A fund is dividing 40 mEUR in the Baltic states

The Baltic Times, TALLINN
Nov 23, 2000
By Kairi Kurm

 The Baltic Investment Fund III (BIF III), one of the region’s largest private equity funds, is planning to invest its capital in medium and large companies in the Baltics. The targeted size of the fund is 50 million euros.

At present the fund so far has 40 million euros ($34 million or 624 million kroons) in preliminary capital, which will be increased to 50 million euros in six months.

The fund plans to seek long-term capital growth opportunities in companies that are expanding, newly privatized or are capable of returning about 30 percent of the investments annually.

According to Ruth Laatre, a partner in BaltCap Management, which manages the fund, 30 percent is the average revenue that investors are expecting to receive but it is not an objective.

“The expectations of the companies are sometimes more ambitious,” said Laatre. “We do not expect to find as many large companies as we did in the past, because most are capable of finding resources themselves from foreign markets, which sometimes offer bigger funds than we do,” said Laatre.

The equity investments BaltCap is planning will range from 1 million euros to 7.5 million euros. Laatre said that the fund is looking for a 30 – 40 percent share in companies, but in small companies it is ready to take majority positions.

“The companies we are looking for should be market leaders in some field. They should have a good product, good export opportunities and strong management,” said Laatre. “We come when the company needs money for expansion or it is bringing a new product on the market and we leave after we have managed to grow.”

The fund also expects to get a seat in a council or management board in order to have a say in the company’s development.

Laatre said that the company exits mainly via strategic sale or primary listing after a three- to five-year holding period.

Besides large and medium companies BIF III is also looking for small companies. The size of the Baltic SME (Small and Medium-sized Enterprise) Fund, which is intended for funding smaller companies thanks to the support of the European Union and PHARE funds, is 8 million euros and will be increased to 12 million euros after additional investments.

The target companies of the Baltic SME Fund should have a maximum turnover of 40 million euros, maximum assets of 27 million euros and no more than 250 employees. The rest of the investment criteria are the same as BIF III’s, said Laatre.

According to Laatre, part of the additional money that is necessary for both funds would come from present investors.

European Bank for Reconstruction and Development and other foreign institutions own the fund.

Current BIF III investors include the EBRD and a number of Finnish financial institutions and other investment institutions based in the U.K. and Norway.

Laatre said that Finnish investments have been the largest since the creation of the first Baltic Investment Fund in 1995, and other investors were found later. In Finland, BaltCap has a head office which also handles investor relations. Other offices are situated in Estonia and Lithuania.

The only private investors that profit from the success of the companies’ investments are the management members of BaltCap. Laatre said that ownership in BaltCap is the main motivation for people working for the fund with such a long investment period. Eight years is the maximum lifetime of the fund, during which BIF III has to be capable of getting out of the companies profitably.

The three well-known Finnish and Estonian institutions SITRA, CapMan and Suprema own the other half of BaltCap.

SITRA is a Finnish National Fund for Research and Development, which has created similar funds in Finland. CapMan is one of the leading private equity fund managers in the Nordic area, which, according to Laatre, recently joined up with BaltCap and is a big help in finding Finnish investors. Suprema is the leading investment bank in the Baltics, and also advised the previous management company of the two Baltic Investment Funds.

At present BaltCap manages three Baltic Investment Funds totaling more than 65 million euros. The first 10 million euro fund was established in 1995, and the second one, which included 15 million euros, in 1998. Both have been fully invested, said Laatre.

“We increased the amount of total capital in the third fund because we have higher aims now,” said Laatre. “We did not increase the fund that much in 1998 because it was a critical period, when the values of the companies were falsely reflected due to the stock exchange boom.”

“For BIF III we started looking for investors from London, Switzerland, Denmark and Sweden. Previously we had only EBRD and Finnish investors,” said Laatre.

She said that although investing in the Baltic companies is very risky, it might also be very profitable. Laatre said that BaltCap prefers long-term investors, who are ready to invest their money for three to four years or longer if necessary.

“Our message to the investors was that the Baltic region is one of the fastest growing regions in Europe and especially needs long-term capital. We have gone through an economic recession and only the strongest companies, which are competitive or have found new markets in Europe, have survived.”

She said that the alternative investment opportunities in Estonia are not as attractive as investing in an equity fund. “There are few companies noted on the Tallinn Stock Exchange, but investing there is not liquid enough. The other alternative, investing in loans, is not popular among investors,” said Laatre.

