Two major minimum wage agreements signed

Late December2004 saw the conclusion of two major minimum wage agreements in Estonia. The first determines the national minimum wage rate for 2005 and the other sets the minimum wage for employees with higher education working in the public sector, represented by the TALO trade union confederation. In both cases the negotiations lasted almost whole year, with the public conciliator involved and union confederations threatening strikes.

At the very end of 2004, the central social partner organisations finally managed to achieve a consensus after lengthy negotiations and thus signed two minimum wage agreements. On 22 December 2004, the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) (EE0308101F) and the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) (EE0310102F) signed an agreement on the national minimum wage rate for 2005, that raises the monthly minimum wage by about 8% to EEK 2,690 (up from EEK 2,480 in 2004). The negotiations over the national minimum wage started in March 2004 and the main sticking points were how to take into account a long-term agreement on minimum wage development concluded between EAKL and ETTK in 2001 (EE0311101N), and the increase in labour productivity (EE0409101N). EAKL started the bargaining by calling for a monthly rate of EEK 2,800, while the first offer made by ETTK was EEK 2,600. In November, EAKL had announced that it would involve the public conciliator in the negotiations in a bid to find an agreement, and threatened extensive protest actions, even strikes (EE0411102F).

On 29 December, the Estonian Employees’ Unions’ Confederation (Eesti Teenistujate Ametiühingute Keskorganisatsioon, TALO) and the government reached a consensus that from January 2005, the minimum wage for public sector employees with higher education who work full-time in a position requiring higher education and are members of TALO, will be EEK 5,960 per month (up from EEK 5,350 at the moment). The deal mostly concerns teachers and will become valid when ratified by the government - this is expected to happen in January 2005.

TALO and the government were due to meet in early February 2004 to discuss the distribution of the wage fund for educational and cultural workers for 2004 and to plan the direction of the pay settlement for 2005 (EE0312103F). As the Minister of Social Affairs was not able to attend the negotiations, the meeting was cancelled, after which TALO accused the government of prolonging the negotiations and threatened a strike. In March, TALO demanded a pay rise of 19% for its members and declared that the minimum wage for its members with higher education should be at the level of national average wage - forecast by the Ministry of Finance as EEK 7,762 per month in 2004. TALO referred to an agreement it concluded with the government in 2001 that stipulates that the minimum wage for employees with higher education who work full-time in a position requiring higher education should be equal to the national average wage forecast by the Ministry of Finance for the same year. The government considered reasonable a rise in the overall wage fund of around 12%.

In July, TALO cut its pay demands to a rise of 15% and a monthly minimum wage to EEK 6,645. The government offered a maximum of EEK 5,350 for the minimum wage. A major step towards consensus was achieved in November, when the parties agreed that the rise in the overall wage fund for 2005 would be 12%. The greatest problem for TALO was that the government wanted the agreement to cover only employees who are paid directly from the state budget, thus excluding the municipal schools. Finally, a consensus was reached at the very end of 2004, with the intermediation of the public conciliator.