Petraviča says wage rise is not postponed, but we will discuss increase size

Petraviča says wage rise is not postponed, but we will discuss increase size

The minimal monthly wage in Latvia will be increased next year. However, because of COVID-19 the size of the increase may not be as high as originally planned, said Welfare Minister Ramona Petraviča in an interview.

She admits that in last year’s talks with the Free Trade Unions Association’s chairman Egils Baldzēns the two had discussed the increase of minimal wage from EUR 430 to EUR 530. However, the situation has changed because of the COVID-19 crisis.

“Of course, we have to look at the situation differently. COVID-19 crisis has impacted the country’s revenue. The fact that it is necessary to raise minimal wages is obvious – no discussions are needed,” said the minister.

She added the need to raise minimal wages indirectly comes from the ruling of the Constitutional Court on the non-compliance of the guaranteed minimal income (GMI) level with the country’s Constitution, as it would not be possible to raise GMI without first increasing minimal wage.

As previously reported, it was planned the government could present an offer for tax system’s changes this year. However, Finance Ministry’s recently prepared report mentioned that the term for the development of the country’s tax policy guidelines will likely be moved to next year. This year, however, the government could review tax benefits.

The rescheduling of the term is explained with the rapid spread of COVID-19 in Latvia and elsewhere in the world, as well as restrictions imposed in Latvia. Finance Ministry has prepared a separate report on assessment of existing tax benefits and using State Audit’s audit Tax Discounts – Unseen Budget Expenditures as the base.

Previously the government agreed on raising minimal wage in Latvia from EUR 430 to EUR 500 in 2021.

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