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Wednesday 19.09.2018 | Name days: Verners, Muntis
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Net wages and salaries in Latvia up 8.6%

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIn Q1 2018 the average monthly gross wages and salaries for full-time work in Latvia comprised EUR 961, growing by 8.6 % or EUR 76 over the year.

Compared to Q1 2017, earnings in private sector rose faster than in public sector. The average wages and salaries in private sector constituted EUR 957 (annual rise of 8.9 %) and in public sector EUR 969 (up by 8.1 %). Average gross wages and salaries in general government sector, which includes central and local government institutions, as well as enterprises controlled and financed by the central and local government, grew to EUR 923 or by 9.0 %, according to data from the Central Statistical Bureau of Latvia.

In Q1 2018, the average net wages and salaries calculated based on the labour taxes applicable on workplace, constituted EUR 713. Over the year, the earnings increased by 10.2 %, which is 1.6 percentage points higher rise than that in earnings before taxes.

Compared to Q4 2017, net wages and salaries increased by 1.8 %.

Considering annual consumer price growth of 2.0 %, the real increase in net wages and salaries comprised 8.0 %.

At the beginning of the year, rise in minimum wage from EUR 380 to EUR 430 or by 13.2 %, introduction of progressive income tax, as well as changes in size of non-taxable minimum had the most notable influence on the changes in average wages and salaries. Mandatory social insurance contributions paid by employees went up by 0.5 percentage points.

Changes in the average wages and salaries are influenced not only by the factors mentioned and rise in employee remuneration, but also by structural changes of the labour market – enterprises that had started and stopped their business during the year, changes in the number of employees and workloads in various economic sectors, as well as state administrative measures in the fight against shadow economy. The effects caused by the mentioned factors in general are reflected as changes in the wage and salary fund and number of full-time employees, which are used in the average wage calculations.

In Q1 2018, compared to 2017, gross wage and salary fund increased by 10.1 % or EUR 195.5 million, whereas the number of salaried workers, recalculated into full-time units, grew by 1.4 % or 9.9 thousand, which is the sharpest growth rate recorded over the past four years.

In Q1 2018, compared to the corresponding period of the previous year, the average wages and salaries rose in all sectors. Wage and salary fund rose faster than the number of full-time employees in all sectors, except for electricity, gas, steam and air-conditioning supply; water supply, sewerage, waste management and remediation; wholesale and retail trade; as well as financial and insurance activities. Wage and salary fund in the mentioned sectors rose, while the number of full-time employees reduced.

At the beginning of the year, the sharpest rise in wages and salaries was recorded in human health and social work activities (of 15.7 %, with the fastest growth in human health activities), agriculture, forestry and fishing (11.5 %, with the fastest growth in crop and animal production, hunting and related service activities), accommodation and food service activities (11.1 %, with the faster growth in accommodation), real estate activities (10.8 %), manufacturing (10.6 %), and construction (10.3 %).

In Q1 2018, the highest average wages and salaries for full-time work were registered in financial and insurance activities, information and communication, energy, public administration, professional, scientific and technical activities, as well as mining and quarrying. In other sectors, the average wages and salaries before taxes were below the national average.

The lowest earnings, in turn, were observed in accommodation and food service activities, other service activities (that includes activities of public and other organisations, repair of computers and personal and household goods, washing and (dry-)cleaning, hairdressing and other beauty treatment, funeral and related activities), education, arts, entertainment and recreation, as well as administrative and support service activities.

Compared to Q1 2017, regional breakdown shows the sharpest rise in the average monthly gross wages and salaries in Latgale (of 11.2 %), Vidzeme (10.0 %), as well as Kurzeme and Pierīga regions (9.2 % in each), while Zemgale region had the lowest annual rise (of 7.0 %) in Q1 2018. The lowest average gross wages and salaries still were observed in Latgale region – EUR 671 for full-time work, followed by Vidzeme with EUR 764, Zemgale with EUR 796, Kurzeme with EUR 800, whereas indicator registered in Pierīga region amounted to EUR 910. The average gross wages and salaries in Riga exceeded EUR 1000 already in 2017 and constituted EUR 1085 in Q1 2018.

Information on the average wages and salaries is broken down by region based on the office address of enterprise or institution.

The data on earnings in the Baltic states show that in Q1 2018 Estonia had the highest average gross wages and salaries – EUR 1242, followed by Latvia with EUR 961 and Lithuania with EUR 895.Compared to Q1 previous year, earnings have increased in all Baltic states. The sharpest rise was recorded in Lithuania (of 9.5 %), followed by Latvia (8.6 %) and Estonia (7.7 %).

It shall be noted that at the beginning of the year, minimum wage was raised in all three countries. In Q1 2018, the highest minimum wage was registered in Estonia (EUR 500, with the annual rise of 6.4 %), Latvia (EUR 430 and 13.2 %), while the lowest was recorded in Lithuania (EUR 400, and 5.3 %). Minimum wage in Latvia and Lithuania constituted 45 % of the average earnings before taxes, while in Estonia the difference was smaller – 40 %.


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