The average income per employee was 1,073 euros

According to Statistics Estonia, in 2016, the average monthly gross income per employee was 1,073 euros. The growth of gross income continued at the same rate as in previous years (6%), however, the number of people receiving income started to decrease for the first time since the years of the economic crisis.

In counties, the average monthly gross income per employee was mainly in the range 900–1,200 euros. It exceeded 1,000 euros in Harju, Tartu, Hiiu and Rapla county; only in Ida-Viru county, the monthly gross income was below 900 euros.

The average monthly gross income varied greatly among local government units. There was a two-fold difference between the local government unit with the highest and the lowest gross monthly income. The highest monthly gross income per employee was earned in the rural municipalities of Harju county, led by Viimsi rural municipality (1,505 euros). At the other end were the Tartu county rural municipalities of Piirissaare and Peipsiääre and the city of Kallaste, where the gross income was below 800 euros per month.Average monthly gross income per employee, 2016

The number of persons receiving gross income was slightly below 520,000, and it decreased by almost 350 persons compared to 2015. The main reason behind the decline in the number of income recipients is the fact that the number of young people (aged under 25) has continuously decreased in recent years. Before the financial crisis, the number of young income recipients was close to 64,000; in 2016, it was 34,000. Also in the age group 50–62, the number of income recipients decreased by 700 persons. The number of income recipients grew among the population aged 25–49 and 63 and over, but less than in the previous years.

Gross income recipients, 2003–2016

The number of income recipients decreased in most counties, with the exception of a small increase in Harju, Tartu and Saare counties. The decrease in the number of young employees was also prevalent in counties, especially in Ida-Viru and Järva counties, where the number of income recipients under 25 years of age fell by 10% compared to 2015.

Over a half (53%) of income recipients were women and their average monthly gross income was 948 euros. The average monthly gross income of men was 1,214 euros. As the dataset does not enable distinguishing between full-time and part-time employees and analysing by economic activities, the reasons for the difference in men’s and women’s monthly gross wages do not appear from the data.

The analysis is based on the data of the Estonian Tax and Customs Board as at 26 April 2017. The average monthly gross income per employee is calculated by dividing the average monthly sum of payments with the average number of persons receiving payments. In Estonia, the main representative of public interest for the survey is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia analyses the data necessary for conducting the statistical activity.

Labour force participation rate 70 pct in 1stQ

Labour market performed better than expected in the first quarter. The labour force participation rate, i.e., the proportion of persons of working-age who are either employed or unemployed, reached a record level of 70.2%, considering seasonal factors. Employment substantially increased and the unemployment rate decreased further.

The number of employed increased by 2.7%, over the year, mostly in trade, and in Tallinn, as several new shopping centres were opened. Increased economic activity lifts employment this year. Manufacturing and service companies expect higher sales and plan to increase the number of employees during next three months.

The unemployment rate decreased to 5.6% in the first quarter (6.5% in the first quarter of 2016). The registered unemployment rate of 5.0% was at the same level as one year ago. Strong demand for labour supressed the number of unemployed, even when the work ability reform moved large groups of people from inactivity into the unemployed. Nevertheless, in April, the number of registered unemployed grew again, so there is no clear trend.

The number of inactive decreased by 5.7% as less people were away from the labour market due to studies, bad health or raising children. The participation rate is on the rise due to a tight labour market, the work ability reform motivating people with disabilities to look for a job, and, a smaller number of people aged 15-24.

First quarter data shows that the labour market remained tight. The amount of labour available in the market has decreased, while the rate of job vacancies has jumped. The rate of job vacancies, i.e. the share of job vacancies in the total number of jobs, was 1.7% in the fourth quarter of 2016. A shrinking working-age population reduces the amount of existing work force as well. The number of people aged 15-74 decreased by 6,000 only in 2016. Therefore, wage pressures are expected to persist.

