The reduction in the Latvian population has created an urgent need to increase retention in the labour market, of not only high skilled entrepreneurs and competitive employees, but also to ensure that most of the VET students obtain a qualification relevant to the labour market. This also refers to vocational students at risk of dropping out due to a variety of reasons, including their unfavourable socio-economic backgrounds. In Latvia, after the EU accession it was a political decision to invest major funds in the development of VET, to increase the number of vocational students, as compared to the number of students in general education. According to the evaluation of the OECD and Cedefop, the progress is slow but steady. The success of the policy was determined by a set of factors, that included the modernisation of the curricula, successful introduction of the competence-based approach and work-based learning, as well as improving the overall competence of teachers and their well-being, to promote their individualised work with students and to avoid burn-out due to heavy workloads. Alongside these factors, massive investment in the VET institutions’ infrastructure and equipment, and co-operation with employers, has improved the prestige and attractiveness of VET. This has created the pre-conditions for retaining maximum numbers of students in the education system, including the students at risk of dropping out, especially due to disadvantaged socio-economic conditions.