Average monthly salary EUR 1,100 in Latvia

Data released by the Central Statistical Bureau (CSB) May 27 show that in the first quarter of 2020 the average gross wages and salaries for full-time work increased by 6.6 % or EUR 68 and comprised EUR 1,100.

In January 2020, compared to the corresponding period of 2019, the average monthly gross wages and salaries grew by 7.0 % or EUR 1 101, in February – by 7.8 % (EUR 1,085), but in March the growth rate was slower – 5.0 % (EUR 1,113).

Compared to the fourth quarter of 2019, in the first quarter of 2020 gross wages and salaries dropped by 1.2 %.

Average wages and salaries after taxes – EUR 812

Average net wages and salaries (calculated based on labour taxes applicable on workplace) comprised EUR 812. Over the year, it rose by 6.3 %, but, as compared to the 4^th quarter of 2019, fell by 0.8 %.

Considering the consumer price growth, the real increase of the wages and salaries comprised 4.3 %.

Median wages and salaries comprised EUR 858

In the 1^st quarter of 2020, median gross wages and salaries amounted to EUR 858 (in the 1^st quarter of 2019 – EUR 784). Compared to the 1^st quarter of 2019, it rose by 9.5 % – more rapidly than the average wages and salaries. In the 1^st quarter of this year, net median wages (after taxes) constituted EUR 641 and rose by 8.9 % over the year.

Median is an average indicator located in the middle of employee earnings sorted in an ascending or descending order. 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.

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

Citadele bank economist Mārtiņš Āboliņš commented on the figures, saying: "The economic crisis will slow down, but most likely will not halt wage growth in Latvia."

"As a result of the crisis, the financial situation of companies in many sectors has deteriorated and large producers, traders and service providers have also emerged as recipients of downtime benefits. This will have an impact on wages and in particular their variable component. Envelope wages are also likely to decline, and the low level of downtime benefits for many workers has also highlighted the problem of the informal economy. All this means that the income of the population will decrease and we can already see it in the turnover indicators of personal accounts in April. The good news, however, is that the lowest point in the economy could be behind us. Many short-term indicators have been improving since mid-April, and wage growth is also likely to be positive this year," said Āboliņš.

Annual rise in public sector was slightly sharper

In the 1^st quarter of 2020, the average gross wages and salaries in public sector exceeded indicator of private sector only by EUR 4 – EUR 1 104 (in private – EUR 1 100), however, annual growth rate in public sector was slightly sharper – 6.7 % (in private – 6.5 %). 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 1 061 or 7.8 %.

As compared to the 4^th quarter of 2019, in private sector average wages and salaries rose slightly (by 0.4 %), but in public sector reduced by 4.5 % due to the fall of irregular bonuses and premiums.

Changes of average monthly earnings by sectors
(EUR)

Changes in the average wages and salaries are influenced not only by the rise in employee remuneration, but also structural changes of the labour market – enterprises that had started and stopped their business during the year, changes in the number of employees and workloads. The effects caused by the mentioned factors in general may be seen in the changes in the wage and salary fund and number of full-time employees, which are used in the average wage calculations.

In the 1^st quarter of 2020, compared to the 1^st quarter of 2019, gross wage and salary fund increased by 7.5 % or EUR 172.3 million, whereas the number of salaried workers, recalculated into full-time units, grew by 0.9 % or 6.3 thousand. 

Drop of 3 % in accommodation and food service activities

Affected by COVID-19 crisis, in the 1^st quarter of 2020, compared to the 1^st quarter of the previous year, average wages and salaries in accommodation and food service activities fell by 3.0 %. But in March, both compared to March 2019 and to February of this year, it reduced by 21 %. As compared to February, average wages and salaries in March also decreased in arts, entertainment and recreation sector (-1.1 %) and education (-0.9 %), which was not observed in the previous three years.

Over the year, average wages and salaries increased the most in other service activities (that includes activities of public and other organisations, repair of computers and personal and household goods, washing and (dry-)cleaning, hairdressing and other beauty treatment, funeral and related activities) – by 12.8 % and human health and social work activities – by 11.5 %. In other service activities sharper increase in salary fund of public and other organisations sector and reduction of full-time workers in other sub-sectors had the largest impact on changes of average wages and salaries. 

Without the mentioned sectors, average wages and salaries in the 1^st quarter of 2020, compared to the 1^st quarter of 2019, also had the sharpest rise in construction sector – growth of 8.9 %, manufacturing and professional, scientific and technical activities – by 8.0 % in each, administrative and support service activities – by 7.9 %, as well as mining and quarrying – by 7.7 %.

Average wages and salaries in seven sectors above national average indicator

In the 1^st quarter of 2020, average gross wages and salaries for full-time work in financial and insurance activities, information and communication, energy, public administration, professional, scientific and technical activities, mining and quarrying, as well as human health and social work activities were larger than that of national average indicator (EUR 1100).

The smallest average wages and salaries were registered in accommodation and food service activities, education, arts, entertainment and recreation, real estate activities and other service activities. 

Average monthly earnings and changes thereof by economic activity; Q1 2019 and Q1 2020

Sharpest rise in earnings recorded in Pierīga region

Compared to the 1^st quarter of 2019, in the 1^st quarter of 2020 out of all regions in Latvia average gross monthly wages and salaries grew faster in Pierīga – by 10.2 %. In other regions, except of Latgale, annual increase was within 5.6-5.9 %. In Latgale, where average wages and salaries were the lowest – EUR 747, annual growth rate was also the smallest – 4.9 %. In the 1^st quarter the average monthly gross wages and salaries in Riga were the largest – EUR 1 227 for full-time work.

Rapid growth in average wages and salaries in Pierīga region were affected by drop of full-time workers in trade sector due to the change of office address of an enterprise and salary fund growth in real estate activities, information and communication, energy and administrative and support service activities.

The CSB compiles information on average wages and salaries by regions according to the address of office or main activity of an enterprise or institution.

Average monthly gross wages and salaries in Q1 2019 and Q1 2020 by region