 

Source: Swedbank

Growth accelerated in productivity

  • The alignment of growth in labour productivity and in wages improved in the second half of 2016 as growth accelerated in productivity and slowed a little in wages
  • Whether companies can improve their profitability as foreign demand recovers will depend on whether labour productivity grows further
  • People changed jobs more last year than they did the year before
  • Simultaneous increases in the number of vacancies and in unemployment indicate however that there is a worse match between labour and jobs

The economy perked up in the second half of 2016 and growth recovered in labour productivity. Employment declined at the same time, and so did wage growth a little, with the consequence that growth in labour costs slowed. This equally meant that the squeezing of corporate profit margins lessened. Whether companies can improve their profitability and overcome problems with inflated labour costs will depend on whether labour productivity grows further. Where companies have so far managed to preserve jobs and hold on to staff despite weak demand, improved demand will allow them to increase production and productivity without taking on additional labour costs. Productivity clearly depends on investment too, which has been reduced in recent years.

The rate of growth of the average wage slowed in the second half of 2016, though only a little. Wage growth was very different in different sectors of the economy, like it was in the first half of the year. Wages in oil shale and construction rose by less than the average wage, but those in the labour-intensive services sector rose faster than the average, though not as fast as in the first half of the year. The high expectations for employment in construction and in manufacturing companies revealed in sentiment surveys by the Estonian Institute of Economic Research suggest that wage growth may be pushed up in future as there is a shortage of suitable labour.

Labour shortages are illustrated by the notable increase in 2016 in the number of vacancies. The rise in the vacancy rate can partly be explained by increased movement between jobs as the number of separations initiated by the employee was 13% higher than a year earlier. Under normal circumstances a rise in the vacancy rate is accompanied by a fall in unemployment, but in the second half of 2016 the unemployment rate actually rose. There were more unemployed in Ida-Virumaa because employment was lower and in Harjumaa because of both lower employment and increased participation in the labour force. Simultaneous increases in the number of vacancies and in output indicate however that the match between labour and jobs may have deteriorated. The number of unemployed was shown by the labour force survey to have increased sharply in Ida-Virumaa, but a lot of the new jobs were created in Harjumaa.

Over the long term the labour supply is dictated by the number of people of working age and their degree of active participation in the labour market. Increased participation in the labour market will be supported in future by reforms to social insurance. The labour participation rate in Estonia is already one of the highest in Europe though, especially for the over-50s, and this will limit the effect of the reforms. The decline in the number of people of working age has slowed much more in recent years than had been forecast. Because immigration into Estonia will probably exceed emigration from Estonia in future, the amount of labour in the economy will shrink more slowly in future than was earlier forecast.

Source: Bank of Estonia
Author: Orsolya Soosaar, Economist at Eesti Pank

Estonian gender pay gap decreased to 21 pct

According to Statistics Estonia, in October 2016, the average gross hourly earnings of female employees were 20.9% lower than the average gross hourly earnings of male employees. The gender pay gap decreased by 1.3 percentage points compared to the previous year. The gender pay gap decreased by 1.3 percentage points for the third year in a row.

In October 2016, the average gross hourly earnings without irregular bonuses and premiums were 6.04 euros for female employees and 7.63 euros for male employees. Compared to 2015, gross hourly earnings increased 11.6% for female employees and 9.8% for male employees. In the past three years, the gross hourly earnings of female employees have risen faster than the gross hourly earnings of male employees, which is the main reason for the decrease in the pay gap (the difference between the hourly earnings of male and female employees).

In 2016, the gender pay gap was the biggest in mining and quarrying (36.4%), where the majority of employees are men. A larger share of male employees in a particular field of activity is not always related to a bigger than average pay gap. Another economic activity with mostly male employees is construction, but the pay gap in this field is smaller than average – 15.3%.

After mining and quarrying, the next biggest pay gaps were recorded in financial and insurance activities (33.0%), manufacturing (29.5%), wholesale and retail trade (29.0%) and human health and social work activities (26.0%). The difference between the gross hourly earnings of male and female employees was smallest in water supply; sewerage, waste management and remediation activities (8.9%), public administration and defence (8.0%) and other service activities (7.8%). The pay gap was non-existent in transportation and storage activities.

Compared to 2015, the gender pay gap increased the most in administrative and support service activities (8.0 percentage points), accommodation and food service activities (4.9 percentage points), and in mining and quarrying (4.1 percentage points) and decreased the most in construction (6.3 percentage points), other service activities (6.2 percentage points) and professional, scientific and technical activities (6.1 percentage points). In the past five years, the pay gap has decreased the most in other service activities and real estate activities and increased the most in administrative and support service activities, in agriculture, forestry and fishing and in mining and quarrying.

