The Head of the Bank of Latvia Calls for a Reduction in the Number of Public Sector Employees: Where They Are Suggested to Transition

Latvia needs to reconsider the number of public sector employees and facilitate their transition to private business, according to Bank of Latvia Mārtiņš Kazāks.

The central bank chief argued during a press conference on Tuesday, November 10, that the country’s economic potential is far from being fully utilized. He followed up those remarks on Wednesday, November 11, during an appearance on the Latvian Television program “Morning Panorama,” where he called for a reduction in the number of public sector employees, as reported by the LETA agency.

Kazāks pointed to a trend since 2019, noting that budget expenditures have grown faster than revenues. “The development is too slow; we can and must develop faster. We need to look both at reducing expenditures and at faster development,” Kazāks emphasized.

Central bank specialists will now review proposals of Prime Minister Andris Kulbergs regarding the reduction of state expenditures and the attraction of additional funds into the economy. While the volume of lending to enterprises is growing by about 15% annually—with household lending growing by 10%—Kazāks said that loans alone are not enough. He said that the economy needs skilled workers, new investments, and a strong scientific base.

According to the Central Statistical Bureau, in the second quarter of 2026, there were 904,200 occupied jobs in Latvia. Of these, 612,100 were in the private sector, and 292,100 were in the public sector, meaning approximately one in three occupied jobs in Latvia is in the public sector.

Statistics for the second quarter of 2026 show that compared to the same period last year, the number of occupied jobs increased in both the private and public sectors.

In the second quarter of 2026, Latvia had an average of nearly 19,700 vacancies. This is approximately 400, or 1.8%, fewer than a year earlier. Private companies had nearly 10,500 vacancies, while the public sector had over 9,200 vacancies.

Indicator	II Quarter 2026	Change Over the Year
Private Sector	612,100	+8,400 (+1.4%)
Public Sector	292,100	+4,400 (+1.5%)
Total	904,200	+12,800 (+1.4%)

The Head of the Bank of Latvia emphasized that the transition from the public sector to the private sector is not always possible without additional training. Different professional skills and competencies may be required to work in commercial companies.

The Head of the Bank of Latvia Calls for a Reduction in the Number of Public Sector Employees: Where They Are Suggested to Tr — Photo: en.bb.lv

“Thus, it would be necessary to reduce the number of public sector employees, but in order for this not to be too painful, it is essential to help facilitate this transition,” Kazāks said.

Therefore, Kazāks believes that the State Employment Agency (SEA) should play an important role in this process. The agency will need to assist people in acquiring the necessary skills and ease the job search in the private sector.

Kazāks did not specify a particular number of employees that, in his opinion, should be reduced in the public sector, nor did he propose timelines for such changes. So far, this is about the position of the President of the Bank of Latvia, not an approved government plan for reductions.

Changes must be made thoughtfully but without delay, Kazāks emphasized.