Study of politician’s bank account shows close ties to businesses

A study of a bank account owned by convicted former Environment Minister Villu Reiljan and his wife Anne Reiljan shows how important business is in politics in Estonia, writes Äripäev in its investigative journalism report.

Proof of this is Villu Reiljan’s 50th birthday that he celebrated in May 2003. The total amount of money paid to his special-purpose birthday bank account by well-wishers was 220,000 kroons or over 14,000 euros. Cash donations may have amounted to as similar amount.

Read more from BBN

Wage growth slowed in the second quarter

Data from Statistics Estonia show that the average gross monthly wage was up 4.8% in the second quarter of 2014, and the gross hourly wage by 8.8%. The sizeable difference between the growth rates of monthly and hourly wages indicates that less was paid in bonuses and benefits, which can be seen as the flexible part of wages. Quarterly growth in average wages continued to slow in seasonally adjusted terms, reflecting an adjustment to the weak economic environment and productivity.

Average wage growth was also slowed by increased declaration of wages in sectors where wages are below average, such as catering and accommodation services, and agriculture, where Statistics Estonia reports that employment was more than 10% higher than last year. The effect of employers anticipating the upcoming registration of employees could already be felt in the second quarter.

Wage growth has also slowed in sectors that are exposed to risks from the external environment. Average wages in manufacturing rose by 4.9%, and those in transportation and storage by 2.4%. Exporting companies are less able to increase their labour costs than companies serving domestic demand are, as external competition makes it harder for them to pass higher costs into product prices.

The impact of large collective wage agreements passing out of the comparison base and increased uncertainty will together mean that wage growth is more likely to slow in the near future. The Eesti Pank June forecast expects that if external demand recovers, wage growth in the coming years will be 6-7%. This is in line with Estonia’s potential for economic growth of 3-4%.

Source: Bank of Estonia

Author: Orsolya Soosaar, Economist at Eesti Pank

Average monthly gross wages exceeded 1,000 euros

According to Statistics Estonia, in the 2nd quarter of 2014, the average monthly gross wages and salaries were 1,023 euros and increased 4.8% compared to the 2nd quarter of the previous year.

Compared to the same quarter of the previous year, the increase in average monthly gross wages and salaries in the 2nd quarter of 2014 was slower than in the 1st quarter. The average monthly gross wages and salaries without irregular bonuses and premiums increased 5.0% in the 2nd quarter. Compared to the 2nd quarter of 2013, irregular bonuses and premiums decreased 1.8% per employee and reduced the rise in average monthly gross wages by 0.2 percentage points.

Real wages, which take into account the influence of the change in the consumer price index, also increased 4.8% in the 2nd quarter of 2014. Compared to the same quarter of the previous year, real wages increased for the twelfth quarter in succession.

According to the Wages and Salaries Statistics Survey, the number of employees as at the end of June was 4.7% higher than at the same time in 2013. There was a slightly more than a 10% increase in the number of employees in four economic activities: 1) agriculture, forestry and fishing; 2) wholesale and retail trade; 3) accommodation and food service activities; and 4) administrative and support service activities.

In the 2nd quarter of 2014, the average hourly gross wages and salaries were 6.21 euros and increased 8.8% compared to the 2nd quarter of 2013.

In the 2nd quarter of 2014 compared to the 2nd quarter of 2013, the average monthly and hourly gross wages and salaries increased the most in financial and insurance activities (by 9.3% and 12.2%, respectively).

Compared to the 2nd quarter of 2013, the average monthly and hourly gross wages and salaries increased the least in mining and quarrying (by 0.4% and 4.8%, respectively).

The average gross wages and salaries were 996 euros in April, 1,002 euros in May and 1,065 euros in June.

In the 2nd quarter of 2014, the employer’s average monthly labour costs per employee were 1,379 euros and the average hourly labour costs were 9.29 euros. Compared to the 2nd quarter of 2013, the average monthly labour costs per employee increased by 4.5% and the average hourly labour costs by 7.3%

Compared to the 2nd quarter of 2013, the average monthly labour costs per employee increased the most in electricity, gas, steam and air conditioning supply (8.9%) and the average hourly labour costs increased the most in financial and insurance activities (11.2%)

Compared to the 2nd quarter of 2013, the average monthly labour costs per employee decreased only in mining and quarrying (0.8%) and the average hourly labour costs increased the least in information and communication (3.0%).

Statistics Estonia conducts the Wages and Salaries Statistics Survey on the basis of an international methodology since 1992. In 2014 the sample includes 11,920 enterprises, institutions and organisations. The average monthly gross wages and salaries have been given in full time units to enable a comparison of different wages and salaries, irrespective of the length of working time. Calculations of the monthly gross wages and salaries are based on payments for actually worked time and remuneration for time not worked. The hourly gross wages and salaries do not include remuneration for time not worked (holiday leave pay, benefits, etc.). In short-term statistics, the average gross wages and salaries are measured as a component of labour costs. Labour costs include gross wages and salaries, employer’s contributions and employer’s imputed social contributions to employees

Average monthly gross wages and salaries, 1st quarter 2010 – 2nd quarter 2014 (euros)
Year 1st quarter 2nd quarter 3rd quarter 4th quarter
2010 792 758 822 759 814
2011 839 792 857 809 865
2012 887 847 900 855 916
2013 949 900 976 930 986
2014 966 1 023

Average monthly gross wages and salaries and monthly labour costs per employee,
2nd quarter 2014

Diagram: Average monthly gross wages and salaries and monthly labour costs per employee, 2nd quarter 2014

Average hourly gross wages and salaries and hourly labour costs, 2nd quarter 2014

Diagram: Average hourly gross wages and salaries and hourly labour costs, 2nd quarter 2014

 

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Construction volumes decreased in 2Q

According to Statistics Estonia, in the 2nd quarter of 2014 compared to the same quarter of the previous year, the total production of Estonian construction enterprises in Estonia and foreign countries decreased 4%. The construction volumes have decreased for three quarters in a row.

