Analytics, Baltic, Employment, Financial Services, Markets and Companies, Wages

He said wages kept growing in Latvia and the average gross monthly wage could reach EUR 1,000 already in the second or third quarter of this year but the average net monthly wage might grow to EUR 1,000 in two or three years.

Wage growth in Latvia in the coming years will be steeper than in the neighboring Baltic states as the average gross monthly wage is expected to grow 8.3% in Latvia this year and 7.2% in 2019. In Estonia, the growth is estimated at 5.8% this year and at 5.3% next year, and Lithuania is likely to see a 7% increase of the average gross monthly wage in both 2018 and 2019.

According to Gaspuitis, Latvia's problem is the wide gap in the average wage between different regions, for example, the capital city Riga and the eastern Latvian province of Latgale. Although the average net monthly wage in Latvia will grow to EUR 1,000 in the next few years, it is not going to happen in Latgale, and people are likely to drift from eastern Latvia to the capital city in search for the better-paid jobs.

Latgale has the highest unemployment rate in Latvia, and the economic trends do not suggest that the jobless rate in eastern Latvia could shrink to the level in other Latvian provinces, the SEB Banka expert said.

As reported, SEB in its latest Nordic Outlook has lowered Latvia's GDP growth forecast for this and next year. SEB analysts have cut Latvia’s economic growth forecast to 3.7% from 4.1% for this year, and to 3.5% from 3.7% for 2019. Latvia's annual inflation forecast for 2018 and 2019 has been left unchanged, at 2.7% and 2.5% respectively but unemployment is likely to drop by 2 percentage points this and next year to 6.8% in 2019.