Wage hikes slow for Estonia's IT companies

U.S. IT companies have carried out mass layoffs in recent months due to the economic downturn, but the situation is not so bad in Estonia although wages are no longer rising quickly.

On Wednesday, Microsoft announced it will freeze its employees' salaries and cut stock options and bonuses.

A representative for Estonia's Microsoft office did not comment on the news and it is not known if there will be a knock-on effect for its European branches.

But other firms in the IT sector said that wages are no longer rising quickly, fueled by a labor shortage. But there has not yet been any need to freeze salaries.

Thursday's "Aktuaalne kaamera" spoke to several IT companies to see how they are coping.

"We are really driven by what the market is doing around us. In IT, wages continue to rise. But now moderately. This rally as such, I think, will stop. Similarly at Helmes - we're going by the Fontes wage survey, we're adjusting accordingly," said Helmes development manager Meelis Lang.

"We are doing rather well at the moment and the need is even growing. We are recruiting quietly and we think that is a good thing," Lang said.  

Nortal Estonia CEO Ats Albre told AK: "Our wages have continued to grow. Certainly this year they will not grow as aggressively as in the past, but today the overall global need for IT services has not really gone away. So in line with that, wages are also moving forward step by step."

CEO of the Estonian Association of Information Technology and Telecommunications Doris Põld said: "In previous years, wage growth has been rather rapid, and employers have been forced to keep pace with it.. due to a shortage of labor."

She added: "The wage rally as it stands has stalled. Wages may not rise as fast as in previous years."

Estonia's IT sector saw a wave of layoffs in its product-oriented start-ups last year, but bigger and older companies with business models independent of investors survived and even expanded.

"I wouldn't say there was a crisis for businesses, but it was a reorganization of their own resources," said Põld. 

"If start-ups are no longer getting that kind of money from investors, they will try to be more profitable, more self-sufficient, and consequently business decisions will be made about the workforce."

But the changes in the USA may not reach Estonia for a while.

"For example, Nortal, which also has the U.S. as one of its home markets, we have an office in Seattle with more than 100 people, more than 100,000 people have been let go from the IT sector in the surrounding area, which is the size of the population of Tartu," said Albre. 

"If we are talking about the fact that the U.S. is generally ahead of Europe, and the U.S. continues to be in a rather difficult economic situation, then this could spill over into Europe at some point. There is a certain anxiety that we still feel about what the next six to 12 months will bring."


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Editor: Barbara Oja, Helen Wright

Source: Aktuaalne kaamera

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