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Minimum wage in Baltic states and other important things to know about the construction industry
On May 10, 2018, the signing of the General Agreement (General Agreement) on the establishment of the minimum wage in the construction industry in Latvia was started. For now more than 210 construction companies with total turnover of ~90% of the necessary quorum (EUR 713 million) for the conclusion of General Agreement have signed it. In accordance with the provisions of the General Agreement a minimum wage for construction industry, which will significantly exceed the current minimum wage in the country, will be set. In addition the General Agreement also provides for specific rules relating to overtime pay. In Lithuania and Estonia such general agreements are not concluded and the minimum wage in all sectors of the national economy, including construction industry, is the same.
Minimum wage
From January 1, 2018, the minimum wage in Latvia is set at EUR 430,- which is slightly more than in Lithuania (EUR 400, -) and less than in Estonia (EUR 500,-). If the General Agreement comes into the force, the minimum wage in the construction industry in Latvia for employees with normal working hours will be EUR 780,- per month. Furthermore, a minimum hourly rate of EUR 4.67 will be set as well. In Lithuania and Estonia, the minimum hourly rate for all sectors of the economy is respectively EUR 2,45 and EUR 2,97. A certain transitional period may also be set for the adaptation of the minimum wage and hourly rate according to the provisions of the General Agreement. Namely, the first six months when the General Agreement comes into the force, the employer is entitled to set a minimum wage of EUR 650,- and an hourly rate of EUR 3,89.
Payment for overtime
In Lithuania and Estonia, the payment for overtime compiles 150% of the salary. An employee in Latvia receives an overtime payment – at least 100% of his or her hourly or daily payroll rate. However, amendments to the Labor law are currently in legislation phase in Latvia. Those amendments provides the right to set a smaller payment for overtime work, if in accordance with the requirements of the law, a general agreement has been concluded in the relevant sector, and if the general agreement stipulates a substantial increase of the state minimum wage or hourly wage rate in the sector. The project of the said law, among other, provides that the payment for overtime may be set to at least 50% of the employee`s defined salary. The construction industry wants to take such an advantage and the General Agreement includes provisions of the overtime payment to be 50% of the defined salary. Consequently, the application of such provisions of the General Agreement depends on the adoption of the said amendments to the Labor Law.
The comparative overview has been created by our experts of construction law – Attorney at Law Nils Fogels(Latvia), Attorney at Law Jaak Siim (Estonia) and Senior Associate Justinas Leita(Lithuania).
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