Laatre said that all of the investments BaltCap has finished have been very successful. They included the Estonian construction company EMV, which was listed on the stock exchange, the Estonian brewery A. Le Coq, which was sold to its majority owner, and the Lithuanian brewery Svyturys.

Laatre said that the investors pay taxes on the revenue in their home country, according to the rules of the U.K. protectorate Jersey, where the fund is registered.

Laatre said that investors in the Baltic Investment Fund are satisfied with it, especially those whose country has a double taxation contract with Estonia. She also said that the legislation of Jersey is more stable compared to the Baltic countries, which will change with EU negotiations.

“I have also set big expectations for the investments in the biggest IT company Microlink, the Lithuanian refrigerator producer Snaige and the Lithuanian IT company Informacines Technologies,” said Laatre.

According to Microlink CEO Allan Martinson, BIF was the first financial investor to make an investment in Microlink in the beginning of 1999.

“It was a brave move at that time, when investing in Baltic IT industry was not as popular as it is today,” said Martinson.”BIF enabled Microlink to start fast expansions. BIF’s investment was the first big one in a row of following transactions in the next year-and-a-half, when a number of funds invested about 50 million euros in Baltic IT companies. BIF was certainly a pathfinder.”

At present BIF has invested a total of about $25 million in six Estonian companies and eight Lithuanian companies. Laatre said that the fund has not invested in Latvia, because the companies it has been interested in have not had a proper business plan or the management.

“But Latvia is an unknown country for us with many opportunities, and we are planning to open a representation there at the end of November,” said Laatre.

Source: http://www.baltictimes.com/news/articles/3460/

Car market is taking Western shape

The Baltic Times, TALLINN
Nov 16, 2000
By Kairi Kurm

New car sales in Estonia have increased 46 percent this year compared to last year, but it is still far from a sales boom because the number of cars sold per capita is very small compared to such countries as Hungary, Poland or the Chech Republic.

In Latvia and Lithuania the sales are even smaller, but Latvia boasts a large number of luxury car sales.

“Although the sales of new cars in Latvia in the first 10 months of this year were 49 percent lower than in Estonia, the number of luxury cars sold there is bigger,” said Erkki Ots, sales director at Japauto.

In Latvia 105 luxury cars (2.2 percent market share) were sold in 10 months, compared to just 53 in Estonia (0.6 percent market share). Last year 89 luxury cars were sold in Estonia during the same period. Cars that cost over half a million Estonian kroons are considered to be luxurious, Ots explained.

But in Latvia 486 luxury Sport Utility Vehicles (SUVs) and off-road vehicles were sold during the same period, so the total market share for luxury cars is more than 10 percent. Ots said that this year 24 Mercedes Benz G500s, 24 Jeep Grand Cherokees and 145 Toyota Land Cruisers were sold in Latvia.

“Few Latvians have the money, but these few have a lot of it,” said Ots, who researched the Latvian market with hopes to expand. “Few, on the other hand, have the money to buy a new but reasonable and inexpensive 150,000 kroon ($8,000) family car.”

Ots said that one of the biggest reasons behind that anomaly is that people get paid from the black market and that official salaries are often too small to get a lease.

He said that in Estonia the leasing interest rates are about 10 percent, but in Latvia they are about 15-16 percent, and the mandatory insurance is up to 50 percent more expensive than in Estonia.

Ots said that middle-class managers actually earn similar salaries in Latvia and they have the same costs as Estonians, but they cannot prove it to the leasing companies.

He also confessed that an honest company has difficulties keeping pace with other companies due to the size of the illegal market.

“A solid foreign car sales company opened a branch in Latvia two years ago in a very nice location. Their new salon in Latvia was very big and luxurious, better than any other one in Estonia. Although they tried they could not make their way with official salaries because they were not competitive anymore,” Ots said.

Ots said that the new car sales business in Estonia has largely gone legitimate thanks to the new customs system.

“All cars imported to Estonia should get a notification from the customs about the imports. The only thing to bargain is the price of a second-hand imported car in the customs declaration,” said Ots. “A lot of cash is circulating on the market of second-hand cars.”

Ots said that taxes on imported cars in Estonia, Lithuania and Latvia are very liberal compared to Finland. The excise tax and the value-added tax on a mid-range car imported to Estonia is about 22 percent, while in Finland it is about 122 percent, said Ots.

