Average Estonian pension is 371 eur

The average old-age pension in Estonia was 370.9 euros per month in the third quarter of 2015, Statistics Estonia said on Friday.

Compared to the third quarter of 2014, the average old-age pension was bigger by 6 percent.

The average size of pension in Estonia in the third quarter also grew by 6 percent year over year to 326.8 euros.

Source: Baltic News Service

Wage growth accelerated

• Wage growth picked up as labour market tightened further in the third quarter
• Remarkable surge in employees’ purchasing power supports consumption

According to Statistics Estonia, average wage amounted to 1,045 euros, up by 6.9% annually. As labour market has tightened, workers’ bargaining power has increased and growing labour costs are biting into enterprises’ profitability.


Wages increased in almost all sectors. Wage growth was the fastest in sectors where the average wage level is the lowest, e.g., accommodation and food services, education, entertainment, and real estate. The rapid growth of wages in these sectors was supported by a substantial increase in the minimum wage, a political agreement to raise the wages of teachers, and strong domestic consumption that lifts the sales of enterprises who sell their products and services in the domestic market.

Average wage decreased in a relatively small sector of administrative and support service activities where average pay was lower than last year in a few small enterprises. Average wage in construction grew only by 1%, probably due to the registration of previously unofficially employed workers who still receive part of their pay in an envelope.

Households’ real purchasing power will grow markedly this year. The growth of gross wages will probably remain fast in the fourth quarter and smaller labour taxes and deflation will result in a remarkable surge in households’ purchasing power. Net wages were up by 7.7% in real terms in the first nine months of the year.

Wage growth will also be fast next year as the lack of suitable labour remains a concern. An agreed 10% increase in the minimum wage in 2016 will also have an impact. The growth of wages in real terms will slow in 2016 compared with 2015 as prices will start growing and labour taxes will be lowered less than this year.

Source: Swedbank

Majority of Estonians are satisfied with their job

According to Statistics Estonia, 85% of employees are very or rather satisfied with their job. In the last 12 months, every fifth employee has had conflicts interfering with the relations and work of enterprise and employees.

Approximately 72% of employees – 79% of women and 65% of men – considered having a good relationship with the employer to be very important.

More than a quarter (28%) of employees is very satisfied and more than half of employees (57%) are rather satisfied with the current job. In the comparison of occupations, satisfaction is highest among managers, professionals (technicians and associate professionals) and clerical support workers, one third of whom is very satisfied with their job.

About one third (31%) of employers considered the adequacy of employees’ skills and knowledge to be sufficient and more than half (62%) considered it to be rather sufficient. However, nearly three quarters (71%) of employees considered their adequacy of skills and knowledge for work assignments to be sufficient and a quarter have pointed out that their skills/knowledge presume more difficult work assignments. 11% of employees are very satisfied and 48% are rather satisfied with the possibilities for acquiring new skills and knowledge at work.

7 out of 10 employees consider the possibility of having a say in the enterprise’s activity, work organisation and working conditions as very or rather important. 14% of employees are very satisfied and 48% are rather satisfied with the involvement. In approximately 88% of enterprises, employees have the possibility of discussing the activity, work organisation and working conditions of the enterprise with the employer. In 6% of enterprises, employees discuss the same issues in cooperation with the employees’ representatives (trustee, working environment representative).

The work environment has a great impact on the effective performance of work tasks and on the person’s health. In addition to managers, several representatives and organisations of employees’ interests are also involved in the improvement of the working environment. 6% of enterprises have a trade union and 7% of employees belong to one. However, there is a working environment representative in more than half (54%) of enterprises: in almost all (99%) enterprises with 250 and more employees, and in a third of enterprises with 5–9 employees. A working environment council operates in 6 out of 10 enterprises with 50–249 employees and in 9 out of 10 enterprises with 250 and more employees. There is a trustee in approximately 18% of enterprises, which is 5 percentage points more than in 2009.

7% of employees marked it possible to lose their job due to employer’s initiation and 15% marked it possible to leave their job due to own initiation in the next 6 months. 31% of employers are absolutely certain of the possibility of finding a new job after leaving the current job.

