The actual minimum wage in Estonia is 4350 kroons (278 euros). Any simple tourist from UK, France, Belgium, Ireland etc would be really surprised hearing about it. The prices have almost the same level as in their countries but minimum wage… so low! Is this European country or what?
Yes, the minimum wage in Western Europe is many times higher but the consumer price level not so much.
Example:
Minimum wage in Belgium is 1387,49 EUR (21709,50 EEK)
Price level: if EU27=100,
the price levels are
in Estonia – 71,5
in Belgium – 106,3
Look at Eurostat data – http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&pcode=tsier010
That means the price levels in Belgium are only 1,49 times higher than in Estonia.
To have the same purchasing power as in Belgium, the Estonian minimum wage should be today as high or low as 14 602,47 EEK (933,24 EUR).
My proposal to the trade unions, employers and state is to negotiate and work out the "minimum wage strategy" – how to achieve the normal purchasing power of the minimum wage and the possible timeline for it. Even better would be the Baltic-wide negotiations because of the almost similar economical conditions in Latvia and Lithuania. The "strategic minimum wage" could be this year 933,24 EUR / 14602,47 EEK and it should change proportionally with the inflation. Of course this kind of strategy should be made public and easily searchable.
I think it’s a question of the Estonia’s image, too. That’s the cause why I published such idea under this theme.
P.S. In the brainstorming session “My Estonia” (1st of May 2009) I expect to speak about something close to this question. It’s about the salaries on the top of our public service. Example – the salary of an Estonian Parliament’s member is 12,1 times higher than our national minimum wage, but European Parliament’s member’s salary is only 5,68 times higher than French national minimum wage. Is Estonian Parliament overpaid or simple Estonian worker underpaid?