Cabinet moves to boost minimum wage

  • 2005-08-17
  • By Elizabeth Celms
RIGA - The Cabinet of Ministers has announced plans to increase the minimum monthly wage from 80 lats (115 euros) to 90 lats as of Jan. 1, 2006.
The decision was made on Aug. 16 in an effort to help residents struggling with rising food and communal service prices, which have escalated since Latvia joined the European Union last May.

The price-hike has most affected those receiving minimum wage, the Ministry of Welfare told the Leta news agency. Indeed, low salaries have caused many Latvians to work two jobs 's often in the shadow economy 's or even head west in search of higher wages.

In order to increase the minimum wage, 4 million lats will have to be allotted from the national budget, as well as about 16 million for raising teacher salaries, according to Welfare Ministry estimates.

Just a day earlier, during an Aug. 15 meeting between Education Minister Ina Druviete and the Latvian Education Employee Union, members gave the government two weeks to officially accept a wage-increase plan developed by a working group in May.

The teachers threatened to strike if the ministry fails to comply.

In response, Druviete said the government would discuss the subject on Aug. 23. She did not, however, promise that demands would be met.

"I don't think that teachers will need to strike," Sanda Purina, Druviete's press secretary, told The Baltic Times. "The minister promised to increase wages, and the government has already done much work to develop a concrete plan."

The Cabinet's promise to increase wages comes at a time when Latvia is battling high inflation 's the highest in the EU25 's and being asked by international financial institutions to refrain from additional spending.

In May, the Ministry of Science and Education created a working group to develop a graphic for increasing teacher salaries next year. The commission determined that wages could be increased gradually until 2010, reaching 464 lats a month.

"Druviete presented this plan to Prime Minister [Aigars] Kalvitis on May 16," Purina said. "On Aug. 23 the government will decide whether or not to accept this graphic."

Druviete has been discussing plans to increase teacher salaries for more than a year, but has yet to make an official decision. She emphasized, however, that this was a ministry priority 's one that would not be overlooked when discussing next year's budget.

According to union member Astrida Harbacevica, who was quoted by the daily Diena, the average teacher earns 193 lats a month before taxes.

In order for the government to increase teachers' monthly wages by 40 lats, an additional 46 million lats would be required for the 2006 budget, Purina said.

"Six million of this amount will go toward paying higher education professors, while 40 million is for primary and secondary school teachers," she added.

Data from the European Employer Federation shows that Latvia's minimum wage level is one of the lowest in the EU. In comparison, Lithuania has a monthly minimum wage of 145 euros, while Estonia leads the Baltic sates with 172 euros per month.

Luxembourg boasts the highest minimum wage in the EU at 1,467 euros a month.

The Welfare Ministry expects that January's minimum wage increase will curb salaries paid under the table to avoid taxes, and boost competition between companies paying taxes from employees' whole salaries, Leta reported.

A higher minimum wage will also increase Latvia's standard of living, helping the state spend less money on social aid, and boosting local government income.