Two costs that never reach the budget
Waiting
Months pass between deciding to hire and the first day on the job. Advertising, screening, interviews, an offer, then the notice period owed to their current employer. For a manager-level role in Latvia that is usually five to eight months, and longer if the first candidate falls through. The whole time, the problem you are hiring someone to fix carries on costing you.
Ramp-up
A new manager does not work at full effect on day one. Three to six months go on learning the processes, the people and the systems. During that time you pay a full salary for partial output, and spend your own hours getting them up to speed. The ramp months field in the calculator sets this period.
Questions owners ask
Why is the figure so much larger than the salary?
Salary is roughly half of the first-year total. The other half is employer social contributions at 23.59 %, the recruiter fee, and above all time: the months the role sits empty, and the months the new person spends getting up to speed. Those last two never leave your bank account, but the problem that should have been fixed keeps costing you.
Where does 23.59 % come from?
It is the employer share of Latvian mandatory state social insurance contributions for 2026. The employee pays a further 10.50 %, but that is withheld from their pay, so it is already inside the gross salary here. Contributions are capped at EUR 105,300 a year; above that the excess is charged as solidarity tax instead.
Is a 20 % recruiter fee realistic?
It is a default assumption you can change. There is no published Latvian benchmark for this rate. International practice for management search usually falls between 15 and 25 % of first-year gross salary. If you search yourself, set it to zero and add your own time to the ramp cost instead.
Does this mean you should never hire?
No. It means hiring is the most expensive way to test a hypothesis. If you know exactly what needs doing, and the workload is steady and large enough for a full-time role, a permanent person is the right answer. If you do not yet know what you need, it is cheaper to find that out first.
How accurate is this calculation?
The tax side is exact for 2026 rates. Everything else is your own assumption, visible and editable. The point is not a figure accurate to the cent, but the right order of magnitude: first-year cost is a multiple of the salary, and most of the difference never appears in a budget.
One letter a month about operations
One concrete example from a Latvian company and one thing you can act on this month. No theory, no pitches.
