Minimum Salary Level Increased

The situation

Effective April 1, 2020, the minimum monthly salary for foreign workers in Latvia has increased 7.1 percent from 2019, as below:

 

The exchange rate at the time of publication of this alert is 1 EUR to 1.08 USD.

A closer look

• Existing employees. Employers of foreign nationals must increase foreign nationals’ salaries to comply with the new rule.
• Initial and renewal applications. Employers of foreign nationals seeking to obtain or renew work authorization on or after April 1, 2020 must increase foreign nationals’ salaries to comply with the new rule. Immigration applications that do not meet the minimum salary will be refused.
• Pending applications. Employers of foreign nationals with pending work authorization applications as of April 1, 2020 must increase foreign nationals’ salaries to comply with the new rule. Immigration applications that do not meet the minimum salary will be refused.

 

Reminders on other requirements

• Benefits and allowances. As before, benefits and allowances may only be included in the minimum salary calculation if they are specified in the employment contract, guaranteed and fixed, and are not paid in kind. Specifically, discretionary compensation, insurance contributions and non-recurring payments can be included in the salary calculation.
• Currency. As before, employers are required to guarantee the salary in EUR regardless of payroll location and/or exchange rate fluctuations.
• Additional funds for dependents. As before, foreign nationals must have access to an additional EUR 430 gross per month for accompanying spouses, and EUR 129 gross per month per child for accompanying children, if these dependents do not have their own financial means.
• Market salary rate. As before, Residence Permit with Work Authorization applicants must also meet the average gross salary rate for the previous year. EU ICT Permit applicants must also meet the market salary rate for the proposed position.

 

Background

• Annual minimum salary increases in Lithuania. Increases between five and eight percent are common for Lithuania.
• Regional comparison of minimum salary calculations. European countries use a variety of factors to develop minimum salary levels for foreign workers, including but not limited to a) national minimum wage levels; b) amounts set in collective bargaining agreements; c) specific minimum salary levels for foreign workers set by the government; and d) a combination of complicated factors involved in a market salary determination, such as those based on characteristics of the position or individual, educational level, age and/or experience. This category can also involve comparisons against other of the mentioned factors and/or other considerations that a particular country's government finds relevant to a minimum salary determination. This last category is the most common category in Europe, and it requires the employer to conduct a relatively complex analysis to determine the appropriate salary level for each employee. The below map displays which European country applies which factors. 

Looking ahead

Over the last five years, the majority of foreign employees in Latvia have been from the European Union and the European Economic Area, however there has been a significant increase in the number of third-country national employees. As a result, the government has been focusing on protecting local workers, though companies from various industries are still experiencing a workforce shortage. It is likely this pattern of protectionism will continue. Fragomen will report on relevant changes in Latvia. 

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].