2023-04-19 12:48:17
The minimum wage has recently increased across Europe. In Latvia, this increase reaches 24% in 2023, the largest in the European Union. But is it enough to meet the rising cost of living?
To fight against in-work poverty, a new European directive calls on member countries to ensure that their minimum wage is adequate. How is this decided, and what does this mean for the workers? Fanny Gauret from euronews met them at Rig a Lettonie.
In the country, the minimum wage increased from €500 to €620 per month in 2023. But with inflation estimated at 20% last year in the Baltic countriessome Latvians do not really feel the difference.
“_I don’t feel the increase in my salary at all. Prices have gone up a lot for everything, including food. As there are two of us with my husband at the moment we can pay the bills but it’s difficult. survive if I was alone_”, explains Vizbulite Horstshe is a mail carrier.
After discussions between unions, employers, and the government, no compromise was found to set an adequate minimum wageleaving the decision to Parliament.
“We are happy that it has been increased, because the negotiations have been very difficult. Currently, the average salary in Latvia for the past few years is 1,400 euros. Our goal is to achieve an adequate minimum wage of 700 euros“, analyse Martin Svirskiseconomist for the trade unions of Latvia.
The new directive proposes to Member States to use as a reference value 60% of the median wageor 50% of the average wage to establish a more balanced minimum wage.
This minimum remains one of the lowest in Europe, where there are great disparities between countries, due to very different labor markets and incomes.
In Europe, 60% of minimum wage recipients are women. Aija Laizāne is a nursing assistant. She is raising her 17-year-old son and struggling to make ends meet.
“_I spend roughly €250 on rent for my studio, telephone, gas, electricity. Yes, my son is growing up, he has to be dressed, fed, shoes are expensive, clothes are expensive, he I have to pay for his studies and his train journeys, so I’m looking for extra work,” she says.
“I had to rethink my business model”
Together with other countries in the east of the Union, Latvia is the country with the most workers with low wages, often unskilled. Eduard Filippoventrepreneur and president of an association of SMEs, would like a tax-free minimum wage and fairer and clearer social security contributions.
“Personally, I had to rethink my business model because I cannot afford to hire temporary workers, nor recruit young people because the social security burden is too high for me”he explains.
Eduard Filippov supports raising the minimum wage, but believes that employers were not sufficiently consulted.
On the union side, the economist Martin Svirskis emphasizes the importance of collective bargaining.
“We are asking the government to set up some kind of tax relief for the various benefits negotiated collectively, for health expenses, for catering. And this year, the negotiations also focus on education“, he says.
The construction sector, for example, was able to negotiate a higher minimum wage, at €780. He and hopes to get €900 next year.
Interview with the Latvian Minister of Social Affairs, in charge of Labor
How to succeed in finding a compromise on the amount of the adequate minimum wage? Fanny Gauret of euronews spoke with the Latvian Minister of Social Affairs, in charge of Labor.
Evika Silina, Latvian Minister of Social Affairs, in charge of Labor
“It was absolutely clear that we had to do something because our minimum wage was too low compared to that of the Baltic States. We were historically dependent on Russian gas. And yes, last year our prices were much higher than in western countries.”
Fanny Gauret, euronews: So how could dialogue be improved with the various social partners?
Evika Silina, Latvian Minister of Social Affairs, in charge of Labor
“Last year, the intention of the legislators was to reach more or less 45% of the average Latvian income and it will be the case, but not yet this year. That’s why we probably need to talk more with our trading partners and our unions. Before next year, we have to be sure that there will be a mutual consensus so that we can go much further. Business leaders talk about a minimum tax-free payment amount. Previously, the non-taxable amount was the same as the minimum wage. Today is a little different. I think we will continue discussions on that number as well.“
Fanny Gauret, euronews: What is the importance of helping workers who earn the minimum wage and those who have low wages, for the economy?
Evika Silina, the Latvian Minister of Social Affairs, in charge of Labour.
“One of the first tasks that I have undertaken concerns people with low incomes, who will benefit from greater social benefits and can be helped to pay for housing and other things. The government is therefore ready to improve the skills of our workers, because without these people able to work, earn money and live according to their needs, the economic growth of our country is compromised. So there are many directions in which we are going to work, and one of the most important is to promote and invest in people who are not necessarily very young anymore, but who can change professions and try to learn something something new.“
Collective negotiations, the study of the economic impact and the needs of workers are three tools put forward by theagence Eurofoundso that each member country can define its minimum wage, guaranteeing a decent life for every European worker, in all circumstances.
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