Average earnings before taxes rose by 12 % in Q1 2023

Data of the Central Statistical Bureau of Latvia (CSB) show that in Q1 2023 the average gross wages and salaries for full-time work amounted to EUR 1 462. Compared to Q1 2022, the average monthly earnings increased by EUR 160 or 12.3 %. Hourly earnings before taxes went up to EUR 9.18 or by 5.2 %.

Compared to Q4 2022, in Q1 2023 average gross earnings increased by 1.3 % and hourly earnings fell by 1.7 %; national wage and salary fund, at the same time, remained unchanged and number of hours worked grew by 1.7 %.

In January 2023 national minimum wage was increased from EUR 500 to 620 for full-time work or by 24.0 %.

Average monthly earnings after taxes EUR 1 071

The average net wages and salaries (calculated based on the labour taxes applicable to employers) comprised EUR 1 071 or 73.2 % of the gross earnings. However, considering rise in the consumer prices, net earnings fell by 6.1 %, pointing to a decline in the purchasing power of salaried workers, moreover, for the fourth quarter in a row.

Change in the average net earnings in Q1 2023, compared to Q1 2022, were also caused by the increase in the maximum non-taxable minimum (from EUR 350 to 500 as of 1 July 2022) and higher coefficient used to calculate differentiated non-taxable minimum.

Median monthly earnings EUR 1 149

In Q1 2023 median gross wages and salaries for full-time work amounted to EUR 1 149. The indicator has risen by EUR 146 or 14.5 %, compared to Q1 2022 (from EUR 1 003). Net median wages (after taxes) amounted to EUR 856 and have grown by 14.6 % over the year.

Median is calculated based on the information available in statistical surveys and administrative data of the State Revenue Service.

Median is an average in the middle of the ascending or descending order of wages of workers, i.e., half of the wages are higher than the median and the other half are lower. As median, compared to the mean arithmetic earnings, is not influenced by extremely high or low wages and salaries, it reflects typical earnings more precisely.

Sharper upturn in private sector

In Q1 2023, the average monthly gross wages and salaries in private sector amounted to EUR 1 483 and over the year grew faster than in public sector (by 13.1 %). In public sector, the average monthly gross earnings amounted to EUR 1 422 and grew by 10.5 %. The average earnings in general government sector, which includes central and local government institutions as well as enterprises controlled and financed by the central and local government, went up to EUR 1 366 or by 9.4 %.

Compared to Q4 2022, the average earnings in public sector fell by 2.0 %, of which by 3.8 % in general government sector. Private sector, in turn, indicates a rise of 3.0 %.

Change in average monthly earnings by sector

* Excluding foundations, associations, funds, and commercial companies thereof.

Change in the average wages and salaries is influenced not only by the rise or decline of employee remuneration but also labour force demand and supply on and structural changes of the labour market. It should be noted that in Q1 2022, which is used as the base for annual increase estimates, companies in sectors affected by the COVID-19 pandemic restrictions still received part-time wage subsidies and special allowances for health workers.

The effects caused by the mentioned factors in general may be seen in the changes in wage and salary fund and number of full-time employees, which are used in the average wage calculations.

In Q1 2023, compared to Q1 2022, the national wage and salary fund increased by 15.4 % or EUR 429.5 million while number of salaried workers, recalculated into full-time units, by 19.4 thousand people or 2.7 %.

In terms of economic activities, the sharpest rise in the average earnings (exceeding 20 %) was registered in agriculture, forestry and fishing, energy sector, as well as mining and quarrying. Reduction, in turn, was observed in human health and social work activities (−2.7 %). The sharp increase in mining and quarrying was driven by reduction in the number of employees and 12.4 % increase in calculated fund of wages and salaries at the same time. The average figure in human health and social work activities was the most affected by smaller fund of wages and salaries in human health activities (−2.8 %) and more employees in social work.

Highest-paying economic activity ranking remains unchanged

In Q1 2023 the average gross monthly wages and salaries for full-time work above the national average were recorded in financial and insurance activities (EUR 2 803), information and communication (EUR 2 461), energy sector (EUR 1 951), professional, scientific and technical activities (EUR 1 911), public administration (EUR 1 626), mining and quarrying (EUR 1 593), human health and social work activities (EUR 1 530), as well as agriculture, forestry and fishing (EUR 1 487).

The lowest earnings for full-time were observed in accommodation and food service activities (EUR 945 before taxes).

Sharper rise in Latgale and Vidzeme

In Q1 2023, compared to Q1 2022, the sharpest rise in the average earnings before taxes was observed in Latgale (16.4 %) and Vidzeme (15.3 %) where the average earnings are lower than in other regions and thus the increase of the national minimum wage had more notable upward influence. The highest average gross earnings for full-time work were recorded in Riga (EUR 1 630) while the lowest in Latgale (EUR 1 038, which is 36 % fewer than in the capital). It should be noted that the gap between the average in earnings in Riga and regions has narrowed over the year – the most markedly in Latgale (by 3.0 percentage points) and Vidzeme (by 2.7 percentage points).

Hourly earnings EUR 9.18

In Q1 2023 gross hourly earnings amounted to EUR 9.18, and over the year they have grown by 5.2 % (EUR 8.73 in Q1 2022).

Over the year hourly labour costs (which include wages and salaries as well as other labour-related expenses of the employer) rose from EUR 11.00 to EUR 11.56 or by 5.1 %, which was due to the increase in both the total labour costs and hours worked (of 15.5 % and 9.9 %, respectively).

Latvia has the slowest rise of average earnings among the Baltic states

In Q1 2023, compared to Q1 2022, the average gross wages and salaries in Estonia and Lithuania increased by 13.3 %, while Latvian annual growth rate was slightly lower – 12.3 %.

All Baltic states increased national minimum wage in 2023. The highest increase may be observed in Latvia – of 24.0 % (from EUR 500 to 620), followed by Lithuania with 15.1 % (from EUR 730 to 840) and Estonia with 10.9 % (from EUR 654 to 725).

Methodological explanations

Wage and salary statistics is produced based on the results of a sample survey conducted among merchants, state and local government institutions, foundations, associations and funds, as well as administrative data.

CSB calculations of average wages in public sector include central and local government institutions and commercial companies thereof, companies with central or local government capital participation of 50 % and over, excluding foundations, associations, funds, and commercial companies thereof.

According to the European System of Accounts, the general government sector includes central and local government institutions, social security fund, enterprises controlled and financed by the central and local governments.

Information on the average wages and salaries is broken down by region based on the address of the office or main activity of an enterprise or institution.

Average monthly and hourly earnings and change in labour costs are calculated from not rounded figures.

In line with the regulatory enactment of the European Union, when compiling data on labour costs, wages and salaries include remuneration in kind (goods and services provided by the employer to employees free of charge or at a lower price, living quarters, mobile telephone, transport compensation, etc.) and exclude payment for the days not worked due to illness that is paid by the employer. Other labour costs include statutory social security contributions payable by the employer, employers’ contractual and voluntary social security contributions (additional pension insurance contributions, health and life insurance contributions, etc.), support payments from the employer, gifts, payments of a sick list A, severance pay, entrepreneurship state risk duty.

Media requests:
Communication Section
E-mail: media@csp.gov.lv
Phone: +371 27880666

More information on data:
Lija Luste
Wage Statistics Section
E-mail: Lija.Luste@csp.gov.lv
Phone: +371 67366917