Around 88% of employees come in contact with a health risk in at least 25% of their working time, which is 4 percentage points more than in 2009. In at least a quarter of their working time, employees came in contact with the following health risks: working with a display screen equipment (47%), unvarying movements or positions causing fatigue or pain (41%) and bad (indoor) climate conditions. As at in 2015, more than three quarters (77%) enterprises promote health activities, it is more common in companies with a larger number of employees. More than half of the employees (53%) have participated in the enterprise’s health promoting activities in the last 12 months: 7 out of 10 employees of non-profit associations, foundations and state and local government agencies and 5 out of 10 employees of companies.

Statistics Estonia conducted the Work Life Survey for the first time in 2009 and repeated the survey in 2015. The survey was ordered by the Ministry of Social Affairs. The aim of the survey was to provide an overview on work organisation, relationships pertaining to work, involving employees, collective working relationships, occupational health and safety, and trends. 850 employers and 4,780 employees responded to the survey in 2015.

Source: Statistics Estonia

Estonia ranks high for English proficiency

EF Education First released today the 5th annual edition of EF English Proficiency Index (EF EPI), the world’s largest ranking of countries by English skills. Estonia occupies a respectable seventh place out of 70 countries and is classified as having a very high proficiency level.

Sweden ranks first for English skills, closely followed by the Netherlands and other other Nordic countries – Denmark, Norway and Finland. Slovenia is sixth and Estonia seventh. It’s the Arab countries and Cambodia that come in last.

Compared to last year, both Estonia’s ranking and total score have improved. Yet it is still lacking from repeating its best ever fourth place.

Estonia stands out in the index for the slightly better language skills of the male population. In other countries, women tend to have the upper hand when it comes to speaking English.

This fifth edition of the EF English Proficiency Index (EF EPI) ranks 70 countries and territories based on test data from more than 910,000 adults who took online English tests in 2014.

According to the test results, the gap between the highest and lowest proficiency countries has widened, with the top-ranked country, Sweden, a full 33 points above Libya, in last place.

Worldwide, English proficiency levels are highest among young adults aged 18-20. However, on a global level, the difference in English ability between age cohorts is extremely small for adults under 30. On a national level, the story is quite different, with some countries showing stark generational differences and others almost none.

Source: ERR


Growth in employee productivity has stalled

Ardo Hansson, Governor of Eesti Pank, finds that the harmonisation of Estonian incomes with those of elsewhere in Europe will slow as the productivity growth of employees in Estonia is less far above the European average than it was.

In a presentation to a conference on the Estonian economy, Mr Hansson said that the current GDP growth rate of around 2% is to be expected given the state of the economies in our trading partners. He said that the economy could grow faster than it is at present as its long-term achievable growth rate is 3-4%.

His presentation emphasised that income levels in Estonia cannot sustainably be increased by the government boosting demand. “Estonia has more than ever to gain from structural reforms that support growth. Technological development and improvement in labour productivity are the foundations for the ability to grow”.

Economic growth in Estonia since the crisis has come largely from increased employment, but employment is subsiding as a source of growth for the economy because the Estonian population is shrinking. “There has been a great leap forward in the share of the population that is active in the labour market in Estonia and we have passed Finland, but there is still space for further advances before we catch up with Sweden. Having more people participate in the labour market is one way the Estonian economy can grow”.

The purchasing power adjusted productivity of employees in Estonia has reached 63% of the European Union average, but the rate of increase has slowed in recent years. Ardo Hansson explained, “There are more than 15,000 euros of machinery and equipment per employee in Estonia, which is three times what there was in 2000, but only half as much as there is in Finland or Germany. The closer the economy comes to that ‘peak’, the more effort is required for growth”.

He said that a smaller part of income is being invested in Estonia than before, at a point where financing conditions for investment are good and Estonian companies are in a strong position financially. If the economy does not modernise faster than it has been doing, stagnation could set in.

However, Estonia still has several advantages over the rest of the European Union and the euro area, as it has a flexible labour market, the chance to bring in technology from more advanced economies, good financing conditions and a strong banking sector, lower corporate indebtedness than before, little bureaucracy, relatively low labour costs, and strong public finances and low government debt.

