Latvian wages grow four times within 16 years

Take note – story published 6 years and 6 months ago

The average Latvian monthly pay has grown from €164 in 2001 to €631 after taxes in 2016. While it's a formidable achievement, it still puts Latvia a long way behind what workers can earn abroad, reports Latvian Radio's Aiga Pelane. 

Experts say, however, that the so-called 'envelope wages', or illegal, non-taxed pay should be added to the sum. 

Research says the shadow economy was at 36.6% of the Latvian GDP. That was the height of the economic crisis, and pay was often cut to 'save' on labor taxes.

The 2016 shadow economy part was about 20% of GDP, however, but research still suggests non-taxed pay is one of the most common instances of the shadow economy. 

There are currently no estimates as to what the average real wage could be if the shadow economy is taken into account.

Statistics show another worrying tendency, namely, regional differences in what people receive for their work.

The 2016 average pay in Riga was €710 after taxes but just €440 a month in the Latgale cultural region in Latvia's east. 

Differences can be explained with unemployment levels, the available work places, as well as the profile of the companies that work in the region.

For example, the wealthy finance sector is concentrated in Riga but no chief offices of banks are to be found in other regions of Latvia.

Riga is often preferred as the place to set up companies in different areas too, as you can find employees and better infrastructure here. 

Unemployment in Riga is also much lower than elsewhere, with the State Employment Agency saying Riga's registered unemployment was 4.4% in August 2017 whereas the figure was a whopping 16% in Latgale.

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