Problematic start of negotiations over national minimum wage for 2006

In negotiations over the national minimum wage for 2006, conflicts between the social partners have appeared even before the negotiations have started. In June 2005, the employers’ central organisation declared that they would boycott the negotiations until the government takes a position on covering a deficit in Estonian health insurance budget.

Last year, the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) (EE0308101F) and the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) (EE0310102F) started the negotiations over the national minimum wage for 2005 already in March to reach an agreement in autumn. In reality, the social partners did not manage to conclude the agreement until the very end of December (EE0409101N, EE0501103N). In this year, by the beginning of July, the social partners have not yet even started to negotiate over the minimum wage for 2006.

In May, 2005, EAKL declared that the monthly minimum wage should be EEK 3,100 in 2006 (in 2005 it is EEK 2,690). According to EAKL, this proposed number takes into account a long-term agreement on minimum wage development concluded between EAKL and ETTK in 2001 (EE0311101N), the level of minimum wage in 2005 and a rise in pensions foreseen in the coalition agreement. EAKL reasoned such a proposal stating that a person, who works 40 hours per week, should afford a better standard of living than an average pensioner. Since April 2006, according to the government’s plans, the pension will rise up to EEK 3,000 per month.

In June, EAKL proposed ETTK to begin negotiations over the national minimum wage for 2006. On the very next day, the Council of ETTK announced that ETTK would start the negotiations only after it had become clear, how the problem of the budget deficit of Estonian Health Insurance Fund (Eesti Haigekassa) would be solved. The budget of Health Insurance Fund is in deficit for this and the next two years altogether by more than EEK 700 million and the government has not found a reliable solution to this problem. The deficit is mainly caused by the collective agreement signed in healthcare sector in 2004 (EE0410102N). ETTK stands for not increasing the tax burden of employers and it has proposed that the deficit should be covered first of all by increasing the minimum social tax base for self-employed persons and persons insured by the state to the level of the minimum monthly wage. EAKL opposed strongly to the declarations of ETTK, as it tried to link the negotiations over the national minimum wage with unrelated issues. EAKL accused ETTK in looking for excuses to avoid the negotiations.

After these statements, the Estonian Social Democratic Party (Eesti Sotsiaaldemokraatlik Erakond) took the issue of frozen negotiations to its concern and made a declaration demanding that the social partners and government have to conclude an agreement on the conditions of the rise of the national minimum wage in the nearest future. The opinion of the social democrats is that the monthly minimum wage should be at least EEK 4,000 per month in order to accord with the European Social Charter, which requires that the national minimum wage should be 60% of the national average wage. In Estonia the national minimum wage is only 38% of the national average wage at the moment.

This information is made available through the European Industrial Relations Observatory (EIRO), as a service to users of the EIROnline database. EIRO is a project of the European Foundation for the Improvement of Living and Working Conditions. However, this information has been neither edited nor approved by the Foundation, which means that it is not responsible for its content and accuracy. This is the responsibility of the EIRO national centre that originated/provided the information. For details see the "About this record" information in this record.

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