The Estonian minimum wage at €500 gross next year will be close to 40 percent of the national average, and with this development Estonia will at least proportionally reach a similar level to that of other EU countries that have a minimum wage, Bank of Estonia economist Orsolya Soosaar said on Wednesday.
“Over the last five years the minimum wage increased by 10 percent a year, which is faster than the average wage. This means that the relation of the minimum wage to the average wage is close to 40 percent, and that is a similar level to those European countries that apply a minimum wage,” Soosaar said.
The Estonian Trade Union Confederation and the Estonian Employers’ Confederation are set to sign this year’s agreement over the minimum wage tomorrow Thursday. It is expected to be set at €500 gross a month.
As chairman of the trade unions Peep Peterson told ERR earlier on Wednesday, this isn’t the €40 annual growth they had hoped for, but at the same time it was in the interest of the employees as well not to be too confrontational in their negotiations.
The minimum wage in Estonia is not set by the state, but agreed on by the employers and employees’ representative organizations. The minimum wage most recently grew by €40 a year.
According to Soosaar, setting the 2018 minimum wage at €500 reduces its annual growth from 10 to 6.4 percent. This was closer to the forecast average wage growth for next year.
The lower growth of the minimum salary could influence income tax changes announced for early next year, which in turn would mean a lower tax burden for all those with low incomes, Soosaar said.
Editor: Dario Cavegn