Average gross wages in Latvia could increase by around 7% next year, according to bank analysts.
Senior economist Agnese Buceniece of Swedbank told news agency LETA that wage growth will continue to slow in 2026 and is expected to be around 7%.
She noted that the tight labour market will help sustain wage growth. The increase in the minimum wage will be modest—from €740 to €780—which means that a rising minimum wage will not be a significant driver of average wage growth in 2026. Growth in average wages will also be constrained by austerity measures in the public sector, as well as companies’ ability to pay higher wages, given competitiveness risks and declining corporate profitability in recent years.
At the same time, Buceniece forecast that wages in the private sector will grow faster than in the public sector. The budget law approved by the Saeima stipulates that public sector wages are not planned to be increased in 2026. In addition, cash bonuses will be restricted and performance bonuses for work in 2026 will not be paid, although this will not apply to state security institutions.
According to her estimates, budget expenditure on remuneration will rise by 3% next year, compared with a possible increase of 6.8% in 2025. Wages in the education sector are expected to grow faster than in the public sector overall. Although minimum monthly pay rates for teachers will remain unchanged next year, average wages in education will increase due to the continued implementation of the new funding model, “Programme at School,” for which €45 million has been allocated in the budget.
Wage growth in construction is expected to slow, as the sector has not agreed on raising the minimum wage, which will remain at €1,050. However, unlike in 2025, this minimum will apply to all employee groups without exceptions, Buceniece added.
She also noted that amendments approved at first reading in the Saeima envisage a significant reduction in the minimum overtime premium—from 100% to 50%. “Discussions are still ahead. If the current proposal is adopted, it could further slightly limit wage growth next year,” Buceniece said.
SEB Bank’s macroeconomic expert Dainis Gašpuitis told LETA that wage growth will continue to slow in 2026, but the pace will remain high, continuing to pose challenges to competitiveness and profitability.
According to Gašpuitis’ forecast, average wages in 2026 could rise by just over 7%. “The pace will remain rapid, outpacing inflation, which will mean further growth in average purchasing power,” he said.
At the same time, Gašpuitis noted that in many sectors it is becoming increasingly difficult to maintain current wage growth, although declining inflation is a supportive factor. “Typically, the process will be uneven across sectors, companies and even individual teams, meaning that personal prospects may differ from the overall picture. No sector is expected to see wages stagnate. The biggest changes may occur in lower-paid jobs, where demand could rise sharply, for example in construction and manufacturing,” Gašpuitis said.
He added that overall growth will also be dampened by restrictions on public sector wage increases, meaning that wage growth in the private sector will be faster. On the other hand, the expected activation of the economy and labour market will improve workers’ opportunities and increase the challenge for employers to maintain employee motivation.
Meanwhile, economist Pēteris Strautiņš of Luminor Bank told LETA that since 2013, growth in Latvia’s wage bill has consistently outpaced nominal gross domestic product (GDP) growth, with the sole exception of 2021.
He stressed that the officially declared wage bill is one of the very few economic indicators known with complete precision, whereas almost everything else—production, trade, exports—is more or less an estimate.
“Rapid wage growth causes endless concern among analysts that wages are rising faster than productivity, harming competitiveness. However, export dynamics during periods when market conditions are reasonably favourable, as they are now, do not point to major competitiveness problems. This raises a logical question—perhaps productivity, and thus GDP growth, is being underestimated?” Strautiņš said.
He also noted that wage growth next year should continue to slow, a trend already under way since 2023, when wages rose by 12%. Wage growth of around 7% is forecast for next year, following an increase of 8% in 2025.
Read also: BNN IN FOCUS | Three political processes in Latvia whose consequences we will also feel next year
Seko mums arī Facebook, Draugiem un X!