Last Friday, Finance Minister Mart Võrklaev (Reform) sent a draft bill to its coordination round, concerning reduced wage hikes for senior civil servants.
In something of a pattern with the government of late, this coordination period, which invites feedback from stakeholders, is very short – the deadline for approval or comments is noon today, Monday.
The bill states that the changes will limit wage rises for top civil servants to 17 percent, through to April 1, 2028, when the current regime will be reinstated.
The bill amends the Salaries of Higher State Servants Act (known in Estonian by the acronym KRAPS), where the salary increase for senior civil servants specified in the bill will be, temporarily, half of the salary increase of all remaining senior civil servants, through to March 31, 2028.
In other words, whereas an 11 percent wage increase was forecast under the current KRAPS regime, if the new bill enters into law, that wage increase would be 5.5 percent.
The bill is due to come into force March 15, 2024, assuming it enters into law.
The KRAPS sets out the highest wage rate for officials considered to be senior civil servants, which is at present €5,200 gross per month.
This wage rate is index-linked as of April 1 of each year to the highest wage rate index as published by the Ministry of Finance.
As a result of rapid wage-price inflation, senior officials' salaries of have grown significantly faster than earlier, both this year and, according to the forecast, next year as well.
Whereas in 2022, top civil servants' wage rises stood at 7.9 percent, in 2023 the figure was 13.9 percent; the projected figure for 2024 is 11 percent.
Meanwhile, under the terms of the KRAPS, salaries of top civil servants were set to increase by 6.9 percent in 2025, 5.6 percent in 2026, and 4.5 percent in 2027.
Given the difficult situation with the state budget, the government has decided to freeze the public sector wage fund for a four-year period. In addition, the decision was made to limit the salary increase of some civil servants as stated in the KRAPS.
The bill does not, however, alter the official pay for Riigikogu MPs, the head of state, the chair of the Supreme Court, the auditor general, the chancellor of justice, and the board chair and supervisory board members at the Bank of Estonia (Eesti Pank), nor does it change the indexing rationale for these positions.
§ 75 of the Constitution puts in place a restriction on changing the working wage as paid to members of the Riigikogu; this law stipulates the remuneration of MPs, plus sets restrictions on earning other income from work, though this may be amended by the subsequent Riigikogu composition (in other words, MPs' salaries remain safe for the four-year lifespan of that Riigikogu composition).
In addition to MPs, wage hikes are not restricted for top managers at institutions listed in the Constitution. Constitutional institutions, and the agencies that serve them, are not government institutions, but instead independent institutions, operating on the basis of the law.
Since the Bank of Estonia's costs are fully covered by the income earned from the investment the central bank's foreign reserves, and the Bank of Estonia does not itself, receive allocations from the state budget, the wages of members of the Bank of Estonia do not impact on the state budget so no changes will be made here.
The remainder of the senior civil servants set out in the KRAPS – namely the prime minister, members of the Supreme Court, the state prosecutor general, government ministers, the state secretary, circuit, county and administrative court judges, the national conciliator and the commissioner for gender equality and equal treatment – are to have their wage rise limited to one half of the salary rise of those senior civil servants whose salary increase is not limited by the terms of the bill.
Those persons seeing a reduced wage growth would have a projected wage growth of 5.5 percent in 2024, 3.5 percent in 2025, 2.8 percent in 2026, and 2.3 percent in 2027, under the terms of the bill.
From April 1, 2028, the existing regime would be reinstated, which would result in a 17 percent wage rise for the above group, from that time.
Editor: Andrew Whyte, Urmet Kook