Possible minimum wage rise discussed in Latvian government

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The coalition will discuss possible solutions to compensate for price increases, including bigger raise in the minimum wage and earlier pension indexation, representatives of the government said at a briefing on April 25 after the coalition meeting. 

Last week, Welfare Minister Gatis Eglītis presented a plan to raise the minimum wage to €640 or €700 from next year. The minimum wage was not raised this year, so the difference should be bigger in 2023. €640 was selected because it currently corresponds to 50% of the average salary in the country - a system that already exists in other countries of the European Union (EU).

“We do not want to remain in the situation that we have the second-lowest minimum wage in the EU behind Bulgaria and are also lagging behind Lithuania and Estonia, where [..] the difference is already EUR 150,” said Eglītis.

Prime Minister Krišjānis Kariņš said that increasing the minimum wage could potentially drive inflation. Price increases are currently not only a challenge for Latvia or Europe but for the whole world. 

Kariņš said that, on the one hand, targeted benefits should be introduced for those population groups where price increases are causing the greatest difficulty, while the arguments for raising the minimum wage are also understandable.

“This is a very serious issue. I do not think it has a simple solution, because each solution has its own side effects, but we have to work together as politicians with social partners and experts to analyze, talk and look for a path that would be shared by everyone,” said Kariņš

The Minister for Environmental Protection and Regional Development Artūrs Toms Plešs said a common support system should be developed, which is more targeted and could take the form of raising the minimum wage, raising the untaxed minimum, as well as other solutions, including the indexation of pensions from July 1 instead of October 1 as is done usually. 

Talks are ongoing at the government level on how to address the price increases.

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