Social partners discuss minimum wage
In August 2004, during talks over Estonia's national minimum wage for 2005, the ETTK employers’ confederation made several proposals concerning the principles for setting the minimum wage. These proposals run counter to an agreement concluded between ETTK and the EAKL trade union confederation in 2001.
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 for setting the national minimum wage in the period up until 2008 (EE0311101N). On 25 August 2004, ETTK proposed that negotiations over the national minimum wage should in future be conducted on a tripartite basis, involving the government in the talks. Until the 2001 agreement, negotiations over the minimum wage had been tripartite, but in 2001 ETTK proposed bipartite negotiations on the issue. Thus in 2003 and 2004 the level of the national minimum wage was agreed between the central organisations of trade unions and employers and then, under the terms of the Wage Law, the government validated it by decree.
The ETTK employers' confederation believes, that in order to continue bipartite negotiations and fulfil the agreements concluded, the Wage Law needs to be changed. However, initiating amendments to the Wage Law falls within the government’s competence. ETTK takes the position that the national minimum wage should be abolished and a more flexible model of bipartite minimum wage-setting should be applied. ETTK had also reiterated proposals, first made in 2003, on changing the principles for setting the national minimum wage:
- the level of national minimum wage should not be linked to the national average wage, but to the national median wage;
- the rate of growth of the minimum wage should not be higher than the growth rate of labour productivity in industry;
- different minimum wage rates should apply to less competitive groups on the labour market, such as young people and pensioners; and
- the national minimum wage agreement should not cover those employees whose pay conditions are already established by collective agreement.
In 2003’s minimum wage talks, the social partners agreed that in the negotiations over minimum wages for 2005, the increase should depend on the increase in labour productivity and the employment opportunities for 'at-risk' groups, and that the negotiations at national level should promote the development of wage bargaining at branch and enterprise levels (EE0309102F).
ETTK believes that a more flexible wage policy would have a positive effect on employment and promote pay bargaining at branch level. At present, many branch-level social partner organisations are not motivated to negotiate on pay because of the existence of a national minimum wage, it is argued. The EAKL trade union confederation attributes the scarcity of wage agreements at branch level to a lack of interest among employers’ organisations and a lack of such organisations in certain branches. EAKL’s position is that the national minimum wage might loses its importance only when wage agreements at branch level move from being an exception to being the rule.
EAKL believes that ETTK made the abovementioned proposals in order to prolong the negotiations over the national minimum wage for 2005. These negotiations started in March 2004, when both parties presented their positions. EAKL proposed that the monthly minimum wage should be EEK 2,800 (it is EEK 2,480 in 2004), while ETTK stated that the annual increase in the minimum wage should not exceed the increase in labour productivity. So far, ETTK has not made a proposal on the actual minimum wage rate for 2005, though it was due to do so by 20 August. However, both sides have agreed on the necessity to elaborate a mutually satisfactory system of branch-level collective agreements.