Swedbank: Rapid wage growth continued

SwedbankWage growth remained rapid and broad-based in the third quarter. The average full-time-equivalent gross wage amounted to EUR 1,397, up by 8.2%, over the year. Tax Authority’s gross median wage amounted to EUR 1,100, up by 10% in a year. 

Wage growth in the public sector (education, health care, public administration) exceeds the wage growth in the private sector. Private sector, exposed to global competition, has found it harder lifting its labour costs as rapidly. The average wage declined by 3.0% in the energy sector in the third quarter due to substantially lower production volumes of electricity (and the mining of oil shale that is related to it).

According to the financial data of enterprises released today, companies’ profitability remained on a downward trend. Profits decreased by 6.5% in the third quarter as costs increased more than turnover (+5.6% versus +4.9%, over the year). Personnel costs rose by 8.4%, over the year.

As export demand and Estonia’s economy are expected to grow at a slower pace next year, demand for labour should ease, at least in the exporting industry. So, wage growth should moderate, from very high levels (from 7.7% in 2019 to 6.5% in 2020 and 5.5% in 2021). According to sentiment surveys, manufacturing and construction companies plan to reduce the number of employees in the coming 3 months due to lower demand.

For more information about this report, please contact Ms. Liis Elmik, liis.elmik@swedbank.ee, +372 888 7206.

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