Swedbank Senior Economist Liis Elmik has no good news for Estonians. If wages continue to grow on average, then the rate of wage growth will slow down next year, prices will continue to rise, and tax increases will take away some of the income. :format(webp)/nginx/o/2023/11/07/15704734t1h7e8a.jpg)
Grocery basket. Photo: Arvo Meeks, Valgamaalane Sander Silm, economic journalist August 26, 2024, 12:35
Swedbank Senior Economist Liis Elmik has no good news for Estonians. If wages continue to grow on average, then the rate of wage growth will slow down next year, prices will continue to rise , and tax increases will take away some of the income.
"This year, the purchasing power of the average net wage will increase by only two percent. Next year, wage growth will slow down, price growth will accelerate, and tax increases will take away some of consumers' income. Thus, the purchasing power of the average net wage will decrease by two percent in 2025. The purchasing power of the average wage earner will only reach the level that existed before the rapid price growth in 2026, when the average net wage will increase significantly due to the elimination of the so-called tax hump," she says.
In the second quarter, the average pension increased by 11 percent year-on-year. Pensions have been growing rapidly in recent years. If average net wages catch up with prices in 2026, the purchasing power of the average pension will have already recovered.
