The Minimum Wage Is Half of a Living Wage
09.12.2025
Dace Tauriņa, Senior Consultant at Figure Baltic Advisory
In January 1991, the Minimum Wage Did Not Even Reach One Lat
Every year, we analyse the living wage in Latvia, but before turning to the figures, it is important to understand what this concept means. A living wage is the minimum level of income that is considered necessary for an individual or a family to cover basic needs and maintain a decent standard of living in a specific geographical area. For example, this indicator differs between Riga and the regions. This year, the living wage for one person in Riga is €1,657 gross, while in the regions it is €1,455 gross. For a family with two children, each parent in Riga would need to earn €2,359 gross, while outside Riga it would be €2,028 gross. Although the minimum wage has increased significantly over the past twenty years (in 2005 the minimum wage was 80 lats, or €113), it still does not reach the level of the living wage. Of course, every individual and every family has different living conditions and needs. Everyone has their own personal living wage. However, a statistical calculation of the living wage allows employers to determine an approximate lower boundary of pay, below which an employee’s primary motivating factor will inevitably be salary, although situations can vary widely.
In January 1991, the minimum wage in Latvia did not even reach one lat (€0.83). To be fair, that year the threshold was raised three times, and by the beginning of 1992 the minimum wage had reached 2.30 lats. Compared to that time, the increase is, of course, enormous. But let us return to 2025 and compare purchasing power in the context of the prices of various goods and fuel. While we are often overcome with nostalgia when recalling that in 2005 a loaf of white bread cost 0.32 lats (€0.45), milk cost €0.57 and petrol (95) cost €0.74, in reality today it is possible to buy more goods with the current minimum wage than it was possible to buy in 2005 with €113.
Some Companies Are Guided by the Living Wage
However, numbers alone do not tell the whole story. Behind them lies the question of whether a person can provide themselves with a roof over their head, healthy food, and the opportunity to live a normal life. This is why the concept of a living wage is increasingly being discussed - a wage that allows people to live, not merely survive. More and more companies are beginning to view it as one of the key indicators of pay growth and fairness.
In Latvia, there are employers who already use the living wage for one person as the minimum salary threshold in their organisations, fully aware that for some employees this means paying higher wages than the market average for these professions. Some employers are on their way toward this goal, while others do not use this benchmark at all. This is largely related to the fact that low-skilled workers are also in demand in Latvia, with corresponding wage levels. Almost everyone has seen job advertisements offering such low pay that one cannot help but wonder who would actually agree to work for that amount. Given the growing challenges companies face in attracting employees, both now and in the future, businesses will have to think about how to work more efficiently and productively and how to make work more valuable in order to be able to pay higher wages.
At the same time, employees themselves can also take action to improve their financial situation. In Latvia, everyone has good opportunities to study and acquire new professions, allowing them to build a career or apply for better-paid positions. In this way, income can grow.
A Salary Is a Matter of Dignity
A salary is not just a number - it is a matter of dignity. Unfortunately, in Latvia we can still speak about such a phenomenon as in-work poverty. This is a situation where a person is employed, yet their income remains so low that it does not allow them to cover their basic needs and ensure a dignified standard of living. Although each of us has our own personal living wage, there is still room for discussion as to whether the living wage should not be a more appropriate criterion by which to determine whether a salary is truly worthy of a human being.
Latvia still has a very large number of low-paid jobs. Behind every wage there is a person - with a family, dreams and responsibilities. The living wage is not merely an economic calculation; it is a measure of dignity. Latvia has come a long way - from €0.83 to €740 - but we must continue working to ensure that wages become not only higher, but also fairer.