A wage ladder recently compiled by Statistics Estonia divides wage earners into ten equal groups in ascending order.

Kadri Rootalu, a data scientist at the Estonian statistical agency, explained that the average wage is calculated by adding up all paid out wages and dividing the sum by the number of wage earners, also taking into account workload and the number of days worked.

She explained that while the median divides people into two equal parts based on their income, dividing wage earners into ten equal groups in ascending order gives us wage deciles.

The highest, ninth wage decile indicates the income above which 10 percent of wage earners make, which in the second quarter of 2024 stood at €3,625.

"Thus, one-tenth of Estonia's employees earn more than €3,625," Rootalu clarified.

In the same quarter, the eighth decile, which separates the top 20 percent of the highest paid people, was €2,713, and the seventh was €2,238. One rung lower, the sixth decile stood at €1,909, which already falls below Estonia's average wage.

Thus, more than 30 percent of wage earners in Estonia earn above the national average wage. More precisely, according to the data, 36.5 percent of wage earners earn a gross monthly income of more than €2,007.

Lowest decile earns below minimum wage

The data scientist also recommended taking a look at the lower end of the wage ladder.

The first decile, i.e. the gross monthly wage amount below which 10 percent of employees earned, was €771 in the second quarter of this year. She noted that this threshold has risen by €300 in recent years, due primarily to the minimum wage increasing.

"This of course may raise the question of how it's possible that people are earning below the minimum wage, which is currently €820," Roosalu acknowledged, and said that there could be a number of reasons for this.

"The first of these stems from the fact that Statistics Estonia uses register data for statistical purposes, and therefore it's vital that information in the register is accurate," she explained. "If an employee's workload data has been entered incorrectly or hasn't been updated, that also impacts wage statistics. In such cases, estimated wage amounts that are lower or higher than actual [wages] end up included in the statistics."

Another common reason for low wage payouts is that an employee has been on sick or care leave for an extended period during the quarter, and thus did not earn a full wage.

"The median wage is the amount at which half of wage earners earn more and half earn less," Roosalu noted. "This means that, broadly speaking, half of employees earn more than €1,641 and half earn less."

For both the average and median wage, Statistics Estonia publishes the gross amount adjusted for full-time employment.

The difference between the average and the median wage in the second quarter of this year was €366. This means that the average wage was 22 percent higher than the median wage. The gap between the two has increased over the past three years, however both the average and the median wage themselves have likewise risen by just as much.

For example, the median gross monthly wage has risen by €441 over three years, and the average by €531. Looking back, it can be seen that in the second quarter of 2021, the difference between the median and average wage was 23 percent of the median wage, or proportionately the same as it is now.

Since the first quarter of 2023, Statistics Estonia has been using data from the Estonian Tax and Customs Board (MTA) employment register and income and social tax declarations to produce average wage statistics. This data includes individuals employed under employment contracts, the Civil Service Act as well as service contracts.

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