In Latvia, young people discover new passions in bad economic times


Latvia has been plagued by youth unemployment for years, but many young Latvians -- and others around Europe -- are now starting their own small-scale businesses. Toms Erenpreiss, 28, started manufacturing bicycles last year and has quickly expanded his business. (Michael Birnbaum/The Washington Post)

In a country that was among the hardest hit by the global recession, some young people say that a shattered economy has a bright side: the freedom to invent a living that would never have been worth the risk during flush times.

Start-up culture isn’t just for Silicon Valley and New York City. Here in this tough-luck Baltic nation, young entrepreneurs, freed from the prospect of steady, 9-to-5 employment, are founding businesses that run the gamut from high-end bicycle manufacturing to enterprises aspiring to be the next Skype — which was started one country to the north, in Estonia.

With unemployment among young people in the European Union at 23 percent and topping 50 percent in Greece and Spain, these 20-something Latvians say the crisis was good for them, despite the economic pain that accompanied it. Presidents and prime ministers have convened crisis talks, international organizations have called for extraordinary measures to spur hiring, and an entire generation has been forced to adjust its aspirations. But last year, Davis Kanepe, 28, took matters into his own hands in Riga.

He leased a crumbling, Italianate music school building on a down-on-its-heels corner in the middle of the city and, with some friends, turned it into a bar and cultural center.

“Of course, it’s hard, and you don’t work eight hours a day, but you have to work 14 hours a day,” Kanepe said one recent evening at his club, where people wearing stylish hand-me-down sweaters and black-plastic-frame glasses smoked at outdoor cafe tables and drank Belgian beer.

“But if you start working when you’re 19,” as many Latvians did in the boom years before the 2008 crash, “you haven’t had time to think about what your actual aims are,” Kanepe said. Those without a steady job because of the lousy economy have had more time to decide what they want to do, he said. “We who are under 30 understand a lot of things better.”

In this pint-size country of 2.2 million nestled along the Baltic Sea, some young people are signing up at small businesses that blur the distinction between work and personal life, where there is no need to commute to an office. Many say they would have it no other way. If life is more precarious, they say, it’s also more exciting.

A similar movement is happening across Europe and in the United States, where burgeoning communities of small-scale start-ups are attracting people who, before the 2008 crash, would have gone to work for an investment bank or consulting firm. Internet commerce makes it possible for creative types to sell services and merchandise in destinations far from home. That gives an advantage to countries such as Latvia, where the cost of living is low, making it easier to turn a profit.

“If you have some hobby that you really love to do, and you want to do it as a living, it’s very relaxed here,” said Jurga Kupstyte, 32, who worked at an international bank in Riga, the capital, but quit to get a master’s degree in cultural anthropology. She was keeping Kanepe company one recent afternoon as he hawked baskets of fresh strawberries on the street outside his club.

‘No one magical solution’

Analysts caution that the change in working patterns is not enough to put a major dent in young people’s unemployment. Credit, which is crucial to start businesses, is still choked tight. For every new business that blooms into viability, far more are doomed to fail. And in an economy in which more people are freelancers, access to health care and decent retirement benefits become ever more exclusive, although social safety nets tend to be more generous in European countries than in the United States.

“There is no one magical solution” to the problem of unemployment among young people, said Stefano Scarpetta, director of employment, labor and social affairs at the Organization for Economic Cooperation and Development, a world economic group. The OECD this month released a study that called for European governments to adopt sweeping measures to combat unemployment, including eliminating protective barriers around industries, encouraging banks to give more loans to deserving businesses and providing subsidies to employers who hire new workers.

“There is certainly a potential to promote entrepreneurship among young people,” Scarpetta said. But, he added, “we’re talking about a relatively small fraction of the population.”

Even in Latvia, many others have simply moved out of the country to find work.

“The bottom line is that these activities represent a tiny part of the economy,” said Alf Vanags, director of the Baltic International Center for Economic Policy Studies. Vanags added that Latvia’s economy continues to depend largely on traditional exports such as agriculture, wood products and metals, not upscale home-decor items and artisanal crafts sold over the Internet.

Free time to think big

In an old warehouse tucked behind shops where grim-faced attendants seem barely to have changed since the Soviet era, Toms Erenpreiss, 28, started manufacturing bicycles last year after several years of restoring vintage ones. He quickly sold out his first year’s collection, whose swooping curves were modeled on the bikes that an ancestor manufactured in Latvia in the 1920s. Erenpreiss is doubling the number that he will build this year, and his staff has expanded from four to nine people. Eighty percent of the bikes will be exported, he said.

“This is our job and our lifestyle all together,” Erenpreiss said. Depressed demand for his restoration services during Latvia’s economic crisis, he said, had given him the free time to dream beyond repairing old bikes.

“It gave me the freedom to think a bit wider,” he said.

In a warrenlike loft space near the wide Daugava River that bisects Riga, entrepreneurs are working on dozens of new tech-focused companies at a business incubator called TechHub Riga. Many are seeking to achieve the global success of Skype, which was founded in neighboring Estonia but had no difficulties transcending its borders.

One of the most successful companies at the incubator is Infogram, which was launched at the beginning of 2012 and offers easy tools to make online infographics. Its founders claim to draw 15,000 new users every week, crisscross the world to promote their product and say they have global ambitions.

“We’d rather fail trying something bigger,” said Uldis Leiterts, 28, one of the co-founders. “Why should I work for someone else?”

In Latvia, hard economic times have made better businesspeople, said TechHub’s manager, Alise Lezdina.

“People are used to living from month to month,” she said. “People know how to live on a short budget. And that makes them more creative and more passionate about what they do.”

Kristine Berzins contributed to this report.

Michael Birnbaum is The Post’s Moscow bureau chief. He previously served as the Berlin correspondent and an education reporter.
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