Government confirms €654 minimum wage

Money,
Money, Source: Pixabay

The government approved an agreement by trade unions and employers to raise the minimum wage from the current €584 to €654 next year.

The minimum wage is established with an extended collective agreement between the Estonian Trade Union Confederation and the Estonian Employers' Confederation. As is established practice, social partners will agree on the minimum wage.

Data from the Tax and Customs Board shows that there were 16,900 full-time employees earning minimum wage (€584) during an eight month period in 2021, making up 3.4 percent of the entire full-time employee number. In addition, 22,400 full-time employees earned between €585 and €653 monthly, making up 4.5 percent of the entire full-time employee number.

The minimum wage increasing by €70 to €654 from 2022 will bring an additional €18 million in tax revenue to the state budget, the Ministry of Finance said. Income will increase from the social tax, unemployment insurance tax, physical person income tax, excise duties and VAT as a result of increased net wages. The state budget's tax revenue forecast has already taken the new minimum wage into consideration for calculations.

The minimum wage increase will also bring along an increase in the benefits linked to wage, such as parental benefits and parental leave allowances. The Ministry of Social Affairs will pay up to €3.2 million in 2022 in relation to the wage increase.

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Editor: Kristjan Kallaste

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