After the National Tripartite Cooperation Council failed to reach an agreement on raising Latvia’s minimum wage to 835 euros, the Ministry of Welfare has proposed increasing it by 40 euros to 820 euros per month next year, according to draft regulations prepared by the ministry.
The current minimum monthly wage in Latvia is 780 euros. Both the Ministry of Welfare and trade unions had supported raising it to 835 euros.
The draft regulations have been submitted for consultation until 9 November and will still require government approval. The changes are intended to take effect in 2027.
The Ministry of Welfare states that, based on the reference value established in Latvian legislation, the minimum monthly wage should be set at 835 euros next year.
However, no agreement on this amount was reached during meetings of the National Tripartite Cooperation Council on 30 July and 8 October this year.
The reference value used to calculate the minimum wage is 46% of the average gross monthly salary over the latest available 12-month period, as calculated by the Central Statistical Bureau (CSB).
The calculation is based on the average gross monthly salary of 1,815 euros recorded in 2025.
This produces a reference value of 834.90 euros, rounded to 835 euros.
Consequently, the minimum wage proposed by the Ministry of Welfare in the draft regulations is 15 euros lower than the amount calculated using the statutory reference value.
According to CSB data cited in the draft’s explanatory memorandum, an average of 131,815 employees, or 17.1% of all employees, earned the minimum wage or less last year.
This represented a decrease of 2.3 percentage points compared with 2021, when 19.4% of employees received wages at or below the minimum level.
The Ministry of Welfare explains that increasing the minimum wage will raise labour costs for employers whose employees currently earn less than the proposed 820 euros per month for normal working hours.
However, the ministry does not expect the changes to increase employers’ administrative burden, as information about employee income and taxes must already be submitted to the State Revenue Service every month.
According to the ministry’s assessment, a higher minimum wage will improve the purchasing power of low-income workers and have a positive effect on domestic demand.
It could also encourage investment in technology and productivity improvements, while helping to reduce the shadow economy in sectors with a higher proportion of minimum-wage workers.
At the same time, the ministry acknowledges that industries employing a large proportion of workers earning the minimum wage or salaries close to it could face increased pressure from rising production costs.
In the short term, the increase could also negatively affect small and medium-sized enterprises in regions with lower economic activity and income levels, particularly where a significant proportion of employees earn the minimum wage or close to it.
The fiscal impact of increasing the minimum wage to 820 euros has already been incorporated into macroeconomic forecasts, tax revenue projections and state budget expenditure estimates, as well as Latvia’s Fiscal Structural Plan for 2025–2028.
As a result, the proposed amendments will not change the tax revenue or state budget expenditure figures already forecast.
The Ministry of Welfare cannot accurately calculate the potential additional costs for municipal budgets because it does not have data on employees of local government institutions whose monthly wages for normal working hours are below 820 euros.
As previously reported, the Ministry of Welfare stated in its July report on the minimum wage that, based on the reference value established in legislation, Latvia’s minimum monthly wage should be set at 835 euros in 2027.
However, on 19 September 2024, when reviewing an information report on state budget revenue and tax policy, the government outlined a medium-term minimum wage schedule.
Under that plan, the minimum monthly wage would be set at 780 euros in 2026, 820 euros in 2027 and 860 euros in 2028.