Wages rising steeply in all Baltic countries; Estonians still earn the most

In the second quarter of 2017, all three Baltic countries recorded comparatively steep increases in their average monthly wages. The average wage is still the highest in Estonia and the lowest in Lithuania, according to the Baltic statistical bureaus’ dat

The average gross (before tax) monthly wage in Estonia was EUR 1,242 in the second quarter of 2017, which was 6.8% more than in the second quarter of 2016 and 7.7% more than in the first quarter of this year. Latvia’s average gross wage for the first time exceeded EUR 900 in the second quarter of 2017, amounting to EUR 927 a month. That is 8.7% percent more than in the same period last year and 4.8% more than in the first quarter of 2017. The average wage in Lithuania rose 8.7% year on year, increasing to EUR 838.7 a month. Compared to the first quarter of 2017, the average wage in Lithuania has increased 2.3%.

“The labor market is heating up, and will continue doing so in the next few years. That is good for households as they can spend more. On the other hand, companies have to understand that wage growth that is not based on productivity affects their profitability, investments and resilience to future crises. In other words, higher wages is a good thing, but if the wages are growing too fast, that may be risky, and 9% is a very steep increase. Unfortunately, this pressure will not go away, and we can see it in Estonia and Lithuania, where the business cycle has matured more,” Swedbank chief economist Mārtiņš Kazāks says in the bank’s latest macroeconomic review.

“Labor shortages in Latvia are nowhere near as bad as before the crisis, but the overall trend is not that great. Surveys of businessmen show that it is becoming increasingly hard for companies to find workers, especially in construction industry, and that is not just Latvia’s problem. Businessmen complain about labor availability also in Lithuania and Estonia, as well as in Poland, Czech Republic, Hungary and other Eastern European countries where, just like in Latvia, a new period of EU funding begins this year. As a result, wages are increasing fast across the region and, for instance, wages in Hungary have already risen 15%. That means that salaries will be growing rather fast also in the coming years,” commented Citadele economist Mārtiņš Āboliņš.

At the same time, data for the Baltic countries indicate that best-paid industries differ from one country to another. In Latvia and Lithuania, the highest salaries are paid in finance and insurance sectors – EUR 1,989 and EUR 1,543, respectively, were the average gross salaries in these industries in the second quarter. In Estonia, on the other hand, employees in information and communications technology sector are paid the highest gross monthly salaries – EUR 2,135 on the average. ICT employees in Latvia were paid EUR 1,446 on the average in the second quarter, while in Lithuania – EUR 1,456. Estonia’s financial sector ranks second, with the average gross monthly salary at EUR 2,052 in the second quarter.

The other highest-paid jobs in the Baltics are in the energy, public administration and defense, professional, scientific and technical services, and mining industries.

In the meantime, the lowest-paid jobs are in accommodation and public catering. In Estonia, the average monthly gross wage in the accommodation and public catering sector was EUR 819, while in Latvia – EUR 638, and in Lithuania – EUR 566.