Baltic large companies worried about demand, availability of skilled workforce and salaries

A survey of Chief Financial Officers conducted by SEB bank indicates that the main worries for large companies in Baltics are demand for their products and services, availability of skilled workforce and labour costs. Although private consumption has been growing at a relatively healthy pace in each of the countries, 61% of Latvian, 55% Lithuanian and 40% Estonian big companies are anxious about the demand for their products or services.

Sufficient availability of skilled workforce is a common cause for concern for large companies in all three Baltic countries, as confirmed by 43% CFOs in Lithuania, 39% of their counterparts in Latvia and 33% in Estonia. The third most frequent cause for concern are the labour costs. 51% of Lithuanian, 41% of Estonian and 24% of Latvian large companies are worried about the salary trends in their country.

Ints Krasts, board member of SEB Latvia: “Workforce related topics continue to be among the main risks which in near future could have a substantial impact on operations of large companies in Baltics. Unemployment rates are shrinking in all three Baltic States and in Estonia it has already reached 6.5%. Along with the shrinking labour supply, Latvia and Lithuania have seen the most rapid increase of concerns about salary trends.

Meanwhile the financial topics like interest rates, exchange rates and availability of financing are not a cause of concern for large companies. For example, only 5% of big companies in Latvia have expressed worries about availability of financing and 7% are worried about exchange rates. There are two explanations: firstly, over the last few years many corporates in Baltics have accumulated rather large financial reserves. For instance, the total amount of credit facilities SEB has assigned for Latvian companies currently is utilized only by 38%. Secondly, competition among banks is Latvia is very fierce, which means that clients can be sure that banks will offer very advantageous conditions for financing.”

Majority of Baltic company CFOs are convinced that the interest rates will remain at the same level during the next 12 months. This opinion is shared by 88% of large companies in Latvia and Lithuania, as well as 74% of Estonian corporations. Share of those financiers who expect an increase of interest rates is still quite small - 18% of Estonian and 8% of Latvian and Lithuanian companies.

This is the fourth survey of Baltic Chief Financial Officers. Previous surveys were done in 2014 and 2015. Results reveal whether CFOs expect that next six months will bring good or bad news for businesses, identify which are the main concerns and challenges, indicate whether businesses plan to expand or decrease their workforce and give an insight in other topics as well. 263 largest companies with annual turnover over 20 million euros from Latvia, Lithuania and Estonia participated in the survey, which was carried out during September of this year.