The minimum hourly wage will increase from €2.97 to €3.21.

The new minimum wage was agreed upon in an extended collective agreement concluded between the Estonian Trade Union Confederation (EAKL) Estonian Employers' Confederation (ETTK) in September. Based on established practice, the national minimum wage is agreed upon by social partners, noted the government's letter of explanation.

According to Estonian Tax and Customs Board (MTA) data, a total of 25,500 full-time employees earned the minimum wage of €500 per month, accounting for 5.3% of all paid employees. Another 15,700 people, or 3% of full-time employees, earned €501-539 per month.

From January through August, a total of 44,900 persons declared wages equalling the minimum wage and another 59,200 wages in the range of €501-539 during at least month.

The Ministry of Finance estimates that the minimum wage hike from €500 to €540 will bring an additional €14.5 million in tax revenue into the state budget.

The ministry also estimated that state and local government institution labour costs will increase by €3.3 million. State budget-financed institutions will not be allocated additional funds for labour costs; according to the agreement, the minimum wage hike will be covered from within payrolls.

The increase in the minimum wage will in turn also lead to increases in benefits pegged to the minimum wage, including parental benefits and parental leave.

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