Analytics, Estonia, EU – Baltic States, Financial Services, Labour Unions, Legislation, Markets and Companies, Wages

According to estimates by the unions, Estonian wages could reach the European average level in 22 years. "This is provided that Estonia manages to maintain an even 6% growth compared with Europe's 2%. To maintain even growth, it is necessary also for other indicators of the economy, including investments, to be in order," the chairman of the EAKL trade union confederation, Peep Peterson, said in a press release.

He said unions disagree with employers on that rapid wage growth poses a threat to the sustainability of the Estonian economy.

"In our opinion the absence of investments that would help to increase the productivity of businesses is posing a much bigger threat," Peterson said, calling on employers and unions to add investments to the program of their annual pay negotiations.

"What the Estonian society expects is rapidly developing economy, not income cuts," Peterson said.

According to the union leader, it appears from the analyses of the central bank that it is namely wage growth that keeps the Estonian economy buoyant and that sudden disrupting of that growth may put the economy in a free fall.

The European Commission has come up with a pan-European investment program the fruits of which are reaching also Estonian businesses via Kredex. Besides domestic savings will grow, enabling to start investing in productivity growth right away, the unions said.

Bi-annual agreements on the minimum wage between unions and the Confederation of Employers have raised the minimum wage in Estonia by 10% a year on the average in recent years and next year the average wage in Estonia will be the second highest in eastern and central Europe after Slovenia. With the corresponding indicators of Finland and Sweden a more than threefold difference remains, however.

The average monthly gross wage was 1,091 euros and the average hourly gross wage 6.86 euros in Estonia in the first quarter of this year, marking increases of respectively 8.1% and 7.7% over the same period in 2015, Statistics Estonia said on Wednesday. It also said that as a result of a continued decline in consumer prices and increase in tax-exempt income, the real growth in wage earners' purchasing power was almost 9%.