The purchasing power of the average wage fell further in the third quarter
Economist at Eesti Pank
Data from Statistics Estonia show the growth in the average wage slowing in the third quarter. Wages in the second quarter were 10.1% higher than they were a year earlier, but in the third quarter they were 8.1% up on the year. Wage growth was slowed by the private sector, mainly manufacturing and construction.
Data from the Tax and Customs Board show that the average declared wage rose by around 10%, as it did in the previous quarter. The purchasing power of the average wage continues to be reduced by rising consumer prices though, and Estonia is far from the only country in the euro area to be experiencing this. Labour costs in Estonia rising against those in other countries will be an important factor affecting the competitiveness of exporting companies in the near future.
Wages have also risen a little faster in 2022 than before at private companies in the service sector. Higher inflation than before is encouraging wages to continue rising, as the increased cost of living is putting greater upward pressure on wages. There are often limits on how work can be made more efficient in the service sector, especially when the economy is cooling, and so fast growth in wages will be passed into higher prices for services, which is already apparent in the price statistics.
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