The agreement to be signed was reached last week with the help of the public conciliator. According to the agreement, the minimum wage will increase in 2021 to 40 percent of the national average wage, the absolute value of which will be fixed by employers and employee unions next summer on the basis of the Bank of Estonia's summer economic growth forecast, which is to be published next June.

Parties to the agreement sought the help of the public conciliator after an increase to €578 agreed upon in August was not confirmed by the supervisory board of the EAKL.

The parties have now also agreed to launch a joint nationwide survey regarding the effects of minimum wage on Estonia's socio-econoic development.

The increase in the minimum wage will also bring with it an increase in the size of welfare payments as well as fees at many kindergartens, although there has been talk for years of untying these from the minimum wage. Before moving forward on the welfare issue, the Ministry of Justice is awaiting the results of an analysis. The Ministry of Education and Research, meanwhile, is not currently planning on untying kindergarten fees from the minimum wage.

The current minimum wage in Estonia is €540 per month and €3.21 per hour.

The new minimum wage has been agreed upon by the Estonian Employers' Confederation (EKKT), representing Estonian employers, and the EAKL, representing Estonian employees.

Over the past ten years, the minimum wage has nearly doubled — from €278 in 2010.

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