Free Trade Union Confederation of Latvia (LBAS) notes that in continuing talks with the government one of the priority topics constantly brought up is the review of the non-taxable minimum – increasing it not only to the level of minimal wage, but also increasing its influence on the low and medium wage levels.
The trade union reports that on Monday, the 6th of November, at a meeting of the National Council for Trilateral Cooperation, Latvian Employers’ Confederation (LDDK) and the government discussed the state budget and studied the Government Action Plan’s development process. Officials agreed to make future cooperation more effective.
According to LBAS, the maximum applicable non-taxable minimum should be increased to at least EUR 700 a month, equalising it with the minimal wage level, which will come into force starting with 2024. At the same time, to provide more benefits to workers who earn average wages, it is important to increase the threshold to which a differentiated non-taxable minimum is applied,
raising it from EUR 1 800 to EUR 2 800 a month.
The organisation notes that, unfortunately, until now it has been impossible to reach an agreement with employers in regards to a single solution, and the application of new non-taxable minimum threshold will likely be pushed back to 2025.
LBAS stresses that stagnation of this issue is unacceptable because Latvia’s neighbours review minimal wages and non-taxable minimum on a regular basis. On top of that, Latvia loses in areas of wages and competitiveness of businesses.
Both Lithuania and Estonia have outlined a new maximum non-taxable minimum for 2024,
setting it at EUR 747 and EUR 654, respectively. In Latvia, it remains at EUR 500 for the third consecutive year.
LBAS Chairman Egils Baldzēns:
“Every year in eight years’ time (2015-2022) Latvia came close to the average labour cost level of 27 EU members states only for 1.25 EUR/h. But the difference for a single hour of work was EUR 30.5 in 27 EU member states. In Latvia it was EUR 12.2.
This is 40% of the average EU level. If we keep making such small steps to reach the average EU level,
we will reach it only after 1 464 years,
We will definitely not reach Germany’s or Finland’s results. This is why it is necessary to do serious work in policy to find a way out of this dead end and ensure more competitive pay and businesses at least on par with the other two Baltic States.”
LBAS says Latvia has yet to use collective agreements to their full potential. It would be possible to support honest business and competition, as well as limit the gray economy by means of a proportionate policy of social dialogue.
The personal income tax benefits applicable to collective agreements function only partially, because from 2014 onward the Latvian government has not changed the benefit level (it remains at EUR 480 annually). LBAS stands in favour of applying this benefit to state and municipal capital associations.
The trade union listened to the promise given by government representatives to strengthen domestic security in 2024, especially when it comes to wages. Latvian Trade Union of Internal Affairs Employees (LIDA) mentioned that
this budget contains high risks,
which are related to the outflow of workers from various services. LBAS also stressed that it is necessary to fully comply with the decisions made by the government on financial support for the maintenance of the railway sector infrastructure in 2022 and 2023.
During the meeting the government provided information that the Government Action Plan’s content will be reviewed soon, and the proposals from social partners will be discussed in sub-committees the work of which is coordinated by various ministries.
Also read: LBAS: Latvian cannot remain a country with cheap labour
