Employers' Confederation director: Employees seeing good times right now

Estonian Employers' Confederation (ETTK) managing director Arto Aas.
Estonian Employers' Confederation (ETTK) managing director Arto Aas. Source: ERR

Employees in Estonia are seeing good times right now, Estonian Employers' Confederation (ETTK) managing director Arto Aas said on Tuesday, commenting on recently published wage statistics for 2019.

"The Estonian economy is seeing pretty good times right now, and Estonia's employees are seeing especially good times," Aas told ERR. "The increase in the average wage has been very rapid indeed, unemployment is low, and inflation is low. I think people can be pretty happy in this situation."

At the same time, the fact that labor productivity has increased twice as slowly as labor costs may be cause for concern, he continued.

"This means that our businesses' and economy's competitiveness is decreasing, and some serious consideration needs to be given to how long this situation can last and what the next step will be in the Estonian economy," Aas said.

The ETTK director highlighted the fact that wages have increased in the public sector significantly faster than in the private sector.

"The public sector is once again the driver of the wage increase, and the business landscape certainly isn't very happy about that," he said. "This money comes from taxes, and the public sector will be capable of buying out good employees from the private sector."

Despite the rapid increase in wages, there is no risk of an economic crisis right now, Aas continued. "Major banks' and financial institutions' forecasts indicate that economic and wage growth should slow down somewhat this year, and it may be that the very good times come to an end within the next few years," he said. "But there are no signs of any sort of economic crisis right now, thankfully."

Commenting on the influence of foreign labor on Estonian wage levels, Aas found that the former's influence is twofold.

"There are approximately 30,000 foreign employees in Estonia, or approximately 4-5 percent of our labor," he said. "In the big picture, that isn't very much, but they must be paid Estonia's average wage, which in many regions and sectors is a very high wage requirement. It does increase the average wage somewhat, but it is also clear that in many sectors — whether construction, industry, the service sector — the opportunity to utilize foreign labor has relieved the labor shortage somewhat, and normalized an overheated labor market somewhat."

These are balancing factors, Aas said. "Foreign labor is here to contribute to the Estonian economy, and I believe that it is here to stay as well," he commented. "Hopefully people will get used to this situation; it is the new normal, so to speak."

Estonia's average monthly wage reached €1,407 last year, up 7.4 percent on year.


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Editor: Aili Vahtla

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