The most popular new cars sold this year in Estonia were Toyota, Volkswagen, Peugeot, Nissan, Mazda, Opel, SEAT and Honda.

Toyota, which sold 797 cars this year, and Volkswagen, which followed with 793 cars, both control about 9 percent of the market. Sales of Peugeots have increased from 378 to 777 cars this year and sales of Opels have more than doubled, thanks to new sales representation in Estonia. The sales of Mazda and Honda have dropped slightly.

A total of 9,012 new cars were sold in Estonia in the first 10 months of this year, which is 46 percent more than last year.

In Latvia new car sales increased from 4,600 to 4,770 this year. In Lithuania 4,874 cars were sold in the first 10 months compared to 4,300 last year.

Ots said that the situation in Lithuania is very miserable. “The number of new cars sold is the same as in Latvia, although the size of the population should assure bigger sales,” said Ots.

According to the statistics, about 460,000 cars are registered in Estonia, which makes one car per each third Estonian. The most popular car registered in Estonia is still the old beloved VAZ, with 106,300 sold. Ford is next (49,000), followed by Moskvitch (41,700) and Opel (41,700).

Source: http://www.baltictimes.com/news/articles/3416/

3G to reach Estonia in 2003

The Baltic Times, TALLINN
Nov 16, 2000
By Kairi Kurm

 The global rollout of the third generation (3G) of mobile communications, which is expected to start in Japan next year, will reach Estonia in 2003.

3G will be the first truly multimedia and more or less universally available communication system, the number of which will exceed the number of computers connected to Internet, Margus Hunt, president of Nokia Eesti, predicts.

NMT was the first communication standard applied in Estonia in 1991. It was followed by GSM in 1995, which, according to the specialists, will remain the most widely spread standard in Estonia.

Compared to its predecessors 3G enables to transfer more data through the mobile phone with higher quality.

According to Hunt, launching the third-generation mobile communication network in Estonia will cost about 5 billion kroons ( $269 million) and it will cover only Tallinn.

In Germany and Great Britain UMTS (Universal Mobile Telecommunication System) licenses were sold for 790, and 602 billion kroons respectively. Hunt said that in Germany mobile communication operators were ready to pay one dollar per country resident to get the 3G license.

“From the client’s point of view the amount of data is what costs when using the 3G network. In the case of Estonia UMTS could probably become the standard,” said Hunt. “People pay per kilobyte, not per minute. Nevertheless, the terms of payment depend upon operators.”

At present two leading Scandinavian mobile phone suppliers – Nokia and Ericsson – are interested in supplying devices for the 3G network in Estonia.

Juri Kriisemann, public relations manager at Eesti Mobiiltelefon (Estonian Mobile Phone), said that all three operators active on the Estonian market are interested in continuing their activities on the 3G market.

“We are ready to provide the 3G service,” said Kriisemann. “It is too early to apply for the licenses. According to the optimistic predictions, UMTS will be launched in 2002, and the pessimists say it will come later.”

Helena Lohmus, spokesperson from Radiolinja, said that the aim of Radiolinja was to offer modern services.

To remain a competitive operator, the company has to apply for the license. According to Jaana Aduson, spokesperson from Q GSM, that company would also apply for the license.

Kriisemann said the development process is standing behind the development of a UMTS standard. He said that there are a lot of parties involved in the process and it takes time.

“Operators say it does not make any sense to create new services until there are terminals, while the suppliers of mobile phones are waiting for the operators to come out with their services,” said Hunt.

According to Toomas Somera, chairman of the board at Eesti Telekom, the licenses for operating 3G network will be available in 2001. He predicted that the licenses would be given according to political will, the market share or according to the technical developments of the company, business daily Aripaev reported.

Somera believes the licenses should not be sold on auction for the highest price, because that might hinder later investments into the network. Kriisemann said he had no idea about how much the licenses would cost but he hoped the prices would not get too high. “The Estonian market is small. If the prices get too high on the auction, the investments would (not register a return) for a long time and it would not be worth investing,” he said. “Estonia should not follow Europe in this matter.”

“In my mind the state should decide on how many licenses it would give and for which price, and the operators should then pay for it,” said Kriisemann.

Source:  http://www.baltictimes.com/news/articles/3411/

Credit reports on big demand

The Baltic Times, TALLINN
Nov 09, 2000
By Kairi Kurm

A business can identify its clients and check the online credit information site http://www.tasuja.ee before starting any cooperation with a new partner.

