Flash comment: Estonia - August 30, 2012


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Flash comment: Estonia - August 30, 2012: Real wage growth decelerates in 2Q

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Flash comment: Estonia - August 30, 2012

  1. 1. Flash comment: Estonia Economic commentary by Economic Research Department August 30, 2012 Real wage growth decelerates in 2Q Average monthly gross wage According to the data released by Statistics Estonia, the average 25% monthly gross wage increased by 5% in annual comparison in the second quarter, reaching 900 euros. Real wage growth, at the 20% same time, slowed from 2.4% in the first quarter to 1.1%, affected 15% by slowing nominal wage growth as well as delay in the inflation deceleration. 10% 5% The largest increases in real wage were observed in domestic demand related sectors – arts, entertainment and recreation (9%) 0% construction (8%), and accommodation and food service activities 2006 2007 2008 2009 2010 2011 2012 -5% (5%). Wages in the construction sector are affected by high investment growth (mostly due to public sector investments) as well -10% as qualified labour shortage (many workers who lost their job nominal grow th real grow th during the crisis years have now found work in the Nordic countries where the wage level is considerably higher). Accommodation and food service activities, however, are benefiting from the strongly growing number of tourists which allows the companies to raise wages and create jobs. Average real wage in export-dependent manufacturing was up by 4%, affected by growing shortage of qualified labour. We expect the average gross wage growth to reach 6.5% on average this year, assuming wage growth in the services sector will accelerate during the second half of the year. Wage growth is also continuously affected by already visible qualified labour shortage problem in the economy. Real wage growth is expected to reach 2.3% on average, but slower growth is increasingly more likely due to growing risks regarding higher inflation. Annika Paabut Chief Economist + 372 6 135 440 annika.paabut@swedbank.eeSwedbank Economic Research Department Flash comment is published as a service to our customers. We believe that we have used reliable sources and methods in the preparation of the analyses reported in this publication.SE-105 34 Stockholm, Sweden However, we cannot guarantee the accuracy or completeness of the report and cannot beek.sekr@swedbank.com held responsible for any error or omission in the underlying material or its use. Readers arewww.swedbank.com encouraged to base any (investment) decisions on other material as well. Neither Swedbank nor its employees may be held responsible for losses or damages, direct orLegally responsible publisher indirect, owing to any errors or omissions in Flash comment.Cecilia Hermansson, +46 8 5859 7720