Wages continue to grow fast, especially given that the purchasing power of households has been helped by lower inflation. Wages rose more slowly at the end of the year though than the 8.2% seen in the third quarter, and data from Statistics Estonia show that wages rose by 6.3% in the final quarter of 2019. This is in line with the cooling that has already started in the economy.

Wages rose more slowly in the fourth quarter than in the third in both the public and private sectors. In the public sector, where wages had been rising faster than in the private sector for a long time, wage growth slowed in public administration and in education. Wage growth was also restrained by manufacturing, where confidence has been falling for some time among employers.

Taking the economy as a whole, the rise in wages in the fourth quarter was well aligned with the increase in labour productivity. However wages grew faster than productivity in industry, while the opposite was true in IT, which gave a substantial boost to growth in the economy in fourth quarter.

Further information
Hanna Jürgenson
Eesti Pank
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Email: [email protected]
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