The site, which offers credit reports on thousands of debtors, has become very popular since it was launched October 30.

Tasuja.ee maintains information on bad debtors from the Estonian Tax Board and the registered visitors of the page.

The database of Tasuja.ee contains 30,000 claims on more than 12,000 debtors. The total sum of claims involved on its page is about 1 billion kroons ($ 56 million). “This is a huge amount of money compared to the 2.5 billion kroon Tallinn city budget,” said Koit Luus, spokesman for the tax board, who was invited to the press conference to talk about the importance of the new site.

Tasuja.ee receives information on about 11,000 debtors from the Estonian Tax Board, which gives it to Krediidiinfo and Tasuja.ee free of charge at the end of each month.

Krediidiinfo charges 25 kroons for the same kind of information and 90 kroons for the full report. The prices do not include value added tax. Krediidiinfo receives information on the previous month by the 14th of each month.

Many customers of the new Tasuja.ee site are annoyed at the accuracy of the information, which covers the debts of the previous months.

The tax board’s home page contains information on debtors who owe more than 1 million kroons to the board but gives information to Krediidiinfo and Tasuja.ee on companies who owe more than 10,000 kroons. The list of debtors on the board’s home page contains 471 names.

“Tax liabilities is public information and the state is not trading with it,” said Luus. “It is important for us to get that money back. Providing that information through the media or the Internet is one of the many ways through which we try to retrieve the money. The other ways include sending notes and closing bank accounts.”

According to Kersti Uuemaa, manager of Baltic Credibility Facts, which owns the Web site, employees of the company always control the information entered by the visitors of the page.

Uuemaa said that the company employs only two full-time people at present and by the end of the year the number of employees might increase to six. “We are outsourcing most of the services,” said Uuemaa.

The company is planning to spend 1 million kroons to develop the site and is eventually planning to charge for specific services in the future when the database is bigger.

The company is also getting revenue through advertisements.

Uuemaa said that they did not expect the page to become so popular so fast.

“The number of visitors was 10 times as much as we predicted on the first day,” she said, adding that the capacity of the server had to be increased after it failed to work as 35,000 clients tried to visit the site during its first eight hours of existence.

By Nov. 2 the number of visitors had reached 140,000 and 1,700 people had registered as new users, according to the company.

Meanwhile, the tax board’s site has received only 35,000 visitors since it was launched.

A journalist from the business daily Aripaev complained that Tasuja.ee was asking too much personal information on the registration contract and did not publish the same data about itself in return.

Uuemaa said her company had to take its phone number off the page on the same day it started because their phones were being swamped.

“We are not taking a negotiator’s role. Too many people were trying to solve their problems with the tax board through our company. We gave our e-mail address on the page and we have promised to respond to the e-mails,” said Uuemaa.

Tasuja.ee as well as the Internet page of the tax board (www.ma.ee) are available in Estonian only, but Tasuja.ee will soon be translated into English.

“We brought the right thing on the market,” said Uuemaa. “It helps to clean the Estonian business landscape.”

In addition to the tax board, Krediidiinfo and Tasuja.ee, there are a number of debt collection companies providing information online.

Source: http://www.baltictimes.com/news/articles/3272/

Comment: Now it is www.economy.ee.

Hard drinks in Estonia: legal vs. fraud

The Baltic Times, TALLINN
Nov 02, 2000
By Kairi Kurm

“If you get the flu just take a big shot of vodka.” This advice is heard by any foreigner who manages to stay in the countries of the former Soviet Union for more than a few days. The Baltic countries are not an exception. The traditional use of hard drinks like scotch and above all vodka – versus softer drinks like wine and beer – is rooted deeply in history. But, if you are going for vodka, it’s best to know from where it comes. Kairi Kurm reports from Tallinn.

Three big alcohol distilleries and a number of illegal producers control the Estonian alcohol market. According to the Estonian Vodka Association, 4.9 million liters of hard alcohol were produced legally in the first nine months of 2000. The illegal market is about 40 percent.

There are 12 companies in Estonia with a license to produce hard alcohol. About 30 percent of the legal strong alcohol market is controlled by the oldest Estonian alcohol distillery Liviko. The second largest distillery is Onistar, which together with its subsidiaries controls 26 percent of the market. The third biggest alcohol producer is Ofelia, which belongs to Finnish capital and controls about 18 percent of the market.