With regard to ownership, the pay gap in institutions and enterprises owned by the state and local governments was smaller than in enterprises owned by Estonian or foreign private entities. In 2016, the pay gap in state institutions and enterprises was 17.0% and in local government institutions and enterprises 11.6%, whereas the pay gap in the enterprises owned by Estonian private entities was 19.5% and in the enterprises owned by foreign private entities 29.7%.

The pay gap in the public sector (includes state and local government institutions and enterprises) and private sector (includes enterprises owned by Estonian and foreign private entities) was almost the same – 21.6% and 21.8%, respectively.

In 2016, the pay gap was the biggest in Ida-Viru (27.9%), Jõgeva (25.3%), Hiiu (23.4%) and Lääne (22.1%) counties and smallest in Põlva (11.3%), Rapla (15.1%) and Tartu (15.9%) counties.The difference between the gross hourly earnings of female and male employees, 2016

Statistics Estonia and Eurostat use different methodologies to calculate the gender pay gap. Although Eurostat receives data from the statistical offices of the Member States, the pay gap published by Eurostat does not take into account the indicators of enterprises and institutions with fewer than 10 employees; it also excludes the earnings of employees in agriculture, forestry and fishing and in public administration and defence. According to Eurostat’s calculations, the gender pay gap in Estonia is the biggest in the European Union (26.9% in 2015). According to Statistics Estonia, the gender pay gap in Estonia in 2015 was 22.2%, taking into account all enterprises and institutions and all economic activities.

Statistics Estonia has calculated the pay gap since 1994. In 2016, the sample included around 12,350 enterprises, institutions and organisations. The gender pay gap is calculated by deducting the average gross hourly earnings of female employees from the average gross hourly earnings of male employees, divided by the average gross hourly earnings of male employees and expressed as a percentage. The calculated average gross hourly earnings do not include irregular bonuses and premiums.

The statistics are based on the questionnaire “Wages, annex for October” (from 2017, the name of the statistical activity is “Gender pay gap”), the deadline of which was 1 December 2016. For the statistical activity, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia (see graph)

Transferring public-sector jobs out of Tallinn

During the March 23rd Cabinet meeting, the government discussed a plan for moving 1 000 public sector jobs out of Tallinn, which would affect approximately 40 state authorities. Each ministry presented proposals for its own area of administration, which would coordinate the organizational activities for the transfer of jobs. The exact action plans will be submitted by the ministries, to the Government, in May.

“The Government’s objective is to increase the state’s presence all over Estonia and to make the labour market of the country’s regions more diverse. We have become accustomed to the fact that, outside Tallinn, there are state employees who provide direct services to residents. Developments in technology and e-services also allow so-called backroom officers to work and live in their preferred areas all over Estonia,” said Minister of State Administration, Mihhail Korb.

In the movement of jobs to county centres, the focus is particularly on central government authorities, of which about 55,000 people were employed as of last year; of these, 45 percent are in Tallinn. In particular, the jobs that can be moved to these regions involve day-to-day operations that do not depend on location. The plan isn’t to take the constitutional institutions and ministries, or the agencies providing services to residents and businesses of the capital and of nearby areas, out of the capital. An analysis, taking into account the broader plan, was carried out in 2016 within the framework of the preparation of the analysis of state tasks.

“The plan was drawn up taking into account three important points: the quality of public services must be maintained, restructuring costs should remain within reasonable limits, and particular areas should have the prerequisites needed in order to find the necessary employees,” said Mihhail Korb.

The job functionalities that are most likely to be moved to the various regions are those where a state authority is expanding a branch, or where an entire work unit can be moved, or a partial unit can be located in another city. An example of the branch expansion solution was the State Shared Service Centre, which in addition to Tallinn, has added offices in Tartu and Viljandi.

First, the State Real Estate Ltd (RKAS), together with every Ministry, will map and analyse the real estate opportunities in county centres and cities of particular regions, taking into consideration the necessary conditions for job creation. Then, the RKAS will make proposals for the placement of jobs in the regions in order to have as little impact on operations as possible, or while not inhibiting the activity of the authority at all. At the same time, methods will be used for the placement of various state authorities in one building in order to create synergies between the institutions and provide easier access to public services. After that, the authorities will be able to start preparing the job transfer processes, which are planned to be completed by 2019.

