immigration of students and labour.

At the same time, the government’s tax reform as well as debates on the future of Latvia’s minority schools, the merger and consolidation of Latvia’s universities and restructuring of the healthcare system have all been forward-looking. The (unlikely) possibility of the European Union’s flow of cohesion funds to Latvia being cut off after 2020, the Juncker scenarios on the future trajectory of the European Union and the erratic foreign and security policy of US president Donald Trump has led to greater reflection on Latvia’s place in the international community.

Next week, on Monday 4 December, Domnīca Certus will present our own contribution to this foresight genre. Several months ago, we brought together two small groups of scholars, economists, journalists, entrepreneurs and other professionals to brainstorm the global disruptive forces that will shape the world over the next five years, and the domestic challenges that these forces will present for Latvia. Certus’ policy brief identifies and sketches in the nature of these trends and their potential impact on Latvia in 2022 and beyond.

For example, Freedom House, which tracks the standing of democracy and dictatorship across the world, has now recorded eleven consecutive years of declining freedom across the world. The rise of illiberal, strongman regimes in the Philippines and the USA as well as closer to home in Hungary and Poland, and the continuing consolidation of Putin, Nazarbayev and other leaders in the CIS are not just historical blips, but reflect a global drift towards less political freedom. Polling has revealed that young people in Europe and the US are less committed to democracy than older generations. The enormous economic success of authoritarian China – which the OECD forecasts as overtaking the US to become the largest economy in the world in 2021 – will see the political gravity of the world drift away from the West (the US and Europe) towards Asia.

The next five years will see technological progress accelerate and further disrupt global politics and economics. Social media shaped the outcome of the 2016 US presidential election and will hammer the final nail in the coffin for the world’s printed media. By 2022 automobiles with comprehensive self-driving features will be in use all across Europe, with considerable gains in health and safety, although with higher insurance premiums for those choosing to drive themselves in older car models. The fast growth of automated check-outs in Rimi and Maxima supermarkets in recent years is a foretaste of the swift phasing out of many similar jobs with predictable physical activities – from librarians and bank tellers to truck and train drivers. One famous prediction states that two-thirds of children entering primary school will end up working in jobs and occupations that do not even exist at the moment.

These, and other domestic and international trends outlined in Certus’ report, will have a profound impact on Latvia over the next five years. The next parliament and government, to be elected in October 2018, will have to deal with a fast-changing world. The increase in the number of foresight debates and discussions over the last year provides hope that this will be the case. However, a weary traveller arriving to the current developing world level of taxi chaos at Riga airport, and wondering why Latvia is one of the few developed nations which has not licensed Uber, may think differently.