On the vodka market the market shares are different. Onistar controls one third, Ofelia 21 percent, and Liviko 19 percent of the vodka market.
The excise duty too high

The managers of the alcohol distilleries are of the opinion that the excise duties on strong alcohol should be decreased from 145 kroons ($7.7) per liter to 115 kroons, like it was before the law on alcohol excise duty came into force on Dec. 1, 1998.

Aleksander Skoblov, chairman of Onistar, said that if the government would decrease the duty to 115 kroons per liter, the budget would receive 100 million kroons less duties from present taxpayers but would recover the shortage from a decrease in the illegal market.

“When excise duties were decreased in Lithuania in January 2000, the size of the legal alcohol market increased dramatically,” Skoblov said.

The government is expecting to get 1.145 billion kroons to the budget from alcohol excise duties next year, 680 million kroons of which should come from the hard alcohol market.

Although the amendments to the size of the excise duty are not included in the new law on alcohol excise duty, which comes into force in January 2001, Juri Kao from NG Investeringud believes that the law will improve the state’s control over the production, sales and imports of alcohol products.

Alcohol distilleries have also strengthened safety marks for their production, because the producers of fraud alcohol are using their trademarks.

“The law as well as the control over the alcohol market should become more effective,” said Udo Themas, chairman of the board at Liviko. “Local police officers are aware of these frauds but they do not want to deal with it. Also the punishments of the criminals should (be harsher). I find it strange that most of the people who were caught in September in producing fake alcohol were discharged,” said Themas.

A one-liter bottle of illegal vodka costs 50 kroons, as much as the excise duty for the same amount of beverage on the legal market.

According to Sirje Potisepp from a distillery Remedia, Estonian excise duty on alcohol is 1.7 times higher than European Union averages.

“In 1999 the production of alcohol fell by 37 percent compared to 1998. In the year 2000 the production increased a bit, but was less than in 1998,” said Potisepp. “It is naive to think that people are drinking less alcohol now.”

Kao said that the excise duty is very high in Estonia compared to the local purchasing power. An average Estonian can buy 45 liters of alcohol a month, while Germans can afford 416 bottles, Austrians 497 and French 264 bottles a month.

Some doctors and social workers argued on national television that vodka should be an expensive drink, which should be consumed on special occasions only. They said that the good availability of vodka, its strong advertisement campaigns and its low price make people consume it more.

“Vodka is a traditional drink, which is taken on sad and merry occasions,” said Themas from Liviko, which celebrated its 100th anniversary this year.

Although people started preferring whisky and cognac when it became available at shops after the collapse of the Soviet Union, vodka is still a popular drink in Estonia, said Skoblov. “Vodka is becoming more popular, especially in drinks like cocktails,” said Skoblov.
The divided market

NG Investeringud is the biggest shareholder of Estonia’s largest distillery Liviko, which once enjoyed a monopolistic status in Estonia but lost its market share due to bad marketing. NG Investeringud improved the company’s marketing and development strategies when it acquired the company earlier this year.

Liviko produces drinks with 25 different brand names, the most popular of which are Viru Valge and Vana Tallinn. Liviko’s Viru Valge Special Anniversary was named the best alcoholic beverage in the Estonia’s Best Foodstuff competition this year.

According to Themas, half of the company’s production is liqueur. “We are strong in the liqueur sector. We prefer natural raw materials to chemical aromatic compounds,” said Themas. Liviko imports spirits from abroad.

Liviko has 122 employees. The company’s turnover in 1999 was 200 million kroons and it received 20 million kroons profit. For the year 2000 the company predicts a 302 million kroon turnover and a 58 million kroon profit, most of which comes from the sale of real estate.

Liviko and Onistar are the only two companies in Estonia, which have an ISO quality certificate. Liviko exports about 20 percent of its production. More than half of the production is exported to tax-free markets, 18 percent to Finland, 6 percent to Lithuania and the United States and other countries.

Onistar’s share of exports is even bigger, about 65 percent. The company’s biggest export markets are Latvia and Lithuania.

“The Estonian market is too small for us. We have contracts with big Lithuanian and Latvian wholesale companies. We are successful in Lithuania because the market is controlled by a state-owned monopolistic company and the prices are high,” said Skoblov.

The company has also established a subsidiary in the United States and is waiting for a license to start its activities there.

