Employers dissatisfied with planned minimum wage increase

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The Latvian Employers' Confederation (LDDK) has sent a request to the President not to issue the draft amendments to the Labor Law approved by the Saeima on 27 October, which provides for an increase in the minimum wage, the LDDK said on November 9.

LDDK's Director General Līga Meņģelsone said: "The drafting of the bill does not respect the principles of good legislation, as well as the procedures for setting and revising the minimum monthly salary specified in Latvian legislation. The LDDK has repeatedly highlighted conceptual support for the increase in the minimum wage, pointing to the need to establish the ratio to average wages in the previous year and developing balanced criteria for predicting the minimum wage. We are calling for a sustainable mechanism for setting the minimum wage since minimum wage growth must be predictable and elective."

Without objecting to the gradual lifting of the minimum wage in Latvia, the LDDK calls on the President to take into account that labor costs in Latvia are higher than in the neighboring countries of the Baltic region. In LDDK's view, the increase in minimum wage will create a significant burden for employers of individual sectors and regions, and the differentiated non-taxable minimum applied in Latvia has a significant impact on the tax burden at different pay levels, as well as on the gross and net ratio at average and minimum wages. A rapid increase in the minimum wage puts pressure on higher pay increases in other wage groups and increases labor costs – overtime pay, minimum State social security contributions (social security), sick leaves, and downtime.

The LDDK also said that the draft law does not take into account the arrangements and practices existing so far in setting the minimum wage. According to the LDDK, when initially submitting the draft law during the pre-election period and moving the draft law on such important issues to the outgoing parliamentary term, it was adopted in a hasty manner, without involving the social partners in the adoption of a balanced and calculated decision, implementing a democratic and widely used consultation mechanism throughout Europe.

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