Pay rises in public transport eases labour shortage
Following disputes over wage increases and the need to address the labour shortage problem, wages in public transport companies seem to have reached a more competitive level in Estonia’s capital city of Tallinn. As a result of several pay increases, most of the vacancies have now been filled; moreover, the number of applicants taking part in occupational training activities has increased.
Pay increases introduced rapidly
In 2006, rapid wage increases were introduced in Estonia’s public transport sector. For instance, employees at the Tallinn Tram and Trolleybus Company (Tallinna Trammi- ja Trollibussikoondis, TTTK) received two wage rises in 2006, increasing their average monthly gross wage to EEK 7,000 (about €447 as at 17 September 2007). As a result of the ongoing labour shortage in the sector, significant pay increments have also been planned for 2007. In accordance with the collective agreement concluded in March 2007, wages were to be increased by 20% from 1 April. Another pay increment of 10% is due to take effect from 1 November 2007, bringing the average monthly wage of trolleybus drivers up to EEK 12,500 (€799).
Meanwhile, the wage levels of bus drivers have also risen rapidly. In 2006, average pay levels at the Tallinn Bus Company (Tallinna Autobussikoondis, TAK) increased from EEK 8,873 (€567) to EEK 10,000 (€639) a month. Facing the continuous threat of a labour shortage, the company further increased employees’ wages by 10% from 1 September 2007. According to TAK’s Human Resource (HR) Manager, Tiiu Sirts, this has brought the average monthly wages of bus drivers up to EEK 15,000 (€959).
Rapid pay increases have been a characteristic of the Estonian economy in the past year. According to Statistics Estonia (Statistikaamet), the national average monthly gross wage increased by 16.5% in 2006, rising to EEK 9,407 (€601) a month. Economists from the Bank of Estonia (Eesti Pank) have pointed out that sustainable economic development will be threatened if the increase in labour productivity is continuously lower than the rise in wages – as has been the case in Estonia.
The overall rapid increase in national average wages has put pressure on the public transport sector to implement wage rises in order to remain competitive and to keep staff from leaving to work for other transport companies. Therefore, the pay rise in public transport is largely driven by the continuous threat of a labour shortage, wage increments in the rest of the transport sector, growing labour mobility to other transport companies with higher wages, and labour migration in the sector to neighbouring countries.
Labour shortage problem
Labour shortages have become increasingly problematic in the Estonian economy (EE0612019I). In the public transport sector, the labour shortage has resulted in greater competition for employees in TTTK and TAK. In order to attract potential employees, TAK increased its wages in the summer of 2006, when a minimum of 44 bus drivers were needed out of a total of about 570 drivers in order to ensure the normal functioning of the company. After the rapid increase in wages, media reports indicated that TAK managed to reduce its labour shortage and that only a couple of vacant bus driver positions remained.
TTTK’s labour shortage problem arose when trolleybus drivers started signing up for bus driver courses, since the wage difference was about 1.4 times in favour of bus drivers in 2006. This pay discrepancy was interpreted as wage discrimination. As a result, in August 2006, workers held a picket in Estonia’s capital city of Tallinn, in protest against wage discrimination in the public transport sector (EE0609029I). The tram and trolleybus drivers demanded that their wages be increased to the same level as those of bus drivers. When protesting against the wage discrimination in the sector, it was declared that due to the pay gap, trolleybus drivers were starting to move to other transport companies where they were guaranteed better wages; this, in turn, had resulted in staff shortages and a drop in service quality.
However, as a result of the rapid wage increases, TAK and TTTK are now reporting a reduction in the labour shortage problem. In addition to increased wages, TTTK is also offering a scholarship of EEK 5,000 (€320) as an incentive to those who agree to take part in trolleybus driver courses. According to TTTK’s HR manager, the number of applicants signing up for the trolleybus driver courses, which are taking place in the autumn of 2007, has doubled. Moreover, the number of young applicants has increased.
Kirsti Nurmela and Marre Karu, PRAXIS Centre for Policy Studies
Useful? Interesting? Tell us what you think.