Latvia’s Cabinet of Ministers on Tuesday voted to increase the country’s minimum monthly wage from EUR 700 to EUR 740 as of January 1, 2025.
The Latvian Welfare Ministry has said that the rules will apply to all employers and employees. Minister Uldis Augulis says that this represents a gradual transition toward a new system in which the minimum wage will be determined as a percentage of the national average wage. “This will certainly improve the material situation and living standards of lower-paid workers,” the minister added.
Ministry data show that 822,489 people were employed in Latvia last year. According to the Latvian Central Statistical Bureau, 99,270 of them (18.6%) were paid a wage up to or including the minimum wage. In the public sector, there were 29,012 workers at such a wage level, which represented 12.6% of public sector employees.
The share of minimum wage or lower wage earners in the public sector rose a bit from 10.4% in 2020 to 12.6% in 2023, while in the private sector the share decreased from 21.2% to 18.6%.
The Welfare Ministry says that there are sectors in which a large share of employees are paid the minimum wage or close to it, and they may be subject to increasing production cost pressures, including the need to modernise technological processes with an eye toward increasing productivity.
The ministry also argues that an increase in the minimum wage directly improves the purchasing power of low wage earners. Because this will have a positive impact on domestic demand, that will assist one of the main pillars of economic growth. The ministry also hopes that the changes will help in levelling out the wages of the Baltic States while also bringing wages closer to the EU average, which is seen as a way of reducing emigration flows.
Source: BNS
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