How important is an adequate EU minimum wage in a high-inflation context? The Latvian case

The minimum wage has recently increased across Europe. In Latvia, it rose by 24% in 2023, the highest increase in the European Union. But is it enough to cope with the rising cost of living?

To fight against in-work poverty, a new European directive requires member countries to ensure that their minimum wage is adequate. How is this determined, and what does it mean for workers? I went to Riga to meet with them.

In Latvia, the minimum wage increased from €500 to €620 per month in 2023. However, with an estimated inflation rate of 20% last year in the Baltic countries, Vizbulīte Horste, a mail carrier, doesn't really see a difference.

"I don't feel the increase in my salary at all," she says. "Prices have gone up a lot for everything, including food. Since I am with my husband, for now we can manage to pay the bills, but it's difficult. I wouldn't be able to survive if I were alone."

After discussions between trade unions, employers, and the government, no compromise was reached on a level for the minimum wage, so the decision was left to parliament.

Martins Svirskis, an economist for the Latvian trade unions, would have preferred a larger increase.

"We are happy that it was raised at all because the negotiations were quite hard," he says. "The average wage in recent years reached over €1,400. So a minimum exceeding €700 is something we are going for. "

The new directive proposes that member states use either 60% of the median wage or 50% of the average wage as a benchmark to establish a more balanced minimum wage. However, Latvia's minimum wage remains one of the lowest in Europe, where there are significant disparities between countries because of different labour conditions.

In Europe, 60% of minimum wage earners are women,