Onistar uses only Estonian raw materials. The company buys spirits from Moe and Rakvere Piiritusetehas, which were acquired by the company’s owners some months ago.

According to Skoblov, Y2K is Onistar’s most popular trademark at present. “This drink absorbs well in the body, because the water has been enriched with minerals in advance,” said Skoblov. Onistar has about 30 trademarks altogether.

“At present the company has 50 employees, but the number will soon increase to 250 after all the companies have been united under one big concern,” said Skoblov.

Ofelia, the third biggest alcohol distillery in Estonia, has 34 employees. The company belongs to a number of small investors and a Finnish company, Primalco.

Alcohol distilleries Remedia and Liiwi Heliis all control over 10 percent of the market, Moe Piiritusetehas controls about 4 percent, while Almo MS, Vohu Vein, Offex, Lifetime Grupp and Tallinna Karastusjoogid each control less than 1 percent of the Estonian liquor market.

Source: http://www.baltictimes.com/news/articles/3214/

Estonian minimum wage might be raised

The Baltic Times, TALLINN
Nov 02, 2000
By Kairi Kurm

 The Estonian monthly minimum wage may increase from 1,400 kroons to 1,600 kroons, or 9.40 kroons per hour next year if the employers’ union agrees to a government and trade unions proposal.

Tarmo Kriis, assistant to the managing director of the Employers and Industry Central Union, said that the union was going to decide upon the proposal Nov. 3.

“We did not come to a consensus,” said Kriis. “The current score is 2-1. Our last proposal was to increase the minimum wage to 1,550 kroons ($82).”

He said that originally the government wanted to keep a distance from the negotiations and accept the employers’ and the trade unions’ final decision, but as these two did not come to a joint conclusion, the government stood on the trade union’s side.

“Whether we get the trilateral agreement or not, the government has the right to set the state minimum monthly wage at 1,600 kroons without our proposal,” said Kriis.

The negotiations between the two parties started in summer, said Kriis. He said that the preliminary proposal of the trade unions was to increase the minimum wage level to 1,650 kroons but the employers had agreed to a 1,500 kroon level. Last week both sides came closer to each others proposals. The employers agreed to a 1,550 kroon level and the trade unions to 1,600 kroons.

The trade unions declared they rejected all further compromise talks and if the employers did not stick to the 1,600 kroon level they would start a nationwide strike or close railway traffic.

Harri Taliga, social secretary of the Confederation of the Estonian Trade Unions, said that the minimum wage was not enough for living after taxes had been paid but it was bigger than a pension.

“It is not reasonable that a working person gets less than a pensioner,” said Taliga. The average pension in Estonia is 1,551 kroons. According to the daily Eesti Paevaleht there are 110,00 people in Estonia who receive a minimum wage. Tali estimated that about 7 percent of all employees in Estonia receive the minimum salary of 1,400 kroons.

Tali said that the increase in the minimum wage level will bring along more taxes to the government and many people who received pocket money would have to declare higher wages.

“The increase in minimum wage brings along a lot of problems for employers. In many companies the minimum wage is included in the wage payment index and a small rise in minimum wage will bring along big costs to a company. So the companies were allowed to alter their wage payment indexes,” said Kriis.

Kriis said that the wage payment index of the textile company Kreenholm for example is bound to the minimum wage and the company would lose 38 million kroons because of the new wage level and be forced to dismiss 300 people. The trade unions and Kreenholm agreed that the company would remake their wage payment index by the year 2002 and would increase the minimum wage by 9 percent.

The minimum wage will also affect the wages in the public sector. Kriis said that according to the preliminary calculations the new minimum wage level will bring along 100 million kroons of additional costs to the state.

Besides the public sector and some big industries, the rise in minimum wage will also affect many people through fines, which are bound to the wage level.

Kriis said that the other motive behind turning down the trade unions’ proposal was the imbalance in the rise of minimum wage compared to the rise in an average wage. The average wage in Estonia is about 5,000 kroons per month.

“If we would not fight for a rise in minimum wages the average wage would go far ahead and the society would stratify into poor and rich people,” said Taliga.

“Some predict that the average wage will increase by 6 percent next year. But the rise in the minimum wage is about 14 percent. If the productivity does not increase that much, how is it possible to raise wages,” said Kriis. “By the first half of 2001 we should come up with a formula to calculate minimum wages because it should not be set up on emotions.”

Source: http://www.baltictimes.com/news/articles/3209/

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