The recovery in economic activity raised wages

Orsolya Soosaar
Orsolya Soosaar
Economist at Eesti Pank

Data from Statistics Estonia show that the average gross wage was 3.2% larger in the third quarter than it was at the same time a year earlier at 1441 euros. The rebound in economic activity in the summer lifted wages by 4.3% from the previous quarter in seasonally adjusted terms to leave them higher than before the crisis.

Employment in Estonia fell relatively far during the first wave of the crisis given the drop in the economy, but it did not increase at the same rate in the summer months when restrictions were lifted and economic activity bounced back quite strongly. Data issued today show though that the number of hours worked per employee climbed to almost the same level that it was at last summer. This means that the value added created per employee probably increased in the summer, allowing the average wage to rise in most sectors. The average wage was also higher than in the crisis-hit second quarter in accommodation and food service, which had been hit hardest by the crisis, though it still remained lower there than a year earlier.

The average gross monthly wage has grown by less this year than the average declared wage income in the data from the Tax and Customs Board. This suggests the average paid employee may be doing a little better than the statistics on the average wage would suggest. The average wage has also been lifted by a change in the structure of jobs. The crisis had the biggest impact on low-paid jobs and so the most vulnerable part of society has been hit most. Higher unemployment and lower growth in the economy mean that the average wage will rise more slowly in the near future than it did before the crisis, and in the coming quarters the recovery in the labour market will be restrained by the second wave of the coronavirus epidemic. Because the restrictions that have been introduced during the second wave of the virus are much less strict than those in the first wave, the impact they have has so far been weaker.

Additional information:
Hanna Jürgenson
Eesti Pank
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