Economists: Wages in Latvia to continue rising indefinitely

  • 2006-09-07
  • From wire reports
RIGA - Wages in Latvia will keep growing as long as people continue receiving bank loans and there is a labor shortage, Economics Institute head Raita Karnite said last week.

She told the Baltic News Service that wage growth would continue at a slower pace where more highly qualified labor was concerned, particularly since there weren't many resources. Still, in 2006 there will be less money from EU structural funds, so wages should not grow as much as the previous year, she added.

Karnite said that wage growth for less qualified workers would not slow down due to the labor deficit. "If people keep leaving the country, wages will have to be raised or labor imported," she said.

Roberts Remess, at expert at the organization Association of Economists 2010, said that for these same reasons, wages for low-qualified laborers would continue to grow in the second half of 2006 and probably wouldn't slow down.

He said Latvia was still lagging behind in terms of salary, and it might take a decade or even longer for the country's average wages to reach EU levels.

Both economists said that rapid wage growth in Latvia influenced inflation. "Prices follow wages, and prices will keep growing if they can," said Karnite. "People are already solving the problem of wages and high living costs at train stations and the airport 's they leave," added the Economics Institute head.

Remess said that steep wage growth might bring down Latvian exports. "Five years ago, cheap labor was our advantage," he said. Now, as prices for products grow, interest in importing Latvian-made goods might dwindle.

According to information from the Latvian national statistics office, the average net monthly wage in the second quarter of this year had grown 21.7 percent year-on-year to 209 lats (297 euros), while real wage growth was 14.5 percent.