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Latvian wages soar by nearly a third in 2007, worsening economic instability

Latvian wages soar by nearly a third in 2007, worsening economic instability

Gross monthly wages in Latvia skyrocketed 31.5 percent last year, the central statistics office announced Friday, underscoring the instability in the European Union's fastest growing economy.
Wages and salaries in the private sector jumped 30.4 percent, while those in the public sector soared 35.8 percent as the government struggles to keep teachers, police, medical workers and ministerial staff.
The average monthly wage in the Baltic state stood at 398 lats (US$867, euro570) for the year.
The wage gains are by far the highest in the 27-member EU, which Latvia joined in 2004.
A labor deficit and high inflation have been driving wages upward for several years now. In 2006 gross monthly wages increased 22.8 percent.
Economists have warned that such extraordinary wage increases are eroding the competitiveness of Latvia's goods and services since they far outstrip gains in worker productivity.
Yet many Latvians have come to expect regular increases in take-home pay due to runaway inflation, which reached 15.8 percent in January and is expected to continue climbing over the coming months.
The government adopted an anti-inflation plan last summer in order to reduce domestic demand, and data suggests the plan is starting to take effect. GDP growth in the fourth-quarter of 2007 fell to 9.6 percent from 11 percent in the third quarter.


Updated : 2020-11-30 07:22 GMT+08:00