Savings Only in Words? Why the Government Violated Its Own Salary Growth Threshold 0 23

This was the last budget vote in this parliament. And it was the pre-election storms that prevented it from working on reducing expenses and increasing revenues. The work on substantial reforms in public administration has been left as a legacy to the next Saeima.

Economists characterize the budget as a road to nowhere - financed by debt and dividends from state enterprises. The leadership this year did not send the necessary signal - while declaring savings and cuts, it approved salary increases in a number of state enterprises beyond the permissible limit.

New Year’s promises under the Christmas tree are usually dictated by noble goals, but over time they fade, and the promised is retreated from. This also happened with what the parliament included in the budget last year - not to increase salaries in budgetary institutions and enterprises with state capital by more than 2.6%. Last year, the Cabinet of Ministers and the Saeima supported the limitation on the increase of the wage fund this year to no more than 2.6% compared to the previous year. This limitation applies to institutions of state administration, self-government, state and municipal companies, and port managements. At the same time, the government retains the right to make decisions on exceptions, for example, equating the salaries of employees of the Ministry of the Interior with the salaries of employees of the Ministry of Defense.

Economy Minister Viktor Valainis notes that, in his opinion, "the policy as such has justified itself." "If we are moving towards a regime of strict austerity, then everyone should save," he emphasizes. However, the figures tell a different story.

Janis Hermanis, a finance and tax expert from the Latvian Confederation of Employers, calculated that total labor costs in all budgetary institutions for the first 10 months of this year amounted to 3.46 billion euros. This is 6.7% more than a year ago. According to Hermanis, if all institutions had fulfilled the politicians' promises, the amount spent would have been 133 million less. But the Saeima left a reservation in the budget law - in exceptional cases, permission for a more significant salary increase is still possible, and enterprises took advantage of this opportunity.

Already in the summer, most hospitals and medical centers appealed to the government with a request to allow a more significant salary increase for medical workers involved in several foreign-funded projects than the 2.6%.