Situation of retirees and pension system in Latvian labour market

The key question: how many years people must work to achueve retirement monthly income of European Union (EU) poverty threshold – 60% of the previously received gross wages? Calculations are not encouraging. An independent expert’s assessment of future pensioner in the event should work for up to 100 years , but the Ministry of Welfare projections suggest that 50% of previous wages to qualify with 47 years of work experience.

 Economics Minister of Latvia Juris Strods encourages people to change the income tax calculation of workers to pensioners under allowance. Thus, encouraging retired people in the labor market, not only partly addresses the problem of lack of qualified labor force, but also increased the retired people in total revenues and reduces the shadow economy of the country.
Economics Minister Juris Strods: “The current circumstances is that there are the lack of quality workers, those people who feel strong enough to still work, such a possibility is given, to motivate them either financially or by offering them a suitable and convenient working hours. They’re working with your experience, acquired knowledge and skills could be useful not only in a Latvian company. ”

Currently, Latviahas more than 80 thousand workers and retirees in the calculation of personal income tax does not apply to non-taxable minimum. 2008 untaxed minimum application of workers to pensioners to increase their net wage of 20 lats (28 euros) if non-taxable minimum will be 80 lats (112 euros), as it is currently being planned.

The increase in net salaries, might increase the total income of pensioners. For example, workers with minimum wage in total income increased by 9% while the average wage – about 5% .

J. Strods indicates that this personal income tax calculation of empoyed pensioners will reduce the wage payed in envelopes, or the underground economy. Now retired people,could be more tempted to recieve their salaries in envelopes directly due to high taxes.


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