Minimum wage rise causing consternation between coalition parties

Lauri Läänemets (SDE) and Mart Võrklaev (Reform).
Lauri Läänemets (SDE) and Mart Võrklaev (Reform). Source: Priit Mürk/ERR

One goal written into the Reform-Eesti 200-SDE coalition agreement is to boost the minimum wage to 60 percent of the median wage. This has, however, led to a difference of opinions among the coalition partners, ETV news show "Aktuaalne kaamera" (AK) reported Wednesday.

Should the minimum wage not rise, Social Democrats (SDE) chair Lauri Läänemets says, the entire tax policy must be reviewed

SDE had aimed to raise the minimum wage, to the above level of 60 percent of the median, by 2027, through the course of the coalition talks, AK reported, and had more than one avenue of attempting this.

Läänemets told AK that: "If it would be viable to raise the minimum wage via a tripartite agreement with employers, employees and the state, then this would be our preferred version. If this does not prove possible, then the government can do it as a part of the coalition agreement."

However, Mart Võrklaev (Reform), incoming finance minister, says his party is not willing to enshrine an increase in the minimum wage into legislation, since the tripartite negotiations mentioned by Läänemets are still in progress.

Võrklev said: "The minimum wage has always been agreed upon between the unions and the employers, and it is their task, one which they know how to carry out best, to ascertain whose desires and options are whose."

Eesti 200's Riigikogu chief whip, Marek Reinaas, says that the proposal was already discussed during the talks with trade unions and employers, adding all parties agreed to the goal.

Reinaas told AK that: "We also agreed that in and of itself. the goal of reaching the point where the minimum wage stands at 60 percent of the median wage within four years is a good thing, while on the other hand, it is also likely achievable."

"This is why precisely such an agreement was written into the coalition agreement. To be honest, I cannot in any way grasp what the issue is here now," Reinaas continued.

As a trade-off to get the minimum wage clause included into the coalition agreement, SDE agreed to the Reform Party policy of abolishing the "tax hump", (referring to bracket creep whereby rising wages push more and more people into the next tax bracket. Reform would put in place a €700-per-month income tax-free threshold, to alleviate this-ed.).

Läänemets said that therefore, if there was to be no minimum wage hike after all, the elimination of the "tax hump" may not be forthcoming either.

He said: "It's one thing or the other; both could be left out, then it's a zero sum game, while in fact all other aspects can also be implemented in the coalition agreement. However, that is not our goal."

Läänemets added that this would also mean the entire tax policy would need to be put up for review, hence SDE has no plans to leave the coalition.

Trade union and employers' representatives are to sit down together next month, and will negotiate whether the minimum wage will rise, and by how much, or not.

The median wage in 2022 was reported at around the €1,700-per-month mark.


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Editor: Andrew Whyte, Merili Nael

Source: 'Aktuaalne kaamera'

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