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Tuesday 27.09.2016 | Name days: Ilgonis, Ādolfs
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Reirs: increasing minimum wages will increase social fees and other benefit options

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUWelfare Minister Janis Reirs has submitted an informative report compiled by several ministries on proposals for minimum wages. The report will be viewed during the next meeting of the National Council for Trilateral Cooperation.

The report includes proposals for raising minimum monthly wages from EUR 370 to EUR 407 (9.1%) starting from 1 January 2017.

Reirs emphasizes: «Our priority is to reduce inequality and increase minimum wages to support low wage recipients, especially in the regions. At the same time, there is no doubt that minimum monthly wages have to be viewed in relation to taxes and benefits. By increasing minimum wages, we will also increase social fees. With that, we will also open the way to review social support opportunities.»

State Employment Agency has carried out an in-depth support of long-term unemployed persons, identifying obstacles on their way to becoming active on the labour market. One of the main reasons why people turn down job offers is insufficient minimum wage. It is often not enough to cover travel costs. The majority of cases when unemployed people turn down job offers because of minimum wages are found most often in Latvia’s regions. Raising minimum wages can help reduce the number of employers who pay envelope wages.

As noted by Welfare Ministry, the current minimum wage amount for normal work hours (8 hours a day and 40 hours a week) is EUR 370. The ministry believes it is possible to raise minimum wages to EUR 407 in 2017.

Latvia’s Employers’ Confederation urges increasing the tax-free allowance from PIT instead of minimum wages.

«An optimal minimal wage is one that is equal to 40% of average wage amount. Exceeding this limit would impact entrepreneurship. The second problem is that minimum wages are most often applied in jobs where minimal qualifications, low responsibility and low work intensity is found,» – explains CEC Director General Liga Mengelsone.

She noted that, raising minimum wages also requires raising other wages. Otherwise there is a risk that the motivation of employed people to raise qualifications, take larger responsibility and become involved in work of higher intensity.

According to the latest statistical data, the average wage in Latvia was EUR 854 in March 2016. The current minimum wage is 43.3% of that, Mengelsone explained, adding that raising minimum wages will become topical once average wage amount reaches EUR 952.

Ref: 103.109.109.6891


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