Figure Baltic Advisory: living wage in Tallinn will be €1621 this year - lower than in Vilnius, but similar to that in Riga
10/10/2024
In 2024, a living wage, or the minimum income needed to cover a person's basic needs and maintain a decent standard of living, is €1621 gross in Tallinn and Harju County. Excluding the tax free minimum the living wage in Tallinn and Harju County was €1711 gross. Compared to Latvia and Lithuania, Tallinn will have the lowest minimum subsistence level, while Vilnius has the highest - €2,173 gross. In Riga, the subsistence minimum is similar to Tallinn - €1630 gross.
"A living wage means a minimum income that helps to meet one’s basic needs. Such needs include shelter, food, transport, health care, education, but also other necessities for a decent life - whether it's a gym membership, a cinema ticket or a book. This concept goes beyond the minimum wage, which is usually lower and may not be sufficient for a decent living. The cost of living and other expenses in a given geographical area play a role in calculating a livable wage. The aim is to ensure that people can afford the basic necessities of life, but also a decent way of life," explains Irja Rae, Partner and Managing Consultant at Figure Baltic Advisory.
In Tallinn, the living wage has increased only slightly compared to 2023 - last year it was €1614 gross. At the same time, there has been a bigger jump in Vilnius, where the living wage was €1995 gross at the same time last year. In Riga, the increase is also higher than in Tallinn, where the living wage was €1501 gross in 2023.
In Estonia, as in the other Baltic States, the living wage is lower outside the capital, as housing costs in particular, but also other activities and services, are often more expensive in the capital. In Estonia, a living income outside Tallinn and Harjumaa is €1,270 gross, the lowest in the Baltic States. Excluding the tax free minimum the living wage outside Tallinn and Harjumaa was €1426 gross. In Lithuania, the figure is again the highest at €1,899 gross, while in Latvian regions outside Riga and its surroundings it is €1,384 gross.
"Around a quarter of people in Estonia are still earning below living wage, according to our survey. The number of these employees is steadily decreasing, and we are already seeing employers in Estonia and elsewhere in the Baltics setting the living wage as the lowest salary in their organisations. However, there are still too few organisations that are trying to shift wages closer to a decent wage in the face of rising costs," Rae said. "Actually, employers actually stand to gain from this: a socially responsible pay policy helps to increase employees' trust in their employers and boosts motivation."
Although the living wage is higher in capital cities, wage policies among employers are often uniform, regardless of where the employee lives. This means that few employers differentiate in pay levels when workers live outside the capital.