In the context of the DG REGIO project on cross-border regional labour markets, a number of cases are conducted. The case presented here examines the labour market in the Lääne-Eesti - Pieriga/Vidzeme region in Estonia and Latvia respectively.

The region has long historical ties dating back to the Middle Ages and shares a common legacy of Soviet rule, which led to an initially similar economic starting position after independence. The region is characterised by (roughly) symmetric wage levels and low price differences, both considerably below the European average. Unemployment is comparatively higher in Latvia, with a relative increase in unemployment in the neighbouring Estonian regions. Sectors of the labour market are relatively balanced, with the industrial sector slightly more important in Estonia. Following EU accession in 2004, cross-border connectivity has improved, but public transport links are still limited to the main centres. A twin city – Valga/Valka is the centerpoint of exchange between the two countries.

The case shows that there is a lack of data on the cross-border labour market at regional level. Nevertheless, data at the national level allow to estimate that commuter flows from the Latvian region to the Estonian region are more relevant. However, commuter flows do not represent a significant part of the labour force in the border region. The situation in the twin city Valga/Valka indicates potentials for improvement in this regard, and also sees a number of initiatives promoting cooperation in the labour market, education and also cultural sector in the region. Nevertheless, the majority of the cross-border region currently does not currently pursue such activities. Promoting the exchange and analysis of data on the common border and policies to support businesses and workers across the border could help to overcome the region's untapped potential. These steps could address existing gaps and enhance economic integration.

The full case study report will be made publicly available at the official conclusion of the project in early 2025. In the meantime, if you have any comments or questions, please do not hesitate to contact us.