Minimum Wage in Latvia - Frequently Asked Questions

Is there a separate legislation relating to minimum wages in Latvia?

The legal provisions of wage and minimum monthly wage in Latvia are stipulated in several normative acts. According to Article 61 of the Labour Law (in effect since 01.06.2002), the minimum monthly wage is set by the Cabinet of Ministers by Regulation regarding minimal monthly wage and minimal hourly tariff rate No. 665 (27.08.2013). Section 61 of the Labour Law named as "Minimum Wage" does not define the terms, but sets the main provisions regarding minimum wage. In compliance with the law, a minimum wage shall not be less than the minimum level determined by the state. The minimum monthly salary within the scope of normal working time, as well as minimum hourly wage rates, shall be determined by the Cabinet of Ministers. The procedures for the specification and review of the minimum monthly wage shall be determined by the Cabinet of Ministers. In practice there is only one minimum wage determined by law and employer can't be paid less than minimum wage determined by law. Of all the Latvian illegal income earners 9% admitted that the whole of the salary they are paid informally, but 8% - that receives envelope wages smallest part, and the remaining 8% - the biggest salary is paid without paying state taxes. Envelope wages are a sign to illegal remuneration to be paid to avoiding taxes. It is believed that envelope wages is one of the main obstacles to Latvian reduce the informal economy.

Do one or more minimum wages exist that is/are determined by law?

Statute 2 (27.08.2013) states the general minimum wage which applies to everyone. The only exception is person sentenced with deprivation of liberty (The Sentence Execution Code of Latvia in effect since 01.04.1971). In some sectors people are paid more than in other for instance in the first quarter of 2014, the average wage rate was highest in finance and insurance activities sector - 1,773 Euros, information and communication services - 1253 Euros in the energy sector - 965 Euros, and public administration and defence - 914 Euros. But the lowest average wages observed in accommodation, catering and other service sectors, education, arts, entertainment and recreation industry and trade.

On what basis is minimum wage calculated?

Statute 2 (27.08.2013) states both the minimal wage for full-time employees and a set minimum hourly wage. The minimal wage for full-time employees is calculated on 40 hours in seven day period and 8 hours per day by the Labour Law ( Part D Working Time and Rest Time Division Six Working Time Chapter 31 General Provisions Regarding Working Time) (01.06.2002). Usually full-time employees work 8 hours per day for five days and have weekends off.

In case of weekly/monthly minimum age, are they based on any fixed number of hours?

The monthly minimum wage is for full-time employees. §31 of the Labour Law (01.06.2002) states that full-time employees work 40 hours in a seven day period and 8h per day. In a month when the number of working hours is less than the average annual number of working hours per month, the salary of employees to whom a time salary system has been organised with payment of the minimum hourly wage rate and who have worked all the specified monthly working hours, shall be determined in the amount of the minimum monthly salary, increasing the calculated salary by the difference between the calculated salary and the minimum monthly salary referred to in Paragraph 2 of Regulations regarding the Cabinet of Ministers by Regulation regarding minimal monthly wage and minimal hourly tariff rate No. 665 (27.08.2013). The calculated salary of employees to whom a piece-work salary system has been organised within the scope of normal working time and who have worked all the specified monthly working hours, but whose calculated salary is less than the minimum monthly salary referred to in Paragraph 2 of Cabinet of Ministers by Regulation regarding minimal monthly wage and minimal hourly tariff rate No. 665 (27.08.2013), shall be increased according to the difference between the calculated salary and the minimum monthly salary referred to in Paragraph 2 of Cabinet of Ministers by Regulation regarding minimal monthly wage and minimal hourly tariff rate No. 665 (27.08.2013). Usually full-time employees work 8 hours per day for five days and have weekends off, but it depends on job.

Are governmental bodies, employer and/or trade union representatives involved in minimum wages setting?

The Ministry of Welfare together with other partners, like the Ministry of Finance, the Ministry of Economics, the State Chancellery Policy co-ordination department, the Union of Local and Regional Governments of Latvia, the Free Trade Union Confederation of Latvia and the Latvian Employers' Confederation, shall evaluate the economic situation in the country and co-ordinate the amount of the minimum monthly wage. National Cooperation Council. It coordinate and organize the tripartite social dialogue between employers' organizations, trade unions and public authorities in order to reconcile the interests of the organizations social and economic issues, thus ensuring social stability in the country. The amount of the co-ordinated minimum monthly wage and the date for amendments introduction must be approved at the meeting of the National Tripartite Cooperation Council.

