IAWP International Panel“The World Marketplace - Working with Foreign

Companies”

Latvia

Brief overview on Latvia’s key facts.

Government type: Parliamentary

Republic National language: Latvian  Capital: Riga National currency: Lats (1 Lat = 2.2 USD) Population: 2 294 600 (Economically Active Population – 1 015 300) 

GDP: $ 25.6 billion in 2006

GDP per capita: $ 11 217 in 2006

• Large

• Beautiful

• Cultural

• Ambitious

• Educated

• Hospitable

Riga – Metropolis of the Baltics

Labor force administration.

State Employment Agency (established in 2003)

consists of: –the board, –27 affiliated offices, –25 sectors, and –3 client service centers.

Registration of jobs & unemployed

Staff selection

Vocational training atvarious professions

Organizing paid temporary work

Subsidized jobs for (long term unemployed, youth, ex-offenders, before retirement age and disabled individuals)

Subsidizing jobs for school children (age: 14 – 18) during summer holidays

Brief overview on Latvia’s key facts, labor administration and unemployment.

State Employment Agency’s Services:

Vocational counseling/ career guidance services

Labor Market Analysis& Forecasts

Cooperate withEmployers/Businesses

Information exch. vis-à-vis

European Union

Why LatviaWhy Latvia??

Low and easily Low and easily understandable taxesunderstandable taxes

Highly educated and Highly educated and motivated labormotivated labor

Liberal employment Liberal employment legislationlegislation

Well connected by flightsWell connected by flights Developed financial and IT Developed financial and IT

sector sector Easy to set up and manage a Easy to set up and manage a

businessbusiness

Riga: well connected flightsRiga: well connected flights

Latvia – Gateway between Europe Latvia – Gateway between Europe and CISand CIS

Excellent Business EnvironmentExcellent Business Environment

18 %

9 %

24.09 %25 %

15 %

0

5

10

15

20

25

30

CIT Income tax Employers social

tax

Employee social

tax

VAT (sales tax)

%

Corporate Income TaxCorporate Income Tax

39

30

2421

16 15 15

19 19

25 2628 28

29,8

0

5

10

15

20

25

30

35

40

45

US

A

UK

Che

cz.

Rep

.

Est

onia

Hun

gary

Latv

ia

Lith

uani

a

Pol

and

Slo

vaki

a

Slo

veni

a

Fin

land

Sw

eden

Nor

way

Ger

man

y

Tax

, %

Liberal labor legislationLiberal labor legislation

Working time: 8 hours a day (40 hours a week)Working time: 8 hours a day (40 hours a week) Annual vacation: 20 working daysAnnual vacation: 20 working days 25% residential income tax25% residential income tax 99 % social tax % social tax (res.)(res.) 24% 24% social tax (empl.)social tax (empl.) Termination of contract with employees: notification Termination of contract with employees: notification

1 month in advance 1 month in advance

Growth of Investment Among the Growth of Investment Among the Highest in EUHighest in EU

Source: Bank of Latvia

Cumulative FDI into Latvia (Accumulated stock in billion EUR)

2.24

4.03

5.74

3.36

7.22

2.65 2.68 2.64

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2000 2001 2002 2003 2004 2005 2006 2007

Passenger flow Growth at Passenger flow Growth at Riga International AirportRiga International Airport

Source: Riga International Airport

310 398504 506 535 555 562 574 623 633 712

1060

1878

2495

3160

0

500

1000

1500

2000

2500

3000

35001993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

tho

usan

ds o

f p

assen

gers

Source: Bank of Latvia

InvestorsInvestorsFDI share by country, 2007

Other23,6%

Norway3,7%

Cyprus4,8%

United States5,0%

Netherlands5,4%

Russia5,8%

Finland6,2%

Denmark8,5%

Germany10,2%

Sweden12,5%

Estonia14,2%

Major U.S. Investment Projects: Jeld WenMajor U.S. Investment Projects: Jeld Wen

Major U.S. Investment Major U.S. Investment PProjects: rojects: GE MoneyGE Money

In 2004 GE Consumer Finance entered In 2004 GE Consumer Finance entered Latvia Latvia boughtbought two local consumer finance two local consumer finance companies, 210 employeescompanies, 210 employees

In 2005 GE Money Swedish subsidiary In 2005 GE Money Swedish subsidiary

established shared services center in Riga established shared services center in Riga

for its Scandinavian operations:for its Scandinavian operations:

number of employeesnumber of employees - - 101000

In October 2006 GE Money In October 2006 GE Money

enterentereded retail banking retail banking sectorsector::

assets EUR 363 mio, loan portfolio EUR 157 assets EUR 363 mio, loan portfolio EUR 157 mio, 55mio, 5500 employees employees

1 EUR = 1.7 $

PositionPositionNet Salary Net Salary

(EUR)(EUR)Gross Salary Gross Salary

(EUR)(EUR)

Total Employment Total Employment Costs incl. full social Costs incl. full social

taxes (EUR)taxes (EUR)

FromFrom ToTo FromFrom ToTo FromFrom ToTo

Unskilled workersUnskilled workers 498498 640640 667667 858858 827827 1 0641 064

Skilled workersSkilled workers 640640 783783 858858 1 0491 049 1 0641 064 1 3021 302Highly skilled Highly skilled

workersworkers 711711 996996 953953 1 3351 335 1 1821 182 1 1 656656

EngineersEngineers 854854 1 4231 423 1 1441 144 1 9071 907 1 4191 419 2 3662 366Department Department managersmanagers 1 4231 423 2 1342 134 1 9071 907 2 8602 860 2 3652 365 3 5493 549

Top managersTop managers 2 1342 134 3 5573 557 2 8602 860 4 7674 767 3 5493 549 5 9155 915

Overview of Labor Costs, 200Overview of Labor Costs, 20077

Source: HR company CVO Technology People, 2007

Perfect place for business - and leisure !Perfect place for business - and leisure !

Thank you for attention!Thank you for attention!Nils Freivalds, IAWP Nils Freivalds, IAWP Latvia ChapterLatvia Chapter