The Cabinet of Ministers’ decision on the schedule for increasing the minimum pay rate for teachers does not comply with the requirements of the Fiscal Discipline Law, as full compensation for the additional expenditure has not been ensured in line with national and European Union fiscal rules, the Fiscal Discipline Council (FDC) has concluded.
As a result, the Council has prepared a non-compliance report on the government’s decision, including recommendations on how to remedy the situation.
The FDC notes that at a Cabinet meeting on December 22, 2025, the government approved a draft order “On the schedule for increasing the minimum pay rate for teachers for the period from January 1, 2026, to December 31, 2030.”
According to the order, the total indicative additional funding required is estimated at €55,996,103 in 2027, €114,981,372 in 2028, €177,349,657 in 2029, and €243,295,918 in 2030.
Part of the additional funding needed for remuneration of academic staff is expected to be covered by funding allocated to the Ministry of Education and Science of Latvia for the introduction of the institutional funding model — €4,842,730 in 2027 and €5 million annually from 2028 onward.
Under the approved order, decisions on allocating additional funding for 2027 and subsequent years are to be taken during the drafting of the draft law “On the State Budget for 2027 and the Budget Framework for 2027, 2028, 2029, and 2030.”
To ensure the additional funding indicatively calculated by the Ministry of Education and Science for the teachers’ pay increase schedule in 2027–2030,
the plan envisages reducing public sector expenditure, reviewing functions and improving process efficiency,
prioritizing the education sector, and taking into account the financial impact of school network optimization as well as changes in the number of students and teachers.
The FDC has therefore determined that the Cabinet’s decision does not comply with the Fiscal Discipline Law, which stipulates that if the government submits to the Saeima a draft law that results in exceeding the adjusted maximum permissible level of state budget expenditure or reduces planned state revenues, it must simultaneously submit draft legislation providing for compensation of the increased expenditure or reduced revenue. Such compensation must be achieved either by increasing revenues or reducing expenditures.
While not disputing the necessity of increasing the minimum pay rate for teachers, the FDC stresses that compliance with EU and national fiscal rules is also mandatory. Currently, the new EU fiscal framework — the Stability and Growth Pact — is in force, imposing stricter requirements on the growth of government spending.
The Council also recalls that on January 21, 2025, the EU Council approved Latvia’s Fiscal-Structural Plan for 2025–2028, which sets a specific and binding expenditure growth trajectory. This trajectory, together with the requirements of the Fiscal Discipline Law, constitutes a mandatory framework for planning state budget expenditure, the FDC emphasizes.
In addition, on December 4, 2025, the Saeima approved the 2026 state budget and the budget framework for 2026, 2027, and 2028, within which fiscal space — the state’s capacity to allocate additional funding in the medium term — will be limited, the Council notes.
The FDC therefore concludes that
allowing for a comprehensive assessment of the necessity, benefits, and costs of all planned reforms.
The Council also draws attention to the fact that this is already the second breach of the Fiscal Discipline Law in a short period in the context of the teachers’ salary reform, which undermines the overall credibility of the budgetary process.
To remedy the non-compliance arising from the Cabinet decision of December 22, the FDC recommends that the government prepare and adopt regulatory measures ensuring full compensation of the additional expenditure related to the teachers’ minimum pay increase schedule for the period from January 1, 2026, to December 31, 2030, without exceeding the maximum permissible level of state budget expenditure.
As an alternative, the FDC suggests repealing the December 22 Cabinet order until the necessary funding is secured or the policy initiative is approved within the framework of budget priority measures.
As previously reported, on December 22 the Cabinet supported the Ministry of Education and Science’s proposal to resume implementation of the teachers’ minimum salary increase schedule from 2027.
This year, the minimum hourly pay rate for teachers will remain unchanged at €9.76. The Ministry justified this decision by the state of the national economy and the freeze on public sector wages. For a workload of 40 hours per week, teachers will receive at least €1,566 per month.
The increase in the minimum monthly salary rate will be implemented gradually from 2027 to 2030. For example, in 2027 the minimum hourly rate for teachers will rise to €10.35, translating into a minimum monthly salary of €1,656 for a 40-hour work week. Further increases are planned for 2028 (€1,751 per month), 2029 (€1,852 per month), and 2030, when the minimum teacher salary is expected to reach €1,958 per month.
According to estimates by the Ministry of Education and Science, the average teacher salary will be approximately 20% higher than the minimum rate, and by 2030 the average teacher salary is projected to be 2.5 times higher than the nationally set minimum monthly wage.
Overall, the salary increase schedule developed by the Ministry provides for higher minimum pay rates across all teacher positions in general education, special and vocational education, vocational orientation and interest-based education, pre-school education, and for academic staff.
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