Uusküla: Estonia tries to sell Swiss watches at Swiss prices, but it's proving difficult

Estonian wages have risen — the average salary reached 2,135 euros in the first quarter of this year, with the median salary standing at 1,753 euros. The average salary increased by 6.2 percent year-on-year. However, economist Lenno Uusküla points out that Estonia's high price expectations do not always match its competitiveness.

Estonia's labor market continues to show an upward trend: in the first quarter of this year, the average gross salary reached 2,135 euros, while the median salary stood at 1,753 euros. Compared to the same period last year, the average salary grew by 6.2 percent, and the pace of wage growth accelerated in the opening months of 2025.

Economist Lenno Uusküla highlighted that while wage growth is welcome, it also brings challenges to Estonian business competitiveness. "We're trying to sell Estonian watches at Swiss watch prices, but it's proving difficult," said Uusküla, referring to the fact that the price level of Estonian products and services may not always match their actual market value in international comparison.

Wage growth means, on one hand, an increase in residents' purchasing power and an improvement in living standards. On the other hand, it raises production costs and pressures companies to either invest in productivity gains or accept declining profitability. Estonia's open economy, where exports play a significant role, is therefore vulnerable if cost levels grow faster than productivity.

According to experts, in the longer term it is important for the Estonian economy to find a balance between improving workers' well-being and maintaining companies' international competitiveness. If wage growth persistently outpaces productivity growth, it could damage the position of export-oriented sectors in European and global markets.