Analytics, Estonia, Financial Services, Wages

According to Palm, the pay decline will continue, at least in the first half of next year. A slow growth is expected in the second half of the year, due to strengthening economic growth and low year-on-year comparative basis.

He noted, however, that as the recovery from the crisis will be a slow one, the unemployment rate will remain high and hence the pay increase will also not be significant. The recovery of economic growth is expected to be based on exports and with the growth in productivity, the pay will mostly increase in the relevant areas.

Palm emphasised that the flexibility of the Estonian labour market is indicative of competitiveness. “The recovery of Estonian economy from the crisis has been largely supported by the falling labour costs; this creates preconditions for sustainable growth,” he said.