Ida-Viru County businesses perceive risks in minimum wage hike

Euros. Source: Siim Lõvi/ERR

An agreement reached this week between trade unions, employers and the government will see minimum wage grow to 50 percent of average salary over the next four years. Businesses in Ida-Viru County are cautious rather than optimistic.

Tying minimum wage to average salary could become critical when there is robust growth of the latter, tourism entrepreneur Terje Rattur suggested. She believes that the minimum wage hike could negatively impact the availability of service staff in the sector.

"Our guests will have to get used to perhaps not getting their order filled immediately. Especially when the house is packed. There is no other way of offering the service," Rattur, who runs the Mäetaguse von Rosen spa hotel, told ERR.

Aleksandr Dmitrijev, member of the board of furniture seller Smart Mööbel, understands that minimum wage hikes are good news for employees, while it spells challenges for small businesses.

"All of these minimum wage hikes cause costs to go up in general. This in turn reflects in the capacity of companies and could result in layoffs," he said.

Restauranteur Indrek Kõverik suggested that a sharp minimum wage hike could benefit entrepreneurs who have not been diligent about paying taxes.

Because it is already difficult to find good employees in Ida-Viru County, Kõverik believes pressure on salaries could cause businesses to dial back and become micro enterprises.

"I'm also thinking about possibly terminating employee contracts and cutting back the operation, doing just enough for me – why go to any more trouble," the owner and head chef of Franzia said.

Estonia's current minimum monthly salary is €725 or 39 percent of the national average salary.


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Editor: Marcus Turovski

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