Economics, Latvia, Markets and Companies, Wages
International Internet Magazine. Baltic States news & analytics
Friday, 26.04.2024, 14:06
Most companies to raise prices to compensate for wage growth – Citadele Index
Authors of the Citadele Index note that Latvian entrepreneurs’ sentiment
has remained positive for more than a year already. The business sentiment
index now stands at 51.47 points, suggesting of cautious optimism. The most
serious challenges - labor shortages and wage growth – have only been
increasing though.
The business sentiment of enterprises operating in the domestic market
improved from 50.23 points in the last quarter of 2017 to 51.02 points in the
first quarter of this year. Meanwhile, representatives of exporting enterprises
have become more concerned about their business prospects as their sentiment
index has dropped from 54.19 points at the end of last year to 52.33 points in
the first quarter of 2018.
Representatives of manufacturing enterprises voiced the most upbeat
outlook, and the business sentiment in the trade sector improved as well. For
the first time in four years small enterprises also voiced optimism.
The survey reveals that the actual rate of wage growth has been faster
than panned by the entrepreneurs. While many entrepreneurs are planning to raise
wages for their employees, 52% said they had no such plans. The steepest wage
growth is planned in large and medium-sized companies, with manufacturers and
tradesmen most likely to regard the pay rises as a threat to their business.
As many as 51.8% of respondents in the survey said the wage growth will
force them to raise prices of their goods or services, whereas 43.7% said they
did not have such plans.
The Citadele Index is based on a survey of 750 company owners and
business executives, representing firms of different sizes doing business in
different industries. The index is published quarterly since 2004. SKDS
pollster carries out the survey for Citadele Bank.