TALLINN - The wage growth-productivity gap in Estonia widened in the second quarter, underscoring the vulnerability of local manufacturers struggling to compete on international markets, the Finance Ministry said.
The ministry announced Aug. 30 that wages grew 14.6 percent in the second quarter, while productivity increased by only 5.9 percent, indicating that wages are growing two times faster than productivity.
Ministry officials said the trend could not continue long since such a gap cuts into businesses' profit margins.
The intense competition for labor in Estonia remains the main driving force behind the rapid wage growth, the ministry said.
Indeed, in an environment of chronic labor shortage, pressure on employers to increase wages remains high. The problem can be eased only by investing in modern work organization and technology, the ministry stressed.
In its summer forecast, the Finance Ministry said it expected average annual wage growth in Estonia to reach 20.4 percent in 2007 and 15.3 percent in 2008.
Also, the Statistics Office on Aug. 30 announced that the average monthly gross wage amounted to 11,549 kroons (738 euros) in the second quarter of 2007.
Compared to the second quarter of 2006, average monthly gross wages grew 21.2 percent.
