Latvia proposes scrapping annual performance bonuses in public administration
A report on public sector pay in Latvia proposes dropping bonuses for annual performance reviews and limiting who can receive supplements for significant contribution. From 1 January 2027, unfunded vacant posts would also be removed from staff lists.
Latvia's public administration may stop paying bonuses for annual performance appraisals, and supplements for significant contribution would be more tightly restricted. The proposals are set out in an informative report on the remuneration system in the public sector, and are meant to make better use of limited budget funds.
What is proposed
The report says the money intended for annual appraisal bonuses has already been redirected to the state priority "Security", so it suggests removing this pay element from the system. Bonuses for courageous action and for preventing a serious threat to national security or a crime would remain, as would the option of paying cash awards of up to half of a monthly salary per year.
Stricter limits are planned for the supplement paid for a significant contribution to an institution's strategic goals. In any given month, no more than 20% of an institution's employees could receive it, and managers of various levels could not make up more than a quarter of recipients.
Why
The report states that past practice shows the supplement has been used too widely. In 2025, more than 10,300 employees received it, or 31% of all staff. In some ministries it was paid to a substantial share of employees.
Vacancies
The State Chancellery has found that around 10% of public administration posts are still vacant. From 1 January 2027, it is therefore proposed to remove entirely from staff lists those vacant posts for which no funding to hire someone has been secured.
Earlier cuts
The document stresses that pay spending has already been consolidated: when the 2026 budget was drawn up, remuneration costs were cut by 31.7 million euros, including by dropping appraisal bonuses and restricting other variable pay. The role of supplements in the public sector is gradually shrinking while monthly salary matters more. Between 2024 and 2026 the average monthly salary rose by 7.3%, while growth in supplements was considerably more modest.
The report says the changes would still leave some motivating pay elements in place to reward high performance.
