Central bank: Wages grew in Q3 2020 despite pandemic

Wages have risen mid-way through the year due to some improvement in the economy (picture is illustrative).
Wages have risen mid-way through the year due to some improvement in the economy (picture is illustrative). Source: Siim Lõvi/ERR

Wages have grown through summer, though at a slower rate than prior to the coronavirus crisis, the Bank of Estonia says.

The central bank noted Statistics Estonia data recently released which revealed the average gross wage had grown by 3.2 percent on year to the third quarter of 2020 (Q3 2020) despite the pandemic, now standing at €1,441.

Much of this resulted from a rebound in the economy in the summer, where gross wages rose 4.3 percent on the previous quarter.

While unemployment rose during the spring coronavirus wave, easing restrictions and ebbing coronavirus rates in summer saw economic activity recover to an extent, the central bank says; the average declared wage income as per Tax and Customs Board (MTA) data has risen by even more, suggesting the average employee might even be doing slightly better than Statistics Estonia's figures may suggest, the Bank of Estonia says.

Under-employment has become less of an issue through the course of the year as well, with the figure for hours worked per employee nearly at summer 2019 levels.

This and its accompanying added value per employee is likely also behind the rise in average wages, the Bank of Estonia says.

Even accommodation and catering saw some green shoots of recovery in Q3 2020 compared with the previous quarter, though wages there are still lower than last year.

Another factor behind the rise might in fact be that many lay-offs have come from the lowest-paid jobs' sector, in effect rising the wage among those still left employed.

A state-sponsored wage support scheme, which saw companies able to apply for up to 70 percent of their employees' pay packet from April onward, will also have had an impact.

The Bank of Estonia adds that continued unemployment and lower economic growth means future wage rises will be on a shallower curve than before the crisis, hampered by the effects of the second, autumn coronavirus wave – though this in turn is mitigated somewhat by the less severe restrictions which have appeared in Estonia so far, the central bank says.

Median salary rises 1.6 percent on quarter to €1,189 in Q3

Data from Statistics Estonia shows the median wage increased by €19 or 1.6 percent to €1,189 in the third quarter of this year compared to the previous quarter.

A change in the number of employment relationships in the quarterly comparison can particularly be seen in the accommodation and catering industry, which are most affected by the crisis, and among young workers, Statistics Estonia said.

Compared to the second quarter, the data of Statistics Estonia show a small increase in the median salary for some occupations. Data scientist Kadri Rootalu said that there were occupations in the second quarter the wages of which fell sharply, such as dental staff.

"In the third quarter, when there were no more restrictions, their wages rose again and even above pre-crisis levels," she added.

Rootalu also pointed out that according to the data for the third quarter, the number of employees in professions such as servers and waiters as well as bartenders has decreased.

"Nevertheless, no significant change can be observed in the median salary of people working in this field. However, both the number of employees and salaries of travel agents' customer service staff have decreased significantly," the data scientist said.

She also pointed out that while in the second quarter the number of employees in different age groups decreased evenly, in the third quarter young workers under the age of 25 foremost left the labor market.

"The biggest decline was in the accommodation and food service activities and other service-related occupations, which suffered the most from the coronavirus crisis. Compared to the end of the first quarter, the number of hotel administrators, barmen and barmaids in this age group has decreased by 35 percent, the number of waiters and servers by 30 percent. The people to have lost their jobs among travel agency staff have also foremost been younger people," Rootalu said.


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Editor: Andrew Whyte, Helen Wright

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