In the 2nd quarter of 2014, the production value of construction enterprises amounted to 539 million euros, of which the production value of building construction was 337 million euros and the production of civil engineering totalled 202 million euros. Compared to the 2nd quarter of 2013, the volume of building construction in real terms increased 2% and the volume of civil engineering decreased 13%.

The upturn in new building construction on the domestic construction market, which started last year, continued the growth trend in the first half of this year. The repair and reconstruction work in building construction stayed on the level of the previous year. The construction of civil engineering objects, which had driven the construction market for nearly three years, has decreased for three quarters in a row and caused a downturn also in the whole construction market.

The construction volume of Estonian construction enterprises in foreign countries stayed the same compared to the 2nd quarter of the previous year, influenced mainly by the construction of buildings. Construction volumes in foreign countries accounted for 8% of the total volume of construction in the 2nd quarter of 2014.

According to the data of the Register of Construction Works, in the 2nd quarter of 2014, the number of dwelling completions was 631, i.e. 147 dwellings more than in the same period of 2013. More than a half of the completed dwellings were situated in blocks of flats. The majority of completed dwellings were situated in Tallinn.

There is still a demand for new dwellings with a good location and high quality. In the 2nd quarter of 2014, building permits were granted for the construction of 1,333 dwellings, which is a half more than in the 2nd quarter a year ago. The most popular type of building was block of flats.

In the 2nd quarter of 2014, the number of completed non-residential buildings was 212 with a useful floor area of 130,100 square metres – this was primarily made up of new industrial, commercial and storage premises.

Construction volume index and its trend, 1st quarter 2003 – 2nd quarter 2014
(average of quarters of 2010 = 100)

Diagram: Construction volume index and its trend, 1st quarter 2003 – 2nd quarter 2014

 

Source: Statistics Estonia

Wage growth decelerates in the 2Q

Monthly wage growth decelerated for the third quarter in a row. In the 2Q monthly wages increased by 4.8% YoY in nominal terms (7.3% in 1Q) and reached above 1000 euros for the first time (1023 EUR). Real wages, which previously accelerated seven quarters in a row, decelerated to 4.8% as well. Deceleration of wage growth was expected.

Monthly wage growth decelerated in most economic activities, except energy, finance, real estate, accommodation and food services and administrative and support service activities. At the same time, the growth of average hourly gross wages accelerated to 8.8%. The impact from the remuneration to employees for the time not worked, which is one component to explain the difference between monthly and hourly wages, was relatively small in 2Q. The reason comes from the increased share of employees with lower salaries compared to a year ago. The employment increased faster in the activities with lower wages than average, e.g. agriculture and forestry, domestic trade, accommodation and food services and administrative and support service activities. Although the number of employees has increased, hours worked per employee has diminished.

Wage growth responds to the change of economic growth with a certain delay. On the one hand, shortage of labour force and decreased unemployment press wages upwards, on the other hand the share of labour costs in enterprises’ turnover has increased and profitability decreased. Although, the number of employees increased in 2Q, total wage and labour cost has decreased. Deceleration of the wage growth refers to the better adjustment of enterprises and labour market to the weaker economic growth. Swedbank industrial survey published this spring indicated that enterprises planned less growth of wages this year.

According to our recent forecast (Swedbank Economic Outlook), nominal wage growth decelerates to around 6% this and the next year (7.8% in 2013). However, escalation and protraction of the geopolitical tensions can worsen economic sentiment and decelerate wage growth even further. Although nominal wage growth decelerates this year, real wage growth accelerates as inflation rate is low. Growth of real wages will slow down together with the inflation picking up next year.

Source: Swedbank

Man found guilty of attempted bribery of customs officer

On Tuesday, 19th of August, Viru County Court found 35-year old Lithuanian citizen guilty of bribery in settlement procedure.

In the first minutes of 19th of August, the Lithuanian truck driver wished to skip a customs inspection of goods in the Narva Border Point and offered a bribe to a tax and customs officer to do so, placing a 500-rouble note inside his passport. A customs officer then detained the bribe-giver and handed him over to the police.

Marek Helm, Director General of the Estonian Tax and Customs Board said that this is the second similar case this year where an officer is pressured to skip a customs inspection and a bribe is offered to do that. “Attempts to violate rules are inevitable in border points but experience shows that bribe-givers end up in a courtroom. Officers in the customs and police are worthy of praise for preventing such acts of corruption, as well as the prosecutor’s office and court for their quick and good work,” Helm noted.

The Lithuanian citizen was given a one-year sentence. The suspended sentence is contingent on three years’ probation. The convict must pay almost 700 euros in fines and costs and the court also confiscated the 500 roubles offered as a bribe. The court judgment is awaiting entry into force.

The previous bribery case in a border point took place on 9 February when a Lithuanian truck driver offered a 50-euro bribe to an officer in exchange for skipping a customs inspection. The Lithuanian citizen was given a suspended one-year sentence contingent on three years’ probation.

Source: Estonian Tax and Customs Board

Apartment prices sprial upwards

A real estate price index created by website kv.ee shows prices are continuing to increase despite the number of sales dropping the Estonian housing market.

The index, which shows the prices of apartments on sale, has increased by 19.6 percent since August 2013, and 1.6 percent in the last month, kv.ee said.

Sellers usually ask 10-20 percent more that the actual property is worth due to emotional over-evaluation in hope of finding a buyer willing to pay.

The number of transactions has already decreased while the number of new listings has increase by 20 percent in the last six months.

Source: ERR News