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Artur Eresko □ Are all jobs good?

Artur Eresko □ Are all jobs good?

The drastic ‘enrichment’ of the Latvian population has slowed down. If in the first quarter an average wage (gross) showed a 5.9% growth per annum, then in the second quarter the growth made up merely 3.3%.


Curiously, the wage of the Latvian working population is growing by hard-to-explain jerks. For instance, in April the wages grew merely by 1.7%, but in May jumped by 4.7%. It is hard to understand what makes May any better than April, but such speed-ups and slowdowns show certain unreliability of growth in incomes of population of the country.

Anyhow, the nominal growth of wages is accompanied by price falls, thereby additionally contributing to the improving paying capacity of the Latvians. If to compare the second quarter of this year with the same period of the last year, then the average wage (net) has grown by 2.9%. But thanks to deflation recorded for this period the paying capacity of the employed persons has grown by 3.6%.

It may also be noted that a net wage is growing slower than a gross wage despite the fact that this year the tax-exempt minimum has slightly grown. This is partly due to the introduction of the progressive taxation rudiments, which in the Latvian case are manifested in the appearance of a so-called solidarity tax applicable to wages higher than 4 thousand euro a month.

As to the sectoral revenues, then the top of the Latvian wages is traditionally headed by Finances and Insurance. Here over a year a 4.5% growth was observed (from EUR 1 788 in the 2nd quarter 2015 to EUR 1 869 in the 2nd quarter 2016). The second line is occupied by the specialists in information technologies (+3.6%; up to EUR 1 333), and the power industry rounds out the TOP - 3 (+1.4%; up to EUR 1 153).

For comparison: the lowest pay employees of Latvia — cooks, waiters, receptionists and room attendants – they earn three and a half times less than the bankers. The average salary of employees engaged in the public catering and hotel sector in the 2nd quarter of this year made just EUR 557. However, the official statistics does not include tips.

As far as the nearest future is concerned, then it gives hope. The average Latvian wage hike should be triggered by the builders, who are currently going through a bad patch. It is enough to say that the number of people engaged in the construction industry in the first half of the year, if compared to the same period of the preceding year, fell by 10 thousand. Probably, they took banking.

The troubled circumstances in construction are connected with the delay in the acquisition of funds of the European Union. But in the second half of this year with the fund money repayment the construction industry will start recovery gradually, thereby positively affecting the economic advance and contributing to more rapid reduction of unemployment. This would have a positive impact on wages as well.

Therefore, we can forecast with a high degree of certainty that this year the level of gain in wages in Latvia would make up 6–7%.


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

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