According to the Welfare Ministry, the adopted rules apply to employers and employees. Welfare Minister Uldis Augulis (Greens/Farmers) stressed that the decision marks a gradual transition to a new system where the minimum wage will be set as a percentage of the national average wage, which „will definitely improve the material situation and living standards of lower-paid workers“.
According to data compiled by the ministry, a total of 822,489 people were employed in Latvia last year. According to the Central Statistical Office, of the 131,584 employees working in the private sector last year, 99.270, or 18.6 percent, were employed on a wage of up to and including the minimum wage. In the public sector, there were 29,012 workers with such wage level, or 12.6 percent of public sector employees, the ministry said.
Between 2020 and 2023, the share of minimum wage and lower wage earners in the public sector increased slightly from 10.4 percent in 2020 to 12.6 percent in 2023, while in the private sector the share of minimum wage earners decreased from 21.2 percent to 18.6 percent.
Certain sectors with a high share of workers paid the minimum monthly wage or close to the minimum monthly wage may be exposed to increasing production cost pressures, such as the need to modernize production technological processes to increase productivity.
The ministry said that an increase in the minimum wage directly increases the purchasing power of low wage earners, with a positive impact on domestic demand, which is one of the pillars of economic growth. The ministry also hopes that these changes will contribute to a levelling out of wages among the Baltic countries, as well as to bringing wages closer to the average of the rest of the EU, which is one of the instruments to reduce emigration flows.