New Estonian coalition promises to raise minimum wage, lower tax

The new Estonian government coalition has agreed to raise the minimum wage, so that it is at 45% of the average wage in the country, as well as to lower social tax by one percent from 2017, Postimees Online reports.

According to the Social Democratic Party (SDP), which is one of the members of the three-party alliance, the coalition plans to conclude an agreement with trade unions and employers to raise the minimum wage in four years to 45% of the average wage. Currently the minimum wage  is 390 euros, representing 38% of the average wage in Estonia.

The Social Democratic Party will govern in coalition with IRL, considered to be socially conservative, and the largest party, Reform, which holds 30 out of the 101 seats in the Riigikogu (Estonian Parliament).  

Reform Party said the new government wants to lower the social tax from the current 33% to 32%.

"This decision makes creating jobs more favourable for businesses," said Reform Party parliamentary faction vice-chairman Remo Holsmer.

The new coalition also plans to raise the income tax threshold from 154 to 205 euros per month.

The government will also raise salaries for military volunteers during exercises and increase benefits to conscripts, as well as increasing the availability of free defence training. Monthly child benefits will also be raised to 60 euros a month from the current figure of 45, reports ERR.