Employers anticipate continued wage growth

Coins in a purse (photo is illustrative).
Coins in a purse (photo is illustrative). Source: Karin Koppel

In the first quarter of the year, the average gross monthly wage increased to €1,741, while real wages decreased. Companies predict that wage growth will continue.

In the first quarter of this year, the average total monthly wage increased by 13.3 percent to €1,741 euros, compared to the same period last year.

However, real wages, which account for inflation and reflect people's true purchasing power, decreased by 3.2 percent to €1,443.

Pay has risen in every sector over the last year. Even though not everyone in Estonia has enjoyed pay rise, the vast majority has.

High wage growth has been overshadowed by significant price hikes, which have left people poorer year on year. This, however, is changing.

Rasmus Kattai, an economist at the Bank of Estonia (Eesti Pank), said that the average wage's purchasing power has improved by around 5 percent in the last six months.

He anticipates that by 2025, the average pay would be €2,000.

Wage growth has been erratic, according to the Estonian Trade Union Confederation (EAKL). The suggestion is that persons should take a more proactive approach to their earnings.

"This 13 percent plus is not a bad number at all, but the problem is that it is not distributed evenly in the labor market. People who have not received a raise should definitely request one. This is the most effective, workable solution to inflation," Jaan-Hendrik Toomel, leader of the union, said.

Corporate profits have surged in recent years, implying that pay hikes are likely. Wage rises will continue also according to the Estonian Employers' Confederation (Tööandjate Keskliit).

"I anticipate that the majority of Estonians will receive a salary increase this year," Arto Aas, leader of the confederation, said. "This wage increase must be commensurate with the current economic climate and the performance of businesses," he added.

However, both union leaders said that they expects wage growth to slow significantly over the next few years.


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Editor: Merili Nael, Kristina Kersa

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