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Artur Eresko □ As is the economy, so are the wages

Artur Eresko □ As is the economy, so are the wages

In the third quarter of 2016 an average wage (before taxes) in Latvia made up EUR 847 — just 18 euro more than in the third quarter of 2015.

The rise in income of the Latvian population continues decelerating. An average wage in the third quarter grew by 2.2% in annual terms, which is considerably slower than in the first half this year, when wages grew by 4.6%, and the last year, when the growth made up 7-9%.

Thereby, Latvia loses its competitiveness in the regional labour market. While the Latvian wages were growing by insignificant 2.2%, in Estonia they jumped by 7.1%, but in Lithuania – by 7.9%. As a result the Estonians estranged from the Latvian population even more, but the Lithuanian population got closer to them even more: the highest gross salary in the third quarter this year among the Baltic States was in Estonia — EUR 1 119. In Latvia it made up EUR 847, in Lithuania – EUR 793.

We can mention also the fact that at small enterprises wages used to grow much slower than at big companies, where the growth remained at the level of 6%. However, such break can be attributed to “shadow” payments, which depend on the size of the enterprise: the bigger is the enterprise the smaller is such payment.

The slowdown in the growth of the Latvian wage directly correlates with the skidding of Latvian economy. This is, to a large extent, impacted by the uncertainty and corresponding moods, connected with delay in financial injections from the European funds. This particularly clear can be traced in construction, where the number of employed shrank by 8 thousand or 11%, which is the direct consequence of delay in disbursement of the EU funds. Wages of builders, who have not been fired yet, in the third quarter grew just by 0.6% (in the 1st quarter the growth made up 7.6%, in the 2nd— 3.2%).

Besides, the fall in the number of employed and the level of wages of the employees has outlined (-1.5%) in the transport industry. Partially this can be explained by reorientation of the Russian transit traffics from the ports of the Baltic States to the Russian ports.

Next year the EU financing in the amount of ca.700 million euro will stream into the Latvian economy, which means the growth of investments. The demand for builders will grow and this will facilitate to growth of the number of employed in this industry and of wages.

In its turn, no changes are expected in the transport sector next year. Replacement of the Russian transit traffics with new ones is not an easy task at all. In the transport industry both the number of employees and wages, most likely, would continue falling.


Artur Eresko (Артур Ересько), candidate of Economic and Legal Sciences.

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