In the 3rd quarter of 2024, the average monthly gross wage in the country, recalculated according to working days and seasonally unadjusted data, was 1,703 euros, according to the data of the Central Statistics Office (CSB). Compared to the 3rd quarter of 2023, the average monthly salary increased by 154 euros or 9.9%. The payment for one hour worked before taxes increased to 11.59 euros, or by 10.9%.
The average monthly salary after taxes is 1,231 euros
Average net wages (calculated using workplace taxes) were €1,231, or 72.3% of gross wages, and grew by 9.4% over the year, outpacing the rise in consumer prices. Real net wage growth,adjusted for inflation,was 8.3%.
Median monthly salary – 1,385 euros
The median gross wage for full-time work in the 3rd quarter of 2024 was 1,385 euros.Compared to the 3rd quarter of 2023 (1,250 euros), it increased by 135 euros or 10.8%. The median salary after employment taxes (net) was 1,016 euros in the 3rd quarter of this year, and it increased by 9.0% during the year.
faster annual growth in the public sector
During the year, the average salary in the public sector grew by 3.3 percentage points faster than in the private sector – by 12.3% and 9.0%,respectively.
In the 3rd quarter of 2024, the average salary before taxes in the public sector was 1,758 euros. In the private sector, the average salary was 74 euros lower than in the public sector (1,684 euros). In the general government sector, which includes state and local government institutions, as well as state and local government-controlled and financed capital companies, the average salary increased to 1,703 euros, or by 12.3%.
Compared to the 2nd quarter of 2024, average wages in the public sector increased by 0.9%,in the general government sector by 1.1%, and in the private sector by 2.4%.
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Changes in the average salary are not only influenced by the increase or decrease in the salary of employees, but also by labor supply and demand trends and structural changes in the labor market.
The estimated wage fund in the 3rd quarter of 2024 compared to the 3rd quarter of last year in the country as a whole increased by 8.3% or 289.1 million. euros, but the number of salaried employees, converted to full-time employment, decreased by 11.4 thousand. or 1.5%.
During the year, the average wage grew the fastest in the education sector - by 19.2%,significantly affecting the annual growth rate in the public sector. The average salary also grew faster in the administrative and service services sector – 15.9%, in the real estate sector - 15.2%, and also in the other services sector (includes the activity of public, political and other organizations, repair of personal items and household appliances, chemical cleaners, hairdressers, beauty care, funeral and other services) – by 14.4%.
In all the mentioned sectors, the rapid rise of the average salary was influenced not only by the increase in wages, but also by the decrease in the number of employees during the year.It shoudl be noted that the number of employees also decreased in the other sectors, except for the water supply, wastewater, waste management and rehabilitation sector, accomodation and catering services, financial and insurance activities sector, public administration and defense, as well as health and social care sector.
The best-paid sectors are finance, information and dialog
In the 3rd quarter of 2024, the average monthly salary for a full-time job was higher than the national average
The lowest average salary for a full-time job was in the accommodation and catering services sector – EUR 1,106 before tax.
Faster wage growth in Zemgale
In the 3rd quarter of 2024, compared to the 3rd quarter of 2023, the average salary before tax has grown the fastest in Zemgale (11.4%), Vidzeme (11.1%) and Latgale (11.0%).
The highest average gross salary for full-time work was in Riga – 1,877 euros, while the lowest – in Latgale (1,223 euros), which is 35% less than in the capital. The average salary gap between Riga and the regions has slightly decreased during the year in all regions, except for the Riga region and Kurzemi, where no changes are observed. The biggest decrease was observed in zemgale (1.3 percentage points).
Salary per hour worked – 11.59 euros
The gross wage for one hour worked in the 3rd quarter of 2024 was 11.59 euros, and during the year it increased by 10.9% (in the 3rd quarter of 2023 – 10.45 euros).
Hourly labor costs, which include both wages and other labor-related employer expenses, rose from 13.07 to 14.57 euros or 11.4% during the year, driven by an 8.7% rise in total labor costs and the reduction of hours worked by 2.5% during the year,according to the Official Statistics Portal.
How do real net wage growth rates impact consumer spending and economic confidence?
Time.news Editor: Welcome to today’s edition of our interview series! We are thrilled to have Dr. Laura Niklasson, an esteemed economist and expert on labor market trends, with us. Dr. Niklasson, thank you for joining.
Dr. Laura niklasson: Thank you for having me! It’s great to be here.
Editor: Let’s dive right in. Recent data from the Central Statistics Office highlights an impressive growth in average monthly wages for the third quarter of 2024, which has reached 1,703 euros. What key factors do you think have contributed to this notable increase of almost 10% from the previous year?
Niklasson: There are several factors at play here. A meaningful driver is the overall improvement in economic conditions, including increased demand for labor in various sectors, which has pushed wages up. Additionally, sectors like public service have seen a more substantial increase in salaries—up to 12.3%—which may reflect government efforts to improve public sector compensation to attract and retain talent.
Editor: That’s an interesting point! The public sector’s salary growth indeed outpacing the private sector raises questions.What might that mean for the talent flow between these sectors in the future?
Niklasson: Well, when wages in the public sector grow faster, it can lead to a dynamic where professionals in the private sector are tempted to switch careers for better pay and benefits. This could eventually tighten the labor market within the private sector, making it necessary for private companies to boost their compensation packages to retain employees.
Editor: We’ve observed that the median salary after taxes is 1,016 euros. How does this compare to the gross figures, and what insights can be drawn from this discrepancy?
Niklasson: The difference between median gross and net salaries is significant—it underscores the impact of taxes on take-home pay. The net salary—1,016 euros—being lower means individuals have less purchasing power, even as gross salaries are rising. This lag in disposable income,especially when adjusted for inflation,means that while nominal wages may rise,the real experience of workers may not feel as positive. However,the growth rates we’re seeing do suggest a positive trend in real earnings over time.
Editor: Speaking of inflation, can you elaborate on how real net wage growth, adjusted for inflation, is standing at 8.3%?
Niklasson: Absolutely. Real net wage growth is a crucial metric because it illustrates the actual increase in purchasing power when inflation is taken into account. In this case, despite rising prices, the increase in wages has been enough to provide workers with a better standard of living. Such growth outpacing inflation can lead to higher consumer confidence and spending, which could further stimulate the economy.
Editor: Turning our attention back to the private sector, with an average salary of 1,684 euros, what strategies should businesses adopt to compete with the rising public sector wages?
Niklasson: Companies may need to revisit their compensation strategies. This could include not just raising wages but also enhancing benefits packages—think health insurance, work-life balance initiatives, or flexible working arrangements. Employers that can create a compelling workplace culture and career growth opportunities will likely fare better in retaining talent against public sector competition.
Editor: Very insightful! To wrap up, what do you see as the next steps for policymakers regarding wage growth, especially considering current economic challenges?
Niklasson: Policymakers need to continue fostering an environment that supports wage growth while addressing inflation. This could involve policies aimed at skill development to ensure the workforce meets the demands of evolving industries.Balancing these aspects is crucial to sustaining the momentum we’ve seen in salary increases without igniting inflationary pressure.
Editor: Thank you, Dr.Niklasson, for your valuable insights! It’s clear that wage growth is a multifaceted issue with implications for many aspects of the economy.We appreciate your time today.
Niklasson: Thank you! It’s been a pleasure discussing these vital topics with you.
