The Estonian Employers' Confederation (ETTK) and the Estonian Trade Union Confederation (EAKL) on Thursday signed a minimum wage agreement, according to which the minimum monthly wage in Estonia is to increase to €500 and the minimum hourly wage to €2.97 beginning next year.
"The growth in minimum wage that is twice as fast as the growth of productivity is still creating pressure for increasing the efficiency of employers, while the notion included in the agreement stating that wage growth cannot come from nothing but rather from the growth in productivity is important," ETTK director Toomas Tamsar said.
EAKL chairman Peep Peterson said that negotiations on agreeing on minimum wage figures were more difficult than usual, as the prerequisite for an increase in minimum wage was reaching a joint understanding on the long-term methodology regarding how minimum wage should increase in the future.
"Over the past five years, we got used to rapid minimum wage growth of an average of ten percent annually, and it had a positive impact on harmonizing wages," Peterson said. "Now the tempo is decelerating, but based on the agreed growth formula, all employees can still receive a fair share of the economic development."
The minimum wage agreement is in essence an expanded collective pay agreement on the highest level, which means that it must be fulfilled by all Estonian employers. Thus, beginning next year, a full-time employee must be paid no less than €500 per month.
The minimum wage is €470 per month in 2017, resulting in a net income of €398.46 per month. Beginning in 2018, both the basic exemption for low- and middle-income earners and the minimum wage will be increased to €500, which means that the net income of minimum wage earners will increase by 21.1 percent, or €84, to €482 per month.
Editor: Aili Vahtla