The Gender Pay Gap in Latvia: A Real Problem or a Misunderstood Statistic?

06.03.2026

Jānis Kaļķis, Data Scientist at Figure Baltic Advisory

Each year, as International Women’s Day approaches, the question of women’s and men’s opportunities in the labour market resurfaces—particularly the issue of equal pay. This year is especially significant, as the EU Pay Transparency Directive will come into force in Latvia in June (the Ministry of Welfare is currently preparing national legislation to implement the directive). The directive aims to strengthen mechanisms that ensure equal pay for men and women for the same work or work of equal value. As a result, these principles will no longer be merely a subject of discussion in Latvia - they will become a concrete obligation.

The unadjusted gender pay gap: 15.8%

The average annual salary for men in Latvia is currently around EUR 35 000, while for women it is approximately EUR 30 000 - a difference of 15.8%. In neighbouring countries the gap is even larger: 17.8% in Lithuania and 20.7% in Estonia. These figures are substantial enough to create the impression of systemic inequality. However, it is important to understand what exactly these numbers measure.

The 15.8% figure represents the so-called unadjusted gender pay gap. It reflects the overall structure of the economy, including sector distribution, differences in occupational roles, variations in working hours, and the share of variable compensation. This gap does not arise solely within a single job role; rather, it develops over the course of career progression and professional choices, where factors such as industry characteristics and organisational structures play a significant role.

The pay gap in work of equal value: 4.1%

This is precisely where the directive becomes particularly relevant. It does not address the overall statistical gap but rather focuses on pay differences in work of equal value. Work of equal value is defined by comparable job complexity, similar levels of required education and experience, and comparable responsibility for resources and decision-making. In Latvia, the pay gap in such roles last year was 4.1%. This figure is significantly smaller than the overall 15.8% gap and raises an important question: are public discussions sometimes conflating structural characteristics of the labour market with direct discrimination within the same role?

Larger differences in variable pay

This does not mean that pay differences between men and women are insignificant. When analysing total annual compensation in greater detail, the average difference reaches 18.6%, while the median difference is 14.5% (the median reflects the typical situation without the influence of extremely high or low salaries). More pronounced differences appear in the variable component of pay. Here, the average gap reaches 31.4%, while the median gap is as high as 40.9%. Bonuses, performance incentives, and other variable compensation elements often deepen the gap.

It is important to note that the structure of variable pay is strongly influenced by job roles themselves. For example, accounting professions—where women are the majority—typically include fewer bonuses and variable pay elements. In contrast, warehouse and logistics positions—where men often dominate—may have compensation structures where variable pay forms a significant share of total earnings.

Labour market segregation

The picture becomes even clearer when analysing salary quartiles, which divide employees into four equally sized groups ranging from the lowest-paid to the highest-paid. In the lowest-paid quartile, 67% of employees are women and 33% are men. In the highest-paid quartile, 60% are men and 40% are women. These figures may point to phenomena such as the “glass ceiling”—barriers that make career advancement more difficult for women. One frequently cited factor is the so-called “motherhood penalty.” At the same time, individual career choices, professional interests, and personal ambitions also play a role.

The obligation to disclose pay levels and career opportunities

The directive will introduce significant changes in transparency. Employers will be required to inform both job candidates and employees about pay levels and career progression opportunities. Companies above certain size thresholds will also have to report gender pay gaps: Employers with 250 or more employees must report annually starting 7 June 2027. Employers with 150–249 employees will report every three years. Employers with 100 - 149 employees will begin reporting from 2031. However, already from 7 June 2026, employers of any size will be required to explain the principles behind how compensation is determined.

Moving toward a transparent and fairer work environment

The directive’s goal is not merely to reduce inequality in percentage terms. Its primary aim is to promote transparent working environments, accountability, and clarity in decision-making. Transparency itself acts as a preventive mechanism against inequality. When pay structures are clearly defined, the risk of subjective decisions decreases, and both base salary and variable compensation can be determined using gender-neutral factors. At the same time, regulation alone cannot fully change structural labour market patterns. If certain industries remain dominated by one gender—and if those industries are generally lower paid - the overall statistics will continue to reflect this reality.

Understanding the causes behind the numbers

International Women’s Day is an appropriate moment to revisit this topic and examine gender pay differences with a more analytical perspective. In Latvia, the overall unadjusted pay gap stands at 15.8%, while the gap in variable compensation exceeds 30%. At the same time, the difference in roles of equal value is 4.1%. These figures reveal that the issue is complex and layered. Part of the gap can be explained by gender-neutral factors, yet there remains a “grey area” that the new directive aims to address through stronger transparency mechanisms. The key question today is therefore not whether a pay gap exists, but whether we fully understand why it occurs, where it arises, and whether organisations are prepared to justify the principles according to which compensation is determined.