After IRL unveiled an idea to make all salaries under 500 euros tax-free, a move which gave them a 3-point boost in the lastest EMOR poll of voter preference, the Social Democrats have jumped on the bandwagon, introducing a plan to increase the minimum salary by 20 percent each year until 2019, which would increase the current 355 euros gross monthly level to 800 euros in five years.
The minimum salary would, if the idea is approved by the government and Parliament and the next elected government and Parliament in 2015, increase to 390 euros gross per month next year, which would grow to 470 euros at the beginning of 2016 and 560 euros a year later. It would then grow to 670 euros in 2018, and reach 800 euros by January 1, 2019.
"Increasing the lower end of the income ladder will keep more money in the state - that money will go into circulation, will increase competition in the right places and will have little effect on the export sector where most salaries are already high,“ Party Chairman Sven Mikser said, adding that the service sector will gain most from the plan.
As the sector employs more women than men, the plan will also decrease the wage disparity between genders, he said.
The minimum wage, usually changed after an agreement with employee and employer union representatives, was 120 euros in 2002, showing double-digit growth each year until 2008, when it was frozen at 278.02 euros for four years.
Latvia and Lithuania have both set the figure at around 290 euros per month.
Mikser said a second plan is to implement regional tax exceptions, meaning the state would pay up to 3 percent of social tax for companies outside Harju County, by far the nation's wealthiest region. The idea would cost the state 100 million euros annually.
Around 57 percent of the nation lives outside of Harju County, accounting for only 40 percent of GDP, he said.