Swedbank expects wage growth to continue
Swedbank’s chief economist, Liis Elmik, expects the fast growth of salaries to continue. Beyond qualified employees still being scarce, reasons for this included political agreements e.g. over teachers’ salaries as well as strong domestic consumption.
“The minimum wage increase will raise the average salary this year as well as next by about 0.5%. The increase in the real purchasing power of employees will probably slow in 2017 because the growth of nominal pay will slow down, and prices will increase,” Elmik stated in a press release.
According to Elmik, reasons for the fast wage increase in the second quarter were unemployment, a strong increase in minimum pay, political agreements regarding the salaries of teachers and medical workers, and strong domestic consumption that enabled companies selling their products on the domestic market to raise their wage costs.
Estonian companies have so far been able to cope quite well with poor foreign demand, falling export prices and the strong wage increase. “In the long run a wage increase that is too fast is dangerous for the economy, because it reduces companies’ ability to sell their products on foreign markets, invest, and accumulate buffers for bad times,” she added.
In the second quarter of 2016, average monthly gross wages and salaries in Estonia stood at €1,163, and the average hourly gross wages and salaries at 6€.91, which is 7.6% and 4.5% more than a year ago and 0.5% and 3.2% less than in the first quarter of 2016.
Average monthly gross wages and salaries stood at €1,141 in April, €1,129 in May, and €1,220 in June. The higher monthly gross wages and salaries recorded in June were mainly due to an increase in irregular bonuses and premiums as well as holiday pay, Statistics Estonia said on Tuesday.