Minimum wage agreed for 2004

Following lengthy negotiations, in November 2003 Estonia's central trade union and employers' organisations reached an agreement on the national minimum wage rate for 2004. The monthly minimum wage will thus rise from EEK 2,160 in 2003 to EEK 2,480 in 2004.

According to the Wage Law (which came into force in 1994) the national minimum wage in Estonia is determined annually by government decree after the central organisations of trade unions and employers have reached consensus about its level for the next year. Over the years, the minimum wage negotiations have often been rather intense. In August 2001, the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) (EE0310102F) and the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) (EE0308101F) signed a bipartite agreement on the principles of establishing the minimum wage in the period up until 2008. According to this agreement, the proportion of the national average wage represented by the minimum wage should rise to reach 41% by 2008. The agreement also determined the formula and principles for calculating the minimum wage.

In June 2003, trade unions submitted their calculations on the minimum wage rate for 2004, based on the terms of the agreement signed in 2001. The minimum wage rate requested by the unions was EEK 2,600 per month for a full-time job. In 2003, the national monthly minimum wage stands at EEK 2,160. From the employers' side ETTK’s proposal was to set the monthly minimum wage at EEK 2,355 for 2004. Its argument was that the wage rise should not surpass the increase in labour productivity. ETTK also stated that the increase in the minimum wage should not threaten the position of groups at risk in the labour market. A survey conducted in 2000 among the members of ETTK found that increasing the minimum wage can reduce employment in some sectors and age groups. In many enterprises, the pay system is linked to the level of the minimum wage and a rapid increase in the minimum wage will affect their entire pay system.

In bipartite negotiations between EAKL and ETTK held in late July 2003, it was decided that ETTK would submit new proposals for the minimum wage rate in 2004 after consulting with its members. During a meeting of ETTK's branch associations, it was argued that the minimum wage increase should not be such as to lead to extensive redundancies and the liquidation of entire companies. The pressure applied to achieve a rise in productivity should be reasonable and take into account the specific characteristics of different sectors and regions. As a positive aspect of increasing the minimum wage, it was pointed out that this would reduce the amount of undeclared wages paid to employees.

During bipartite negotiations in August, the parties retained their differing positions, though the trade unions lowered their initial demand for 2004 to EEK 2,580 per month. The employers stated that they could not agree to such a raise and proposed an increase to a maximum of EEK 2,460 a month for full-time employees. During talks in early October, no agreement was again reached, but over the period of negotiations the unions decreased their demand to EEK 2,490, while the employers raised their offer to EEK 2,480. After further negotiations, a final agreement was reached and signed on 10 November and the monthly minimum wage in 2004 will be at the level of the employers' final offer - ie EEK 2,480.

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