In the second quarter of 2020, the average monthly gross wages and salaries in Estonia was €1,433, a 1 percent increase on last year, and while in county comparison, both increase and decrease in wages could be observed, the year-on-year growth has not been as modest in ten years, Statistics Estonia said on Thursday.

Swedbank's senior economist Liis Elmik said "The average gross monthly wage growth slowed from 5 percent in the first quarter to 1 percent in the second quarter. Without wage compensation, the average wage would have been lower than last year."

She added the number of working hours per employee decreased by 5 percent and the number of working hours per employee in accommodation and catering was smaller by as much as a quarter compared to the year before.

"In half of the industries, salaries decreased compared to a year ago. Salaries continued to grow rapidly in high-salary sectors such as IT, finance and energy. In these areas, the average gross monthly salary exceeds €2,000 per month," Elmik said.

The economist added salaries fell the most in lower-salary sectors such as trade, tourism and entertainment, which suffered the most in the first phase of the coronavirus crisis. "In construction and manufacturing, the decline in average wages was between 1 and 3 percent," she said.

"Many companies lowered salaries in order to meet the criteria for wage compensation. Some of them are raising salaries back to the old level upon the end of the support scheme. However, the situation is very different in different sectors of the economy," Elmik said.

She pointed out that there are enough orders in the building material or food industries, for example, but that the future looks dark for various services related to foreign tourists.

"The media space is dominated by coronavirus news and possible new restrictions, export demand is still weak, the peak tourist season is coming to an end and wage subsidies and grace periods are coming to an end. In such a situation, both employers and employees are cautious in wage negotiations," the economist said.

According to Swedbank's forecast, the average gross salary with salary support will increase by only 2.2 percent this year. As economic growth picks up next year, wage growth will accelerate to 3.3 percent. "The situation of households will be alleviated by the halt in price growth - the average consumption basket will not become more expensive this year," Elmik said.

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