Growth in salaries was influenced in 2006 by accelerated economic development primarily generated by ever more active real estate and building activity due to the inflow of debt finance. The success of fields of activity with increased revenue caused by high consumer demand also influenced the rise in salaries.The average gross monthly salary in the last quarter of 2006 was 10,212 kroons, 17.5 percent more than in the same period in 2005. Despite the relatively rapid rise in prices, real growth in gross salaries (i.e. salary growth) accelerated, with inflation discounted by the end of the year to 12.6 percent and real growth in net salaries to 13.7 percent. The average gross salary for the year as a whole was 9351 kroons, with real growth in gross salaries of 11.3 percent and real growth in net salaries of 12.3 percent.
The fields of activity that continued to most strongly influence growth in gross salaries throughout 2006 were building, commerce and the processing industry, where salary growth reached on average 20 percent. A total of 44 percent of those employed in the country work in these three areas. The rapid growth of the building sector in turn affected the building material, metals and timber industries, where price rises and growth in income enabled salaries to be raised in order to retain workers. The same was experienced by commerce, where high consumer demand led to increased revenue and prices being reflected in the rapid growth of salaries.
Demand for labour in 2006 increased enormously within the country, while a number of member states of the European Union also opened up their markets. It is for this reason that a proportion of Estonia’s labour force has found work in Finland, the United Kingdom, Ireland, Sweden and other countries (including Norway). The ballpark figure for the number of Estonians working abroad is 20,000 or three percent of the working-age population in the country. Workers’ positions in salary negotiations improved markedly as a result of decreased unemployment and the opening of foreign labour markets, with job seekers demanding ever higher salaries.
The opening up of labour markets inevitably leads to harmonisation of salaries, and rapid growth here is expected to continue in 2007. That is why it is important to focus on making the organisation of work more effective and establishing contemporary technology in companies. Workers have become more aware and more demanding, and working conditions and other working environment-related factors are growing in importance alongside salary in people’s choice of workplace.
Source: Ministry of Finance