In Q1 2022 the average gross wages and salaries for full-time work in the country amounted to EUR 1 297. Compared to Q1 2021, the average monthly earnings grew by EUR 84 or 6.9 % thus coming nearer the annual increase rate recorded before the pandemic (7.2% in 2019).
Hourly earnings before taxes increased to EUR 8.72 or by 9.6%.
Compared to Q4 2021, average monthly gross wages and salaries dropped by 2.9% and hourly earnings by 1.7% in Q1 2022, according to data of the Central Statistical Bureau of Latvia.
In 2022, the national minimum wage remained at the same level it was the year before – EUR 500 for full-time work, however as of 1 January 2022 the maximum non-taxable minimum increased and income thresholds subjected to different income tax rates changed thus affecting the average earnings after taxes (net).
Average net wages and salaries (calculated based on the labour taxes applicable on workplace) comprised EUR 951 or 73.3% of gross wages and salaries. Over the year, net earnings grew slower than gross earnings – by 6.2%. However, considering rise in the consumer prices, net earnings fell by 2.7% pointing to reduced purchasing power of salaried workers.
In Q1 2022, median gross wages and salaries for full-time work amounted to EUR 1 000. Compared to Q1 2021 (EUR 947), they rose by EUR 53 or 5.6%. In Q1 the year, median net wages and salaries (after taxes) comprised EUR 743 and rose by 5.1% over the year.
Median is calculated based on the information available in statistical surveys and administrative data of the State Revenue Service.
The median is the average in the middle of the ascending or descending order of wages of the workers, i.e., half of the wages are higher than the median and the other half are lower. As median, compared to the mean arithmetic earnings, is not influenced by extremely high or low wages and salaries, it reflects typical earnings more precisely.
In Q1 2022, the average monthly earnings in private sector comprised EUR 1 306, and over the year they have grown faster than in public sector – by 7.2%. Average wages and salaries in public sector amounted to EUR 1 285 and the increase rate thereof constituted 6.1 %. Average earnings in general government sector, which includes central and local government institutions, as well as enterprises controlled and financed by the central and local government, grew to EUR 1 246 or by 5.6%.
Compared to Q4 2021, average wages and salaries in public sector fell by 7.2%, of which by 8.7% in general government sector.
Drop recorded in the private sector was notably smaller – 0.9%.
Change in the average wages and salaries is influenced not only by the rise or decline of employee remuneration, but also structural changes of the labour market – enterprises that have started and stopped their business during the year, changes in the number of employees and workloads that were affected by government restrictions imposed and support measures taken due to the Covid-19 pandemic.
The effects caused by the mentioned factors in general may be seen in the changes in the wage and salary fund and number of full-time employees, which are used in the average wage calculations.
In Q1 2022, compared to Q1 the previous year, the total wage and salary fund increased by 13.0% or EUR 320.8 million, while the number of salaried workers, recalculated into full-time units, grew by 38.6 thousand people or 5.7%.
Over the year, the sharpest rise of earnings was registered in professional, scientific and technical activities, water supply, sewerage, waste management, and remediation activities, arts, entertainment and recreation, accommodation and food service activities, energy sector, as well as financial and insurance activities.
In arts, entertainment and recreation, accommodation and food service activities, as well as financial and insurance activities wage and salary fund grew faster than number of employees, while in other above activities growth in the fund was observed, but number of employees reduced.
Decline in the average wages and salaries was recorded in other service activities (of 2.6%), which was due to steeper rise in full-time employee number than in wage and salary fund.
In Q1 2022, the average monthly wages and salaries for full-time work above the national average were recorded in financial and insurance activities (EUR 2 574), information and communication (EUR 2 206), professional, scientific and technical activities (EUR 1 693), energy sector (EUR 1 612), human health and social work activities (EUR 1 569), public administration and defence (EUR 1 433), as well as mining and quarrying (EUR 1 322).
The lowest average gross earnings were observed in accommodation and food service activities (EUR 811) and education (EUR 988).
In Q1 2022, compared to Q1 2020, the sharpest rise in the average net wages and salaries was recorded in Riga (of 7.5%) and Pierīga (7.0%), thus leaving the greatest influence on the change of the national average rate. The highest average gross earnings for full-time work were observed in Riga (EUR 1 467), whereas the lowest in Latgale (EUR 882 which is 40% fewer than in the capital). It should be noted that the gap in the average earnings between Riga and regions grew over the year.
In Q1 2022, gross hourly earnings amounted to EUR 8.72 (EUR 7.96 in Q1 2021), and over the year they grew by 9.6%.
Hourly labour costs that include wages and salaries as well as other labour-related expenses of the employer over the year rose from EUR 9.94 to EUR 10.99 or by 10.6%, which was due to the increase in the total labour costs and hours worked – of 13.3% and 2.4%, respectively.
In Q1 2022, the highest average gross earnings among the Baltic states were registered in Lithuania – EUR 1 730 for full-time work, followed by Estonia with EUR 1 593, and the lowest wages and salaries were recorded in Latvia – EUR 1 297.
Compared to Q1 2021, the lowest annual increase rate of average earnings was registered in Latvia (6.9 %), in Estonia it constituted 8.1 % and the highest was recorded in Lithuania – 14.0 %.
It should be mentioned that at the beginning of the year minimum wage in Lithuania and Estonia was raised: in Lithuania from EUR 642 to 730 or by 13.7% and in Estonia from EUR 584 to 654 or by 12.0%.