Latvia responds to growing minimum wage in Lithuania

DELFI / Šarūnas Mažeika

Lithuania has surpassed its northern neighbour Latvia when it raised the minimum wage to €380, which is €10 more than in Latvia.

However, Latvia has started discussing the possibility to raise the minimum wage to €400-410 from January 1, 2017.

The proposal in Latvia had been criticised by the country’s central bank which would prefer the country to increase the tax-exempt income level instead.

The Bank of Latvia has warned that if the minimum wage will rise to what the Social Security Ministry has offered, €400-410 per month, it will move closer to the average salary and the difference will become one of the lowest in the EU. If the minimum wage is rising faster than productivity, it can give a boost to the black market and employers faking working hours to cut costs.

In Estonia, the minimum wage currently stands at €430, but the government has already agreed to raise it to €470 next year.

Some economists in Estonia are sounding the alarm bells, insisting that the increase in the minimum wage has already hurt the country’s exports.

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