During the debate over moving jobs out of Tallinn, Cabinet members highlighted the need to analyse telework job creation opportunities. The Minister of Public Administration was assigned to analyse, in cooperation with other ministries, the existing practices of the organization of telework, and to provide proposals for opportunities for expanding telework.

The Ministry of Finance will further analyse, in cooperation with the relevant ministries, the options for moving state enterprises and foundations out of the capital. A relevant analysis will be presented to the Cabinet in the autumn of 2017.

Source: Estonian Ministry of Finance

Estonia’s average salary in 2016 was 1,146 euros

According to Statistics Estonia, in 2016, the average monthly gross wages and salaries were 1,146 euros; compared to 2015, the average monthly gross wages and salaries increased by 7.6%. The annual average monthly gross wages and salaries increased in all economic activities. The monthly gross wages and salaries were highest in the 4th quarter.

When in 2014 and 2015, the annual increase of the average monthly gross wages and salaries remained at around 6%, in 2016, the growth increased. Real wages, which take into account the influence of the change in the consumer price index, increased, compared to 2015, due to stable consumer prices by almost as much as the average monthly gross wages and salaries – 7.5%.

In 2016, compared to the previous year, irregular bonuses and premiums increased by 20.4% per employee. Irregular bonuses and premiums affected the year-over-year increase of average gross monthly wages and salaries by 0.4 percentage points.

In 2016, the average monthly gross wages and salaries continued to be highest in information and communication and financial and insurance activities. The year-over-year increase in average monthly gross wages and salaries was fastest in administrative and support service activities (16.4%) and real estate activities (14.3%). Above-average growth in wages and salaries was also recorded in agriculture, forestry and fishing (11.7%), information and communication (10.2%), accommodation and food service activities (9.5%), human health and social work activities (9.0%) and in education (7.7%).

The year-over-year growth of monthly gross wages and salaries was fastest in the Estonian private sector (8.9%) and slowest in state institutions (5.2%).

In 2016, by county, the average monthly gross wages and salaries continued to be highest in Harju (1,271 euros) and Tartu (1,149 euros) counties and lowest in Põlva (864 euros), Saare (880 euros) and Jõgeva (884 euros) counties. The year-over-year growth of monthly gross wages and salaries was fastest in Lääne and Tartu counties and slowest in Hiiu and Võru counties.

According to the Wages and Salaries Statistics Survey, the number of employees converted to full-time units decreased in 2016, compared to the previous year, by 1.2%. The biggest year-over-year decrease in the number of employees in full-time units, compared to 2015, occurred in other service activities, real estate activities and in mining and quarrying. The economic activities that saw an increase in the number of employees in 2016 include financial and insurance activities, human health and social work activities, professional, scientific and technical activities and information and communication activities.

In 2016, the average hourly gross wages and salaries were 6.90 euros; compared to 2015, the hourly gross wages and salaries increased by 6.0%.

In 2016, the average monthly labour costs per employee were 1,548 euros and the hourly labour costs were 10.28 euros. Compared to 2015, the average monthly labour costs per employee increased by 7.7%.

4th quarter of 2016The average monthly gross wages and salaries were highest in the 4th quarter – 1,182 euros, having increased, compared to the 4th quarter of 2015, by 7.0%, remaining on the same level with the year-over-year growth of the previous quarter. The average monthly gross wages and salaries were 1,140 euros in October, 1,158 euros in November and 1,248 euros in December. In the 4th quarter of 2016, the average hourly gross wages and salaries were 7.08 euros, having increased by 6.1% compared to the 4th quarter of 2015.

In the 4th quarter of 2016, the average monthly gross wages and salaries were also highest in information and communication and in financial and insurance activities. Compared to the 4th quarter of 2015, the average monthly gross wages and salaries increased in all economic activities. In the 4th quarter, the largest increase in average monthly gross wages and salaries occurred in administrative and support service activities (15.5%), education (9.5%) and in real estate activities (9.3%). The annual increase in average monthly gross wages and salaries was slowest in professional, scientific and technical activities and in construction.

