The ruling coalition in Latvia plans to discuss possible solutions to compensate the rapid price rise, as journalists were told by representatives of government parties on Monday, 26 April.
Last week the Minister of Welfare Gatis Eglītis presented to coalition cooperation parties the plan to increase minimal wage from EUR 640 to EUR 700 next year. On Monday Eglītis said generally colleagues were not against increasing wages to EUR 640, because this year minimal wage was not increased this year. This means this step should be more rapid in 2023.
The minister explained that EUR 640 was picked because it meets 50% of the average wage amount in other countries – the system that already exists in other European countries and which is linked to the EU directive on adequate minimal wages.
«We don’t want to end up in a situation when we and Bulgaria are countries with the lowest minimal wage in the EU, and fall behind Lithuania and Estonia, where the difference between wages on hand is already at EUR 150,» said Eglītis.
Commenting the question about the possibility of increasing minimal wages Latvian Prime Minister Krišjānis Kariņš said such an option could potentially increase inflation. He mentioned the price rise is a challenge for Latvia, Europe and the rest of the world. This is why it is very important to understand how best to react.
The PM mentioned that the National Trilateral Cooperation Council has already discussed potential solutions, adding that the discussions should continue – with social partners and experts from different sectors and banks.
Kariņš said it is clear it is necessary to move forward with focused aid for groups of residents for whom the price rise creates the biggest problems. At the same time, it is necessary to consider arguments in favour of increasing the minimal wage.
«This is a very important issue. I think there is no simple solution, because every solution has its own side-effects, but we as politicians with social partners and experts have to analyse, discuss and look for a path to share with everyone,» said Kariņš.
Minister of Agriculture Kaspars Gerhards said it is necessary to find a solution as soon as possible to help the least protected groups of society, because
it is expected the price rise will continue.
As for the solution involving minimal wage increase from next year onward, the minister said he agrees with the PM – raising the minimal wage could further increase inflation.
Minister of Environment Protection and Regional Development Artūrs Toms Plešs said it is necessary to consider complex solutions to help residents with low and medium wages make ends meet.
Plešs said his party Attīstībai/Par! believes it is necessary to compose a joint support system that will be more focused and may involve minimal wage and non-taxable minimum, as well as other solutions, including pension indexation as early as 1 July.
Eglītis said the coalition did not reach an agreement on doing indexation as early as 1 July.
The politician explained that pension indexation would cost an additional amount of EUR 26 million a month. This is why if indexation is done on 1 July, not 1 September, this would mean additional costs of EUR 52 million for the state budget.
The politician said that in accordance with the coalition’s previous decision, the Ministry of Welfare is already working on amendments to the Law on Pensions regarding pension indexation on 1 September.
When asked if September is not too late for pension indexation, the minister of Welfare said 1 July marks the coming into force of the increase of non-taxable minimum from EUR 300 to EUR 500. This would help support small pension and small wage recipients, said the politician.
Kariņš also said the coalition parties reached an agreement on pension indexation on 1 September, which is earlier than 1 October.
The PM also said it is necessary to move towards focused support for people who need aid the most. The government needs to continue working in this direction.