Latvia’s average gross wages are forecast to increase by approximately 7% in 2026, according to recent analysis from several banks. While representing continued growth, this figure indicates a slowing trend compared to previous years.
Wage Growth Dynamics
Senior economist Agnese Buceniece of Swedbank anticipates the deceleration of wage growth will continue into 2026. A tight labor market is expected to support wage increases, but the impact of a modest minimum wage increase – from €740 to €780 – will be limited. Austerity measures within the public sector and concerns about corporate profitability are also expected to constrain overall wage growth.
A key divergence is expected between the public and private sectors. The Saeima-approved budget law does not include planned increases to public sector wages in 2026. Furthermore, cash and performance bonuses will be restricted for public sector employees, excluding those in state security institutions.
Sectoral Variations
Wages in the education sector are an exception, with average wages expected to rise due to the ongoing implementation of the “Programme at School” initiative, backed by a €45 million budget allocation. However, wage growth in construction is predicted to slow, as the minimum wage for the sector will remain at €1,050 and apply to all employee groups.
Amendments currently under consideration by the Saeima could further impact wage growth through a proposed reduction in the minimum overtime premium, from 100% to 50%. If adopted, this change could slightly limit wage increases.
SEB Bank’s Dainis Gašpuitis notes that while wage growth is slowing, it will likely remain rapid and continue to challenge competitiveness and profitability. He anticipates that purchasing power will continue to increase, but acknowledges that the pace of growth will vary across sectors and companies.
Looking Ahead
Analysts expect that the activation of the economy and labor market could improve worker opportunities. However, this may also increase the challenge for employers to retain and motivate their workforce. It is possible that lower-paid jobs in sectors like construction and manufacturing could see increased demand, potentially driving up wages in those areas. It remains to be seen how these factors will interact to shape the overall wage landscape in Latvia.
Frequently Asked Questions
What is the projected average wage increase for Latvia in 2026?
Bank analysts forecast an average gross wage increase of around 7% in Latvia for 2026.
Which sector is expected to see the fastest wage growth?
Wages in the education sector are expected to grow faster than in the public sector overall, due to the continued implementation of the “Programme at School” funding model.
Will the minimum wage increase significantly impact overall wage growth?
The increase in the minimum wage, from €740 to €780, is considered modest and is not expected to be a significant driver of average wage growth in 2026.
How might the proposed changes to overtime premiums affect workers?
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