Paradoxes in the labor market of the 21st century: analysis of the microbusiness in Latvia

The object of research is microenterprises in Latvia. One of the most problematic places is the constant tightening of fiscal measures in relation to existing and newly created microenterprises. Including the increase since 2017, the rate of turnover tax from 9 to 15% for enterprises with annual turnover of up to 40 thousand EUR. This creates conditions for the closure of a part of microenterprises or the departure of their owners to the informal sector, which is already happening. Taking into account that in Latvia every fifth inhabitant is subject to the risk of poverty (in 2015 – 21.8% of the population), a reduction in the incomes of families that have lost microbusiness can lead to the growth of the poor. The research uses methods of comparative analysis of indicators of state statistics, the Register of Enterprises and other sources, which revealed both positive and negative aspects of microbusiness in Latvia. Particular attention is paid to the activities of microenterprises, which make a significant contribution to the economy of the country. In 2016, microenterprises employed about 248.57 thousand people or more than a third (35.2%) of employees of all Latvian enterprises. The research results show that at least 20% of the able-bodied population is engaged in business in Latvia. Such large share is associated with the arrival of former employees in the microbusiness. However, not all of them are ready to develop their business, which follows from the small amount of tax revenues to the state budget from microenterprises. For many of them, the goal of profit is not a priority, which goes against the established paradigm. However, they provide the livelihoods of their families, which legislators should take into account.