SEB: Almost 25 percent of Estonian companies cut wage during crisis

SEB main building.
SEB main building. Source: Priit Mürk/ERR

The SEB Baltic Business Outlook survey carried out in the Baltic states in July shows that 23 percent of Estonian businesses have reacted to the coronavirus crisis with wage cuts.

Unlike Latvian businesses, Estonian enterprises have attempted to preserve jobs. Lithuanian enterprises tried to avoid both wage cuts and redundancies by making the greatest possible use of the state's wage compensation measures, SEB said.

The study shows that 23 percent of Estonian businesses made salary cuts during the crisis while the corresponding figure was 21 percent in Latvia and 16 percent in Lithuania.

The study results indicate, that Latvian businesses opted for redundancies as 26 percent of them said that they are reducing the number of their employees. The corresponding figure in Estonia and Lithuania was 18 percent. 

In terms of redundancies and wage cuts, Lithuanian enterprises remained rather conservative compared with their neighbors, likely due to trying to fully make use of the support measures made available by the state. 

Over one-quarter of Lithuanian businesses said that they used support measures to prevent wage cuts and redundancies. The figures in Estonia and Latvia were 15 percent and 8 percent of all respondents, respectively.

Ainar Leppanen, board member and head of retail banking at the Estonian operation of SEB, said: "Growth in the average gross salary decelerated abruptly in the second quarter and we also observed a decline in wages in sectors that were hit the hardest, such as hospitality. On a humane level, its is difficult, of course, but it is definitely preferable to being made redundant."

Leppanen added that the bank has already seen signs of economic recovery, and businesses that have been able to retain their staff will definitely be in a better starting position.

The SEB study into the effects of the coronavirus crisis was carried in July among 2,566 businesses - 1,133 from Estonia, 1,001 from Lithuania and 432 from Latvia. Over 90 percent of the businesses participating in the survey employed up to 50 people, and most of them had up to 10 employees.


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Editor: Helen Wright

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