Welfare Ministry proposes raising Latvia's minimum wage to €820 in 2027

Latvia's Ministry of Welfare (LM) has prepared draft regulations that would raise the national monthly minimum wage from the current €780 to €820 starting in 2027. The document has been circulated for coordination until 9 November, and the government will still have to decide on it. The change would affect all employees earning less than this amount.

Why not €835

Under the reference value set in existing legislation, next year's minimum wage would be €835. That value equals 46% of the average gross wage over the latest available 12 months, as calculated by the Central Statistical Bureau (CSP). The calculation used the 2025 average gross wage of €1,815, giving €834.9, which was rounded to €835. The ministry's proposed figure is therefore €15 lower.

The ministry and trade unions had supported raising the wage to €835, but no agreement on that amount was reached at council meetings on 30 July and 8 October this year.

Who is affected

According to CSP data cited in the explanatory note, an average of 131,815 employees, or 17.1% of all employees, earned the minimum wage or less last year. That was 2.3 percentage points lower than in 2021, when the share was 19.4%.

The ministry's assessment

The ministry believes the increase would boost the purchasing power of low earners and have a positive effect on domestic demand. It could also encourage investment in technology and productivity, and reduce the shadow economy in sectors with more minimum-wage earners. At the same time, the ministry acknowledges that employers' costs will rise and that production cost pressure may grow in sectors with many minimum-wage workers. A short-term negative effect is possible for small and medium-sized businesses in regions with lower economic activity. No increase in administrative burden is expected, since information on income and taxes is already submitted monthly to the State Revenue Service.

Budget

The fiscal impact is already included in macroeconomic and tax revenue forecasts, state budget spending and Latvia's Fiscal Structural Plan for 2025–2028, so forecast figures will not change. The ministry cannot accurately calculate possible additional costs for municipal budgets because it lacks data on municipal employees paid below €820.

On 19 September 2024, the government set a medium-term plan of a €780 minimum wage in 2026, €820 in 2027 and €860 in 2028.