Wages up but purchasing power down in third quarter

Data published by the Central Statistical Bureau of Latvia (CSB) December 1 show that in the 3rd quarter of 2022 average gross wages and salaries for full-time work amounted to EUR 1 384. 

Compared to the 3rd quarter of 2021, average monthly earnings grew by EUR 82 or 6.3 %. Hourly earnings before taxes constituted EUR 9.08 and rose by 5.6 % over the year.

In the 3rd quarter of 2022, compared to the 2nd quarter, average monthly gross earnings went up by 1.6 % and hourly earnings fell by 1.3 %.

Average net wages and salaries (calculated based on the labour taxes applicable in work) comprised EUR 1 013 or 73.2 % of gross earnings. Over the year net earnings grew slower than gross earnings – by 6.0 %. However, considering sharp rises in the consumer prices, net earnings fell by 12.9 % pointing to a sharp decline in the purchasing power of salaried workers. Moreover, the drop is observed for the third consecutive quarter as wage packets are spread ever more thinly.

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In the 3rd quarter of 2022, median gross wages and salaries for full-time work amounted to EUR 1 106, while net (after taxes) to EUR 830. Compared to the 3rd quarter of 2021, median gross earnings grew by 8.4 % and net by 9.0 %. 

Median is calculated based on the information available in statistical surveys and administrative data of the State Revenue Service.

Median is an average in the middle of the ascending or descending order of wages of workers, i.e., half of the wages are higher than the median and the other half are lower. As median, compared to the mean arithmetic earnings, is not influenced by extremely high or low wages and salaries, it reflects typical earnings more precisely.

Sharper annual upturn in public sector

In the 3rd quarter of 2022 average monthly gross wages and salaries in private sector comprised EUR 1 393, and over the year they have grown by 6.1 %. Average earnings in public sector amounted to EUR 1 372, showing higher annual growth rate than in public sector – 6.6 %. Average earnings in general government sector, which includes central and local government institutions as well as enterprises controlled and financed by the central and local government, went up to EUR 1 336 or by 6.1 %.

Compared to the 2nd quarter of 2022, average earnings in public sector fell by 0.6 %, of which by 0.7 % in general government sector, while in private sector they increased by 2.6 %.

In the 3rd quarter of 2022, median gross wages and salaries for full-time work amounted to EUR 1 106, while net (after taxes) to EUR 830. Compared to the 3rd quarter of 2021, median gross earnings grew by 8.4 % and net by 9.0 %. 

Median is calculated based on the information available in statistical surveys and administrative data of the State Revenue Service.

Median is an average in the middle of the ascending or descending order of wages of workers, i.e., half of the wages are higher than the median and the other half are lower. As median, compared to the mean arithmetic earnings, is not influenced by extremely high or low wages and salaries, it reflects typical earnings more precisely.

Sharper annual upturn in public sector

In the 3rd quarter of 2022 average monthly gross wages and salaries in private sector comprised EUR 1 393, and over the year they have grown by 6.1 %. Average earnings in public sector amounted to EUR 1 372, showing higher annual growth rate than in public sector – 6.6 %. Average earnings in general government sector, which includes central and local government institutions as well as enterprises controlled and financed by the central and local government, went up to EUR 1 336 or by 6.1 %.

Compared to the 2nd quarter of 2022, average earnings in public sector fell by 0.6 %, of which by 0.7 % in general government sector, while in private sector they increased by 2.6 %.

Greater earnings upturn in Pierīga and Vidzeme

As usual, there were significant regional variations in earnings. In the 3rd quarter of 2022, compared to the 3rd quarter of 2021, the sharpest rise in average earnings before taxes was recorded in Pierīga (of 7.8 %) and Vidzeme (7.4 %). The highest average gross earnings for full-time work were observed in Riga (EUR 1 542), whereas the lowest in Latgale (EUR 975, which is 37 % lower than in the capital).

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Latvian wages lag behind Estonia and Lithuania

In the 3rd quarter of 2022 average gross earnings for full-time work amounted to EUR 1 799 in Lithuania, EUR 1 679 in Estonia, and EUR 1 384 in Latvia.

Compared to the 3rd quarter of 2021, the lowest annual increase rate of average earnings was registered in Latvia – 6.3 %, in Estonia it constituted 8.1 % and the highest rate – 12.6 % – was recorded in Lithuania.

 

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