How are upratings (adjustments) of minimum wage/s decided upon?

Each year the Ministry of Welfare, together with the Ministry of Finance and the Ministry of Economics, shall evaluate the economic situation in the State and develop a proposal regarding the amount of the minimum monthly wage (with an accuracy to one euro) for the subsequent period, taking into account the macroeconomic forecasts prepared by the Ministry of Economics and changes in the economic situation in the previous year, the planned changes in the tax system (changes in the personal income tax rate, the minimum non-taxable personal income, the rate of mandatory State social insurance payments), as well as changes in the minimum monthly wage in other Baltic states (in Estonia and Lithuania) and the average annual value of the minimum consumer basket per capita per month calculated by the Central Statistical Bureau. (Procedures for the Determination and Review of the Minimum Monthly Wage (03.06.2011)). Since 2011 Latvia the minimum wage has been increased since minimum consumer basket per capita according to statistics remained almost unchanged. This situation arose because minimum consumer basket calculations were in line with the methodology of 1991, which was no longer relevant to the current situation, but now new rules are being developed. Since 2014 minimum wage is 320 euro till 2014 it was 284.57 euro (200 LVL).

Which are the components of minimum wage?

There is only fixed component of minimum wages in Latvia.

How frequently is the fixed component of minimum wage updated?

Minimum wages are reviewed annually. Each year the Ministry of Welfare, together with the Ministry of Finance and the Ministry of Economics. As there was economic crises minimum wage was not updated each year as it should.

What is/are the yardstick/s on which minimum wage upratings are based?

Change in the tax system (changes in the personal income tax rate, the non-taxable minimum personal income, the rate of mandatory State social insurance payments), as well as changes in the minimum monthly wage in other Baltic states (in Estonia and Lithuania) and the average annual value of the minimum consumer basket per capita per month calculated by the Central Statistical Bureau.

What is National Poverty line?

Click here to know the national poverty line in context with Minimum Wage, living wages and actual wages. Select the currency (Euro or national currency) to know national poverty line.

How is minimum wages compliance regulated?

There is no institution that is responsible for regulating minimum wage compliance.

Which legal sanctions can be applied in compliance is lacking?

We have State Labour Inspectorate which is a governmental body. The main function of the State Labour Inspectorate is national surveillance and control of the implementation of labour relations and occupational health and safety field. They can impose administrative sanctions on employers in accordance with the procedures prescribed for the administrative violations. Latvian Administrative Violations Code (II SPECIAL PART Chapter Five Administrative Violations in the Protection of Labour and Citizens Health Section) §41. Violation of the Regulatory Enactments regulating Employment Legal Relations to Labour - In the case of not ensuring the State specified minimal monthly wage, if the person is employed for a normal working time, or not ensuring the minimal hourly tariff rates – a fine shall be imposed on the employer – a natural person or an official or a legal person. Inspectorate applies fines to the employer if the person is not receiving the State specified minimal monthly wage for a normal working time, or not receiving the minimal hourly tariff rates.

Are sanctions often being applied?

In 2013 25% of all fine applied by the State Labour Inspectorate were applied for violating Regulation regarding minimal monthly wage and minimal hourly tariff rate No. 665 (27.08.2013).

Are employer and/or trade union representatives involved in compliance procedures?

Employer/trade union’s representatives are not involved in compliance process.

To whom/Where can individuals complain, if they think they are earning less than minimum wage?

State Labour Inspectorate's mission is to make labour relations and occupational health and safety legislative compliance Latvian to our country to be established and maintained in a safe, healthy working environment and correct labour relations. Monitor and control of labour relations and occupational health and safety laws and regulations compliance.

Controls how employers and employees mutually fulfilling employment contracts and collective bargaining agreements obligations. Contacts: 38 k-1, Kr.Valdemara Street, Riga, LV –1010 working hours: from Monday till Friday 8.30 -17.00 E-mail: vdi@vdi.gov.lv web site: www.vdi.gov.lv

Which month of the year is minimum wage rate revised in your country?

Each year by 1 June, the Ministry of Welfare shall submit a proposal regarding the retention, raising or reduction of the minimum monthly wage for the subsequent period and the date for the implementation of the relevant changes, for co-ordination to the National Tripartite Cooperation Council.