„I would like to acknowledge our tradition of deciding upon minimum wage, which is agreed on by the different parties of the employment market. I appreciate the social partners for achieving this agreement. The raising of minimum wage is important, as it helps to improve the situation of the least privileged,“ said Peep Peterson, the Minister of Health and Labour. „The EU directive gives us recommendations about fair minimum wage, creating an expectation for a quicker increase of minimum wage also in Estonia. A fair minimum wage in 2024 could be 900 euros, from there 1000 euros and, finally, 1200 euros. The quicker increase rate could be agreed on next year.“
The amount of minimum wage is set by a collective agreement signed by the Estonian Trade Union Confederation and the Estonian Employers’ Confederation on 29 September, in which the central organisations of social partners agreed on raising the minimum wage in 2023.
According to the Estonian Tax and Customs Board, there were 15,900 full time workers in the first eight months of 2022 that earned the minimum wage of 654 euros. This is 3.3% of all employees. In addition to this, 17,250 full time employees earned wages in between 655 to 724 euros, which is 3.5% of all employees. By the assessment of the Ministry of Finance, the increase of minimum wage by 71 euros (from 654 to 725 euros) will bring an additional 16 million euros to the state budget as tax revenue.
The increase of minimum wage brings about the raise of earned income in private and public sector. In addition, the benefits linked to minimum wage will increase, e.g. the parental benefit and the benefit for child leave. The increase of minimum wage may also affect benefits paid by local governments. However, it may also have an effect on the prices of offered services, e.g. kindergarten fee, if the local government has linked the prices of these services to minimum wage. Starting from 2022, the amount of maintenance support is not linked to the rate of minimum wage. In addition, the increase of minimum wage helps to improve the lives of the least privileged.