Average gross wage in Latvia grows 10.4% in Q3

01 December 2021

RIGA, Dec 1 (LETA) - In the third quarter of 2021, the average monthly gross salary in the country for full-time work was EUR 1,280, according to the data of the Central Statistical Bureau (CSB). Compared to the third quarter 2020, the average monthly salary increased by EUR 121 or 10.4 percent, but the hourly wages before taxes - by 4.4 percent - from EUR 8.09 to EUR 8.44.

In the third quarter 2021, the average monthly gross salary increased by 3.4 percent compared to the second quarter, while hourly wages decreased by 1.6 percent. Average net wages and salaries, calculated based on labor taxes applicable on workplace, comprised EUR 940 or 73.4 percent of the gross salary. It increased by 10.3 percent during the year. The real increase in net wages and salaries, taking into account the rise in consumer prices, was 6.3 percent.

In the third quarter of 2021, the average monthly gross salary in the private sector was EUR 1,280, and it increased by 10.4 percent during the year. In public sector, the average salary was EUR 1,287, growing at a slightly faster annual rate (10.9 percent). General government sector, which includes central and local government institutions, as well as enterprises controlled and financed by the central and local government, average wages and salaries increased to EUR 1,260 or by 11.9 percent.

Compared to the second quarter, in private sector average gross wages and salaries rose by 5.3 percent, while in public and general government sector decreased- by 0.3 percent and 0.6 percent, respectively.

Average wages and salaries are affected not only by increases or decreases in wages and salaries of employees, but also by structural changes in the labor market: companies that started and closed down during the year, changes in the number and workload of workers, which in 2021, as in the previous year, is also affected by the Covid-19 pandemic crisis.

In addition, the third quarter of this year saw significant changes in the area of labor-related taxation, with the introduction of compulsory minimum national social security contributions from July 1 and the end of the transitional period after which all employees of micro-enterprise tax payers are subject to labor taxes under the general regime. The impact of these factors is generally reflected in changes in the wage bill and the number of full-time employees used to calculate average wages.

The wage bill in the third quarter 2021 compared to the third quarter last year increased by 11.1 percent or EUR 283.6 million for the country as a whole, while the number of full-time equivalent employees increased by 4.4 thousand or 0.6 percent.

Over the year, average wages and salaries grew fastest in the health and social work sector, by 24.3 percent, where both the wage bill and the number of full-time employees increased. Similar trends were also observed in mining and quarrying, manufacturing, trade, information and communication services.

In eight sectors, the average monthly salary is above the national average

In the third quarter 2021, average monthly wages and salaries for full-time work were above the national average in financial and insurance activities, information and communication services, professional, scientific and technical services, health and social work, energy, public administration, mining and quarrying, as well as construction. The lowest average wages and salaries before taxes were in accommodation and food services (EUR 855), as well as education (EUR 988).

Wages and salaries in Latgale on average 36 percent less than in Riga

In the third quarter 2021 the highest average salary before taxes for full-time work was in Riga - EUR 1,427, while the lowest - in Latgale (EUR 912), which is 36 percent less than in the capital of the country.

Over the year, average gross wages and salaries grew fastest in Latgale - by 13 percent, while the lowest increase was in Vidzeme (9.5 percent). Wages and salaries for one hour worked - EUR 8.44 Gross wages and salaries per hour worked in the third quarter 2021 were EUR 8.44 and during the year it increased by 4.4 percent (in the third quarter 2020 - EUR 8.09).

Compared to the 3rd quarter 2011, hourly earnings decreased in real estate (-4.9 percent), other services (includes activities of social, political and other organizations, repair of personal and household goods, dry cleaning, hairdressing, beauty, funeral and other services) sector (-4.5 percent), accommodation and food services (-4.2 percent), construction (-0.8 percent) and manufacturing (-0.2 percent).

Labor costs per hour, which include both wages and other labor-related expenses of the employer, increased from EUR 10.22 to EUR 10.64, or by 4 percent over the year, driven by increases in total labor costs and hours worked, by 10.6 percent and 6.3 percent respectively over the year.

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