Analytics, Financial Services, Latvia, Legislation, Markets and Companies, Taxation, Wages

An important way how to combat shadow economy, is to gradually raise the minimum wage in Latvia, Vilks told LETA. He believes that the current minimum wage in Latvia is too low, while the majority of companies can afford a decent raise in minimum wages – EUR 10-20 a year.

The current minimum wage in Latvia is EUR 320. "It is obvious that the minimum wage is used maliciously, as it does not represent the actual situation in the labor market. Instead, the wages are bound to a constant minimum level," the minister said.

He said that the State Revenue Service (SRS) is on the right track in reducing shadow economy, and that there is no need to stop despite the resistance.

"The things that happen in the construction and many service fields, are no secret. There is a huge proportion of shadow economy, and huge resistance against any SRS activities, besides, the double standard is enormous. A number of these companies are not taking care of their employees, therefore, the wages are low. They force employees to receive under-the-table salaries, thus, stripping them from decent social protection and pensions," Vilks explained. A reduction of taxes would not facilitate the collapse of shadow economy; on the contrary – the business owners would thrive, the minister said.

Vilks promised that the SRS will not stop. Business owners will be negotiated with in order to reduce shadow economy.