For a year now, both public sector salaries and the number of employees have grown faster than the private sector, Tuesday's "Aktuaalne kaamera" reported.

Looking at wages during this time, healthcare and education workers have received the largest pay rises and seen staff levels grow by approximately 1,500 workers each.

However, Estonia still faces big shortages of teachers – especially with the language reform being implemented this year – and medical and healthcare workers as the country has an aging population.

But the manufacturing industry is in a worse situation and has approximately 5,000 fewer workers this year.

Arno Kolk, CEO of the Estonian Electronics Industry Association, said there is no sign of stability anywhere.

"Wages are certainly not going up as fast as in the public sector, because a company cannot afford to pay more than customers pay for the product. We have tried to keep up with inflation, but we do not always succeed, because indeed the global market we sell our products into is pretty tough," Kolk said.

Madis Aben, a fiscal policy analyst at the Ministry of Finance, said the main reasons are poor export markets in Scandinavia and their low growth. When the forecast was made in the spring it was hoped that things would improve.

"Now it's been pushed back to maybe the second half of this year, when we could expect more manufacturing orders from Finland and Sweden," the analyst told AK.

"There is some optimism from the slight recovery of the Finnish, Swedish and German economies in recent months. However, it has not yet reached the construction sector in Finland and Sweden. It may take a little longer than we thought for the Nordic construction markets to recover."

Collective agreements pushed public sector salaries up this year. Healthcare workers had the most success with a 10 percent rise. But it has not solved all the sector's problems as medical workers can still find higher salaries elsewhere.

"The pay level north of us is still several times higher and as of today, there are nearly 1,000 Estonian doctors working full-time in Finland," said Urmas Sule, head of the Estonian Hospital Association. "At the moment we have a shortfall of around €50 million in specialist care in the health sector, which actually means that it is quite a challenge to manage the provision of specialist care for our people by the end of the year."

Industry hopes the situation will improve under the new government.

"Coalition talks are currently underway in Estonia, and for the first time in a long time, industry is being talked about, and loudly. This inspires a certain optimism," said Arno Kolk.

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