SOurce: Bank of Estonia

Slower growth in the economy is not reflected in labour market indicators

  • The share of the working age population in employment has been higher than it was at the peak of the boom for four quarters now
  • Slower GDP growth and faster growth in employment mean that productivity growth slowed in the third quarter and corporate profits shrank by more than before

Statistics Estonia estimates put employment 4.3% higher in the third quarter of 2015 than a year earlier, and the unemployment rate at 5.2%. The share of the working age population either working or unemployed, which is the labour force participation rate, remained at the high level seen in the first half of this year and stood  at 70.9%. The employment rate increased in all age groups and all regions.

Employment growth accelerated and seasonally adjusted unemployment fell substantially from the previous quarter. The share of the working age population in employment has been higher than it was at the peak of the boom for four quarters now. The unemployment rate was a little more than one percentage point lower then than it is now, but this was because labour force participation was lower.

The optimistic scenario in the labour force survey is counterbalanced however by some other sources of data that show employment growth slowing in the third quarter and unemployment climbing. Tax and Customs Board data on recipients of wage income paid out show that they have been fewer in number in monthly terms since the second quarter of the year. The number of declared recipients of wage income in September was probably lower than it was a year earlier. Data from Eesti Töötukassa, the Estonian unemployment insurance fund, show that the number of registered unemployed has been slightly higher than a year earlier since August. These divergences in estimates may have been caused by changes in labour market institutions, but they indicate that employment growth may be overestimated by the labour force survey.

The flash estimate from Statistics Estonia showing GDP growth to have slowed in the third quarter and the accelerating rise in employment together imply labour force productivity has fallen. Data from the Tax and Customs Board also indicate accelerating rises in wages, so corporate profits probably fell faster in the third quarter than previously in consequence.

Source: Bank of Estonia

Author: Orsolya Soosaar, Economist at Eesti Pank

The employment rate is the highest in 15 years‏

According to Statistics Estonia, the unemployment rate in was 5.2% and the employment rate was 67.2% in the 3rd quarter of 2015. The employment and unemployment figures of the 3rd quarter resemble those of the economic boom.

In the 3rd quarter of 2015, compared the same quarter of the previous year, the unemployment rate decreased by 2.3 percentage points, which meant that the estimated number of unemployed persons reached 36,500 and the unemployment rate decreased to 5.2%. These figures resemble more and more the figures of the economic boom of 2006–2007 when the unemployment rate was 4–5% and the number of unemployed persons was less than 40,000.

The employment rate was 67.2% in the 3rd quarter and the number of employed persons was approximately 661,000. This was the highest quarterly employment rate since 2000. The number of employed persons was also smaller than in only a few quarters including the 3rd quarter of 2007 which was one of the peak years of the economic boom.

As the number of persons in working age has been decreasing year by year, the increased numbers of employed persons indicated an overall growth in activity in the labour market. In the 3rd quarter of 2015, the labour force participation rate was 70.9%, which was nearly 2 percentage points higher than in the 3rd quarter of 2014, and which, just like the employment rate, reached a record high since 2000.

In the 3rd quarter of 2015, compared to the same quarter of 2014, there was a significant decrease in the number of inactive persons which refers to the fact that the number of employed persons has grown because of both inactive persons entering the labour market and a decrease in unemployment. The number of long-term unemployed persons (seeking work for 12 months or longer) decreased by 10,000 persons compared to the 3rd quarter of 2014 and was approximately 13,000.

Labour market figures improved in all age groups, among males and females, and Estonians and non-Estonians.

Because the growth of GDP has been rather moderate in 2015,  the improved labour market figures cannot be the result of a big economic growth. The possible reasons include the impact of the employment register on employment and the postponement of seasonal work until the 3rd quarter. The economic growth of the second half of 2014 and the planned work ability reform could have also influenced the labour market to some extent.

Diagram: Unemployment rate and employment rate, 3rd quarter, 2000–2015

The unemployment rate is the share of the unemployed in the labour force (the sum of employed and unemployed persons). The employment rate is the share of the employed in the working-age population (aged 15–74). The labour force participation rate shows the share of the labour force in the population aged 15–74. The estimates are based on the data of the Labour Force Survey.

Statistics Estonia has been conducting the Labour Force Survey since 1995 and every quarter 5,000 persons participate in the survey. The Labour Force Survey is carried out by statistical organisations in all the European Union Member States on the basis of a harmonised methodology.

Source: Statistics Estonia


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