Bloomberg News

Estonia Unions Seek 10% Higher Minimum Wage to Cut Income Gap

November 06, 2012

Estonian trade unions want a 10 percent increase in the minimum monthly wage from January to keep income gaps between the rich and the poor from widening and reduce tax avoidance.

The unions are demanding the minimum gross wage rise to 320 euros ($409) from 290 euros, according to a statement published on the website of the Confederation of Estonian Trade Unions late yesterday.

Earnings of the richest increased four times more than those of the poorest fifth of Estonians between 2003 and 2010, Chairman Harri Taliga said in the statement. The move would also reduce the so-called envelope pay, or undeclared cash payments by employers, that amount to 10 percent of total, Taliga added.

Higher costs of public services after strikes by teachers and doctors this year are threatening the competitiveness of the newest euro area member and may delay the return to surplus budgets, the central bank said yesterday.

Labor productivity declined in the first half of this year as the $19 billion economy is slowing from the European Union’s fastest pace of 8.3 percent last year, while average wage growth haven’t slowed significantly, the central bank added.

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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