Latvia - Wide-scale cuts in wages and social benefits - August 12, 2009

As of July 1, after long discussions between the Latvian government and social partners, a number of new regulations concerning the amount of wages, pensions and social benefits have come into effect.

The monthly non-taxable minimum or tax free allowance on personal income tax has been reduced from LVL 90 (Euro 129) to LVL 35 (Euro 50), which means that the tax burden for workers has increased.

In addition, the government has decided to cut state sector salaries. Monthly salaries below LVL 300 (Euro 430) have been reduced by 15% - affecting 21% of employees in the ministries and subsidiary institutions - while wages above that amount have been cut by 20%, impacting on the remaining 79% of the workers.

Moreover, from 1 September 2009 on, teachers' monthly gross wages will be cut by almost one third, from LVL 345 (Euro 494) to LVL 250 (Euro 358).

Finally, between 16 June 2009 - 2012, old-age pensions and long-service pensions have been cut by 10%.

Wide-scale cuts in salaries and social benefits at

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