The slowdown in salary growth in Latvia has been anticipated for a long time; however, the speed of this process has been unexpected, warns economist Dainis Gashpuitis.
According to him, prolonged pressure on the profitability of companies and their competitiveness, ongoing uncertainty, and the normalization of inflation have not only forced employers to slow down salary increases but have also created favorable conditions for this.
According to the economist's assessment, the adjustment in salary growth rates occurred earlier than expected and likely marks the beginning of a period of slower income growth.
On one hand, this will somewhat ease the cost pressures on the competitiveness of enterprises. On the other hand, the growth of the population's purchasing power will also slow down. The reason is that accelerating inflation increases the number of residents whose purchasing power is either not growing or even decreasing.
"In the coming quarters, it would be beneficial to see a slowdown in salary growth in those sectors where it was the fastest at the beginning of the year, as this is largely an important factor in inflation. The public sector will also have to adapt to the conditions of slower wage growth," said Gashpuitis.
As reported by bb.lv, the average gross salary (before taxes) for a full-time position in the first quarter of this year was 1,831 euros in Latvia, which is 4.2% (73 euros) more than in the corresponding period of 2025.
The average net salary (take-home pay) was 1,364 euros in Latvia, or 75% of the gross salary. Over the year, it increased by 4.5%. The real growth of net salary, taking inflation into account, was only 1.6%.
