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Estonian govt to approve increase of minimum salary from next year – the minimum monthly wage for full-time employment will be 820 euros

The Estonian government on Thursday will confirm the increase in the minimum wage from the new year, which was agreed upon by the representatives of the Estonian Trade Union Confederation and the Estonian Employers’ Confederation in October this year.

According to the draft, from Jan. 1, 2024, the minimum hourly wage will be 4.86 euros instead of the current 4.30 euros, and the minimum monthly wage for full-time employment will be 820 euros instead of the current 725 euros. According to established practice, the government establishes a national minimum wage, which is agreed upon by the social partners.

According to the data of the Tax and Customs Board, there were 16,700 full-time employees who earned a minimum wage of 725 euros as a nine-month average in 2023, making up 3.4 percent of all full-time employees who received wages. In addition to this, an average of 21,000 full-time employees earned wages between 726 and 819 euros per month, which is 4.3 percent of all employees.

According to the Ministry of Finance, the increase of the minimum wage by 95 euros from 725 to 820 euros will bring additional tax revenue of 23 million euros to the state budget compared to 2023. As a result of the increase in social tax, unemployment insurance contribution, personal income tax and the increase in the net salary that goes to consumption, the receipt of VAT and excise duties will increase. The tax revenue forecast of the state budget has already taken into account the increase in the minimum wage through the average wage forecast.

An increase in the minimum wage means an increase in remuneration and salaries related to the minimum wage in the private and public sectors. Also, the amounts of benefits related to the minimum wage, such as parental benefit and additional vacation payments, will increase. The increase in the minimum rate will contribute to improving the living conditions of the most vulnerable.

Source: BNS

(Reproduction of BNS information in mass media and other websites without written consent of BNS is prohibited.)

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