Latvian labour costs among lowest in EU / Article

In 2024, the average hourly labour costs in Latvia were among the lowest in the whole o the European Union, according to Eurostat data published March 28.

Average hourly labour costs in the whole economy across the EU were estimated to be €33.50 in the EU and €37.30 in the euro area (which includes Latvia), up compared with €31.90 and €35.70, respectively, in 2023.  

The average hourly labour costs show significant gaps between EU countries, with the lowest hourly labour costs recorded in Bulgaria (€10.6), Romania (€12.5), Hungary (€14.1) and Latvia (€15.1) while the highest were in Luxembourg (€55.2), Denmark (€50.1) and Belgium (€48.2). 

Thus Latvia’s average hourly labour costs were less than half the EU average. Baltic neighbors Estonia (€19.6) and Lithuania (€16.3) both recorded higher figures. 

There are both good and bad aspects to the figures. On the one hand it means Latvia’s labour force is competitive, at least in theory. On the other hand, it means people don’t tend to get paid very much, with all the knock-on effects that entails for the wider economy. And of course the figures do not take productivity into account, which might be regarded as the decisive factor in interpreting how competitive Latvian labour really is. 

The figures do at least show how Latvia’s labour costs have steadily improved over the last decade and a half. Back in 2008, Latvia’s average hourly labour cost was just 5.9 euros, and it only crossed the 10 euro threshold as recently as 2020 when the figure reached 10.7 euros. So in simple terms it has tripled over 16 years – though again, this does not take things like inflation into account. 

Average hourly labour costs in industry across the EU in 2024 were €33.9 and €39.8 in the euro area. In construction, they were €30.0 and €33.4, respectively. In services, hourly labour costs varied between €33.3 in the EU and €36.4 in the euro area. In the mainly non-business economy (excluding public administration) they were €34.2 and €37.5, respectively.

The two main components of labour costs are wages and salaries and non-wage costs (e.g. employers’ social contributions). The share of non-wage costs in total labour costs for the whole economy was 24.7% in the EU and 25.5% in the euro area. The lowest shares of non-wage costs in the EU were recorded in Romania (4.8%), Lithuania (5.4%) and Malta (5.8%) and the highest in France (32.2%) and Sweden (31.6%).

Between 2023 and 2024, hourly labour costs in the whole economy (in euros) rose by 5.0% in the EU and by 4.5% in the euro area.

Within the euro area, hourly labour costs increased in all EU countries. The largest increases were recorded in Croatia (+14.2%), Latvia (+12.1%) and Lithuania (+10.8%) and the lowest in Czechia (+1.3%) followed by Finland (+1.8%) and Luxembourg (+2.1%).

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