Analytics, Banks, Direct Speech, Estonia, Financial Services, Wages

The rapid rise in average wages has for some time been driven by the public sector. Wages rose faster in state and local government employment than in the private sector in the second quarter too. Wages were up in public administration, education as well as healthcare. Jobs in the public sector mostly demand very good knowledge of the Estonian language, and so employers mostly find new staff from within the local labour force. In consequence the shortage of local labour gives public sector employers more power in wage negotiations than workers in parts of the private sector where employers are also able to find employees from abroad.

The performance of Estonian companies will in future be affected by the cooling of the economies in Estonia’s main export markets. The sentiment survey of the Estonian Institute of Economic Research shows the employment expectations of businesses are more pessimistic, and there are slightly fewer companies than before in construction and manufacturing that consider the labour supply to be the main factor restricting expansion. This suggests that there will be less upward pressure on wages in future and so wages will rise more slowly.