Wages are rising as fast as they were before the pandemic
Economist at Eesti Pank
Data from Statistics Estonia show that the average wage was 7.3% larger in the second quarter than it was at the same time a year earlier. Wage growth accelerated as the number of hours worked per employee rose, and wages rose faster at private sector companies than they did in the public sector. The seasonally adjusted average wage was 0.5% higher than in the previous quarter.
Wage growth would have been even faster if the distribution of workers across different sectors had been the same as a year ago. The recovery in jobs in sectors where wages are below the average, such as accommodation and food service, slowed the rise in the average wage to some degree.
Growth has accelerated in the economy this year, but companies have hired fewer extra employees than might have been expected. Labour productivity has increased in consequence, allowing wages to rise. Although the restrictions introduced to stop the spread of the virus were mostly still in place in the second quarter, companies were more optimistic about future growth in employment in the expectation that the restrictions would be removed and the pandemic would ease during the summer. There was also an increase in the share of companies that consider labour shortages to be a major problem. Even though there are a large number of job-seekers in the labour market, labour shortages are putting pressure on wages.