Plans for minimum wage increase not approved by unions

Estonian Trade Union Confederation (EAKL) chairman Peep Peterson.
Estonian Trade Union Confederation (EAKL) chairman Peep Peterson. Source: Siim Lõvi/ERR

The council of the Estonian Trade Union Confederation (EAKL) disagreed with raising the minimum wage to €578 per month and €3.44 per hour, as previously agreed by trade union and employer delegations, calling it "inadequate".

For several years, trade unions have pushed for a minimum wage of at least 40 percent of the average wage, which would require an agreement for minimum wage to be at least €600 per month.

Although the trade union and employers' negotiating delegations reached a common viewpoint on the minimum wage for 2020 earlier this week, no agreement has yet been reached and all interested parties can comment on the proposed agreement until Sept. 27.

Peep Peterson, EAKL chairman, said it was now up to the unions to decide how to proceed with the negotiations. Another meeting is scheduled for next week to see if negotiations with employers should continue.

Explaining the reasons for rejecting the agreement he said: "Following the announcement of the agreement between delegations on Monday, there has been a lively debate on the minimum wage and the vast majority of speakers see the result as inadequate."

In a joint statement with the Employers' Confederation on Monday, Peterson said a seven percent increase in the minimum wage agreed by the agreement will help reduce wage poverty and bring the minimum wage a step closer to the average wage.

"For years, unions have been targeting a minimum wage of no less than 40 percent of average wages. Net wages have also been achieved thanks to last year's tax reform, which compares with gross salaries by several tens of euros," said Peterson.

In 2017, employers and unions concluded an agreement to establish the minimum wage based on a multiplier of two times the rate of increase in productivity during the year in which the rate is agreed.

The upper limit of the rate of growth is two times the forecast real economic growth, and the lower limit, at least 40 percent of the forecast average gross wages, based on the Bank of Estonia summer economic forecast, according to BNS.

The current minimum wage figure is €540, with a minimum hourly rate of €3.21. The rate has almost doubled since 2010, when it stood at €278 per month.

Last month it was reported by Statistics Estonia that the average monthly salary is now approximately €1,400.


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Editor: Helen Wright

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