In the 4th quarter of 2016, compared to the 4th quarter of 2015, irregular bonuses and premiums increased by 17% per employee. Irregular bonuses and premiums affected the year-over-year increase in average gross monthly wages and salaries of the 4th quarter by 0.5 percentage points. Without irregular bonuses and premiums, the average monthly gross wages and salaries increased, compared to the 4th quarter of 2015, by 6.4%.

Average monthly gross wages and salaries and their change by economic activity, 2015–2016

Statistics Estonia conducts the Wages and Salaries Statistics Survey on the basis of an international methodology since 1992. In 2016, the sample included 12,350 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 time actually worked 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.

The statistics are based on the questionnaire “Wages and salaries”, the deadline of which was 18 October 2016. Statistics Estonia published the quarterly summary in 26 working days. For the statistical activity “Wages and salaries”, the main representatives of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia (see better graph here)

9,000 job vacancies in 4Q 2016

According to Statistics Estonia, there were nearly 9,000 job vacancies in the enterprises, institutions and organisations of Estonia in the 4th quarter of 2016. Compared to the 3rd quarter, when the number of job vacancies reached a 7-year high, in the 4th quarter, the number of job vacancies decreased by 18%. Compared to the 4th quarter of 2015, the number of job vacancies increased by 37%.

The share of vacant and occupied posts in the total number of posts continued to be highest in manufacturing (19%), wholesale and retail trade (16%) and education (10%).

The rate of job vacancies, i.e. the share of job vacancies in the total number of jobs, was 1.7% in the 4th quarter of 2016, which is 0.3 percentage points lower than in the 3rd quarter of 2016 and 0.4 percentage points higher than in the 4th quarter of 2015.

In the 4th quarter, the rate of job vacancies was highest in other service activities (4.0%), accommodation and food service activities (3.7%), information and communication (3.3%) and administrative and support service activities (3.0%). The rate of job vacancies was lowest in mining and quarrying (0.4%), construction (0.5%) and agriculture, forestry and fishing (0.7%).

Compared to the 4th quarter of 2015, the rate of job vacancies increased the most in other service activities and accommodation and food service activities. The rate of job vacancies decreased the most in financial and insurance activities.

Most of the vacant posts were in Harju county (72%), including Tallinn (63%), followed by Tartu county (8%) and Ida-Viru county (5%). The rate of job vacancies was highest in Harju county and lowest in Saare, Lääne-Viru and Viljandi counties.

Three quarters, or 75% of the vacant posts were in the private sector and every forth vacant post was in the public sector. In the 4th quarter of 2016, the rate of job vacancies continued to be highest in foreign private-sector enterprises (2.2%) and state organisations (2.1%). The rate of job vacancies was lowest in local government organisations (1.0%).Rate of job vacancies by economic activity, 4th quarter, 2015–2016

Rate of job vacancies, 1st quarter 2006 – 4th quarter 2016

The movement of labour is characterised by labour turnover (the total number of engaged employees and those who have left), which amounted to nearly 90,000 in the 3rd quarter of 2016, denoting a 4% decrease compared to the previous quarter and a 2% increase compared to the 3rd quarter of 2015. Compared to the 3rd quarter of 2015, the largest increase in labour turnover occurred in mining and quarrying (39.7%), water supply; sewerage, waste management and remediation activities (19.2%) and other service activities (19%), and the largest decrease in real estate activities (29.3%). In the 3rd quarter, both the number of employees hired and the number of employees who left their jobs were highest in wholesale and retail trade and manufacturing.

The data are based on the statistical activity “Job vacancies and labour turnover”, conducted by Statistics Estonia since 2005. In 2016, the sample included 12,603 enterprises, institutions and organisations; the data of randomly selected units are imputed to the total population separately in each stratum. As of the 2nd quarter of 2016, Statistics Estonia uses the data of the Employment Register of the Estonian Tax and Customs Board to pre-fill the survey questionnaires. The main representative of public interest for the statistical activity is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

The number of job vacancies is the total number of job vacancies on the 15th day of the second month of a quarter. A job vacancy is a paid post that is newly created, unoccupied or becomes vacant when an employee leaves, and for which the employer is actively trying to find a suitable candidate from outside the enterprise, institution or organisation concerned.