Figure Baltic Advisory: Salaries will rise by an average of 5% in 2026, but plans for the workforce remain cautious

15.01.2026

Figure Baltic Advisory's latest salary market forecast survey shows that Estonian employers plan to increase their employees' base salaries by an average of 5% this year, which is the same as last year. At the same time, there is growing caution among employers – a record 66% of organizations plan to reduce their workforce, which is the highest figure during the last 15 years. 

A year ago, 50% of companies planned to cut staff. A 14% increase in the number of employees is predicted (23% last year). The cautious attitude of Estonian employers differs greatly from that of our southern neighbors: in Latvia, only 15% of organizations plan to reduce their workforce, and in Lithuania, 7% of organizations plan to increase their workforce. The situation was similar last year when compared to our southern neighbors.

"The recent difficult years have made Estonian employers clearly more conservative, especially when it comes to workforce planning," said Figure Baltic Advisory partner and lead analyst Ilmar Põhjala. "However, 66% of employers reducing their workforce does not necessarily mean massive layoffs – in some cases, it may be a natural decline, where there are no plans to hire new people to replace those who have left." On the other hand, Põhjala emphasized that unemployment remains low, so finding new jobs may not be very difficult for people.

Unlike the workforce, all three Baltic countries have a similar view of salary growth – in Estonia and Lithuania, expectations for base salary increases remain at around 5%, while in Latvia they are slightly lower, at an average of 4.5%. Annual total salary growth expectations remain at the same level in Estonia. The highest salary growth, almost one percentage point above the average, can be expected in Estonia by employees in the transport and logistics sector. The salary changes are driven by both the decline in inflation and the overall stabilization of the economy.

"Although economic conditions have stabilized and pressure for salary increases has eased, it cannot be said that tensions in the labor market have completely disappeared. About half of employers still report salary pressure. The biggest labor-related challenges continue to be inflation, unrealistic salary expectations shaped by the media, and labor shortages," said Põhjala. "At the same time, employers believe that salary pressure has eased compared to last year for all employee groups. The only exception is non-sales professionals, where salary pressure has remained at the same level as last year." 86% of employers anticipate an increase in labor costs this year.

Flexible working hours and remote working opportunities remain a competitive advantage, although the number of employers offering highly flexible working conditions is gradually decreasing, as is the extent to which hybrid working is encouraged. "A clear sign of this development is the fact that the number of employers who expect their employees to work mainly at the workplace has risen from 16% to 26%," said Põhjala. "In 2026, employers do not plan to make any significant changes in terms of working arrangements, so it can be assumed that a balance suitable for all parties has been achieved."

The stabilization of the economic situation is evidenced by the fact that this year's outlook is slightly more optimistic than it was a year ago. 39% of Estonian employers believe that 2026 will be much or slightly better than last year, compared to 35% last year, and far fewer organizations fear a worse year than a year ago. However, many organizations continue to take a conservative approach to investment: 19% do not plan to make any major investments this year, but this is still less than last year, when a quarter avoided investment. "Digitalization and automation, as well as technical solutions, are emerging as important areas of investment, with 39% of companies planning to invest in the former and 40% in the latter, which is slightly more than a year ago," said Põhjala.

"Employers are looking for balance – on the one hand, there is a desire to remain competitive and motivate key employees, while on the other hand, they must operate in an economic environment where growth potential is limited. In such a situation, targeted investments and well-considered personnel decisions become important," added Põhjala.

The Figure Baltic Advisory forecast survey was conducted in December 2025. Ninety-five Estonian organizations from various sectors participated in the survey.