Central Bank justifies big pay hike for board members

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The Latvian Central Bank has told LSM that major pay rises for its governing council and board members on a per employee basis last year can be put down to bonus payments earned partly as a result of euro adoption.

The Bank's annual accounts, published last week, show that remuneration for its council and board members increased markedly from €1.25 million in 2013 to €1.55 million in 2014 - despite the fact that the number of people sitting on the board was reduced from 14 to 13.

The average pay for the Bank's 13 board members in 2014 was just under €120,000.

In 2013 average pay for 14 board members was just under €90,000.

That represents a 33% increase year-on-year for board members.

For the rest of the bank's employees, pay rises were more modest.

Total pay for all bank employees was up around 8% year-on-year, still well ahead of inflation, from €15.5 million to €16.8 million.

The bank had an average of 569 employees over the course of the year, almost unchanged from 2013's average employee count of 567.

Asked if such big increases did not fly in the face of the Bank's own advice that wage growth must match productivity, the Bank told LSM in a statement: 

"Increases last year were due to the conclusion of significant operational phases at the Bank of Latvia, and the successful introduction of the euro, which resulted in the payment of bonuses."

All payments were in line with normal practice in eurozone central banks and also within the Latvian financial sector, the Bank said.

"Since the [economic] crisis Bank management remuneration in general has grown by an average of 3.9% a year, and it is still about 26% lower than in 2008," the statement said.

However it seems big bonuses are not compulsory for waving in euro adoption, which in Latvia's case was achieved thanks to huge austerity measures overseen by then-Prime Minister Valdis Dombrovsis.

In Estonia, the country which adopted the euro before Latvia, average wages at the Estonian Central Bank actually fell by 3.9% in the year following euro adoption in 2011, on a per employee basis.

As reported March 11, the Latvian Central Bank earned profits of €36.8 million.

The figure was down on 2013's profit of  €41.4 million. 

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