According to Minister of Welfare Uldis Augulis (ZZS), this decision marks a gradual transition to a new system, when the minimum wage will be determined as a percentage of the average wage in the country, which “will definitely improve the material condition and standard of living of lower-paid employees”.
Data collected by the Ministry of Welfare (MOW) show that in 2023, a total of 822,489 people were employed in Latvia. According to the data of the Central Statistics Office on the number of workers whose income was up to and equal to the minimum wage, in 2023, out of 131,584 workers, there were 99,270 or 18.6% of the employed in the private sector. On the other hand, in the public sector, there were 29,012 employees, or 12.6% of those employed in the public sector, informs LM.
In the period from 2020 to 2023, the share of minimum wage and lower wage earners in the public sector increased slightly from 10.4% in 2020 to 12.6% in 2023, while in the private sector the share of minimum wage earners decreased from 21, 2% to 18.6%.
The minimum monthly wage is intended to reward the work of lower-skilled workers, reflecting the productivity of such work, therefore, a significant impact on the competitiveness of the sectoral workforce in the labor market is not expected in the long term, the ministry states.
However, certain industries with a high proportion of workers receiving the minimum monthly wage or a wage close to the minimum monthly wage may be under pressure from rising production costs, for example the need to modernize production technological processes by increasing production productivity.
Also, LM states that an increase in the minimum wage directly increases the purchasing power of low wage earners, positively influencing internal demand, which is one of the pillars of economic growth. The ministry also hopes that these changes will contribute to the equalization of wages between the Baltic states, as well as the approximation of wages to the average level of the rest of the European Union, which is one of the tools for reducing the flow of emigration.
LM also believes that the salary increase can become a serious incentive for creating new competitive advantages, as well as promoting innovation and investment in new technologies in order to reduce costs and increase the productivity of production resources, the ministry informs.
Source: www.diena.lv
