Latvia's state spending up 7.8-fold since 2000, prices up 2.75-fold

Latvia's general government expenditure was 2.55 billion euros in 2000 and 19.83 billion euros in 2025, a 7.8-fold increase. Consumer prices rose by 175%, or 2.75 times. These figures come from an opinion article in the Latvian newspaper Diena, which examines the state pay system and income inequality in Latvia.

Wages and purchasing power

According to the Central Statistical Bureau (CSP), the average gross wage was 210 euros in 2000 and 1,815 euros in 2025, roughly 8.5 times higher. The author concludes that average purchasing power has grown more than threefold. He claims that over the past five years public-sector wages have risen slightly faster than private-sector ones, and that wages above 2,000 euros gross are growing fastest.

In the author's view, the pay of state officials is indirectly tied to the minimum wage: it is calculated using the average wage, inflation and other indicators, and a multiplier is applied to top officials' salaries. He describes this as a vicious circle in which wage growth prompts further increases. Officials' pay is currently frozen at the 2025 level.

Savings and spending abroad

The author points to two areas where money does not show up in domestic consumption. Household deposits in Latvian commercial banks rose from 553 million euros in 2000 to 12.123 billion euros at the end of 2025, about 24-fold. Spending on trips abroad grew from just under 84 million euros to roughly 1.3 billion euros, about 15.5-fold.

Inequality

Bank of Latvia economist Oļegs Krasnopjorovs notes that GDP per capita at purchasing power parity has risen from 35% to 71% of the EU average since 2000. However, the Gini coefficient, a measure of income inequality, was 34.2 in Latvia last year and 35.6 this August, against an EU average of 29.2. The author concludes that Latvia needs a balanced state pay system.