Starting from January 1, the minimal wage in Latvia will be EUR 430, which is EUR 50 higher than it was the year before. This is provided by amendments approved by the Cabinet of Ministers in regards to minimum monthly wage amount for standard work time and calculation of the minimal hourly rate.
Previously, Welfare Ministry noted that raising minimal monthly wages would increase employers’ costs. This includes the increase of tax payments from employees’ wages at EUR 430 to social insurance fees of EUR 13.95 and additional labor costs – by EUR 50.
Labor force costs will only increase for employees whose previous minimal wage or wage was below the minimum detailed in the tax reform. Employees whose wage will grow from EUR 380 to EUR 430 will gain an additional amount of EUR 57.83.
According to Welfare Ministry, minimal wages will be increased in such an amount if the increase is not performed alongside major labor tax decline to avoid reducing the company’s external competitiveness or financial state, which is especially topical in Latvia’s regions, where the wage level is generally low.
At the same time, the ministry notes that increase of minimum wages will help improve competitiveness for businesses that pay taxes from higher than minimum wages when compared with those that only pay taxes from minimum wages and pay the rest of their wages in envelopes. (BNN/Business World Magazine)
