The Central Bank of Estonia published an assessment of third-quarter wage and labour market data, reporting that average wages rose 5.9% year on year, unchanged from the second quarter, while seasonally adjusted wage growth accelerated quarter on quarter. Despite nominal wage gains, the bank noted that the purchasing power of the average wage remained below a year earlier as consumer price inflation rose to 5.6% in the third quarter and the increase in the income tax rate to 22% reduced net wage growth. The update highlighted faster wage growth at the lower end of the distribution, with the median wage up 6.3% and slightly lower wage inequality than a year earlier. By sector, wage growth in manufacturing and construction exceeded the national average, while private services were around average and public sector wage growth was below average; Tax and Customs Board register data indicated manufacturing wages have stabilised in 2025. On the labour market, the Statistics Estonia survey showed unemployment falling quarter on quarter and employment increasing, while register data pointed to employment still declining but at a slowing rate; the bank expects fiscal policy to support economic growth and the labour market recovery and estimates the non-accelerating wage rate of unemployment at around 6.5%, about one percentage point below the current unemployment rate.
Central Bank of Estonia 2025-11-27
Central Bank of Estonia reports 5.9% annual wage growth in Q3 and puts equilibrium unemployment around 6.5%
The Central Bank of Estonia reported a 5.9% year-on-year rise in average wages for Q3, with seasonally adjusted wage growth accelerating quarter on quarter. Despite nominal wage gains, purchasing power declined due to 5.6% inflation and a higher income tax rate. The bank noted faster wage growth at the lower end of the distribution and expects fiscal policy to support economic growth and labour market recovery.