Wages rise 6% in first quarter

According to data released by the Central Statistical Bureau (CSB) Thursday, gross average wage growth in Latvia the first quarter of 2015 was 6.1 % in annual terms, which is slightly slower than 2014's average 6.9%. 

The growth was swifter in the private sector (6.9%, which though also slower than in 2014), while the growth of public sector wages stood at more moderate 5.1%.

As in 2014, wage growth was partly boosted by a minimum wage hike (by 12.5%) at the beginning of the year.

"The purchasing power of the employed grew faster than the gross wage due to 1 percentage point cut in personal income tax at the beginning of the year. Due to the zero inflation, the 6.8% annual increase in net wages was fully transmitted into increase in purchasing power.

"It seems that consumers were also less cautious than in the last year to spend the higher income – retail trade turnover grew by solid 7.5% (5.5% without fuel) annually in 1Q of 2015," said Swedbank in a commentary. 

"We forecast about 5% gross wage growth this year. Real net wage growth might be a bit swifter, due to the personal income tax cut and negligible inflation," Swedbank said.

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Economy
Economy