The ruling coalition in Latvia plans to discuss possible solutions to compensate the rapid price rise, as journalists were told by representatives of government parties.
Last week, the Minister of Welfare Gatis Eglitis presented to coalition cooperation parties the plan to increase minimal wage from EUR 640 to EUR 700 next year. On April 25, Eglitis said generally colleagues were not against increasing wages to EUR 640, because this year minimal wage was not increased. This means this step should be more rapid in 2023.
The minister explained that EUR 640 was picked because it met 50% of the average wage amount in other countries – the system that already existed in other European countries and which was linked to the EU directive on adequate minimal wages.
“We don’t want to end up in a situation when we and Bulgaria are countries with the lowest minimal wage in the EU, and fall behind Lithuania and Estonia, where the difference between wages on hand is already at EUR 150,” said Eglitis.
Commenting the question about the possibility of increasing minimal wages Latvian Prime Minister Krisjanis Karins said such an option could potentially increase inflation. He mentioned the price rise was a challenge for Latvia, Europe and the rest of the world. This is why it is very important to understand how best to react.
The PM mentioned that the National Trilateral Cooperation Council had already discussed potential solutions, adding that the discussions should continue – with social partners and experts from different sectors and banks.
Karins said it was clear it was necessary to move forward with focused aid for groups of residents for whom the price rise created the biggest problems. At the same time, it is necessary to consider arguments in favour of increasing the minimal wage.
“This is a very important issue. I think there is no simple solution, because every solution has its own side-effects, but we as politicians with social partners and experts have to analyse, discuss and look for a path to share with everyone,” said Karins.
Minister of Agriculture Kaspars Gerhards said it was necessary to find a solution as soon as possible to help the least protected groups of society, because it was expected the price rise would continue.
As for the solution involving minimal wage increase from next year onward, the minister said he agreed with the PM – raising the minimal wage could further increase inflation.
Minister of Environment Protection and Regional Development Arturs Toms Pless said it was necessary to consider complex solutions to help residents with low and medium wages make ends meet.
Pless said his party Attistibai/Par! believed it was necessary to compose a joint support system that would be more focused and might involve minimal wage and non-taxable minimum, as well as other solutions, including pension indexation as early as July 1.
Eglitis said the coalition did not reach an agreement on doing indexation as early as July 1.
The politician explained that pension indexation would cost an additional amount of EUR 26 million a month. This is why if indexation is done on July 1, not September 1, this would mean additional costs of EUR 52 million for the state budget.
The politician said that in accordance with the coalition’s previous decision, the Ministry of Welfare was already working on amendments to the Law on Pensions regarding pension indexation on September 1.
When asked if September was not too late for pension indexation, the Minister of Welfare said July 1 marked the coming into force of the increase of non-taxable minimum from EUR 300 to EUR 500. This would help support small pension and small wage recipients, said the politician.
Karins also said the coalition parties reached an agreement on pension indexation on September 1, which was earlier than October 1.
The PM also said it was necessary to move towards focused support for people who needed aid the most. The government needs to continue working in this direction. (BNN/Business World Magazine)
