At a meeting on Friday, representatives of trade unions and employers analyzed the state of the Estonian economy.

Kaia Vask, head of the Estonian Trade Union Confederation, said tax rises have made the situation very difficult. Last year's economic forecasts have not held up this year, so previous plans need to be reviewed.

Neither side has made any concrete demands or proposals yet.

"Of course, we want the purchasing power of Estonian workers to improve, so that they can cope better with life, because in the end, when workers' purchasing power is at a reasonable level, everyone actually benefits. Estonian businesses, small producers focused on the local market, these are the ones who need Estonian residents to be able to consume their goods and services," Vask said.

According to a goodwill agreement signed three years ago, the minimum wage was supposed to gradually rise to 50 percent of the average wage by 2027. Last year, the agreement was extended by one year. Under the new plan, the minimum wage would increase by about €100 next year, remaining just under €1,000.

However, employers believe this level is unlikely to be reached and that minimum wage growth should keep pace with the growth of other incomes.

Kai Realo, deputy chair of the Estonian Employers' Confederation council, said: "In a situation where we have actually been in an economic downturn for a couple of years, where doing business has been very difficult, and where there are different challenges in different sectors, it is frankly cynical to say that we must force this agreement through at any cost. That could lead to the loss of jobs in many small businesses, if not the disappearance of entire companies."

The coalition agreement signed in 2023 by Reform, Eesti 200, and the Social Democrats agreed on a rapid increase in the minimum wage.

However, after the Social Democrats were expelled from the coalition, the government took a step back from the process. Minister of Economic Affairs and Industry Erkki Keldo (Reform) said reaching an agreement must remain strictly between the labor market parties.

"There will certainly be no additional pressure or influence from the government. But we do need to look at the overall state of society. The minimum wage should not grow significantly faster than productivity. There is also the matter of people's ability to cope, the cost of living—that's why a bilateral agreement is usually desired, so that both sides are taken into account," Keldo said.

Representatives of employers and trade unions will revisit the minimum wage issue again later this month.

Since January 1, 2025, the minimum hourly wage rate has been €5.31 per hour. The minimum monthly wage for full-time work is €886.

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