A living wage, or the minimum income required to cover a person’s basic needs and maintain a decent standard of living, is EUR 1,621 gross in Tallinn and Harju County in 2024, according to Figure Baltic Advisory, the leading labor market research and consultancy firm in the Baltic region.
In Vilnius, the highest living wage is EUR 2,173 gross, while in Riga, it is similar to Tallinn at EUR 1,630 gross. However, it is important to note that the significant difference with Lithuania is primarily due to the specifics of the tax system, rather than a substantial gap in living standards and prices. In Lithuania the 30% social tax is included in the gross salary, whereas in Estonia and Latvia, social tax is calculated separately from the gross salary.
These needs include shelter, food, transportation, healthcare, education, as well as other essentials for a decent life – such as a gym membership, a movie ticket or a book.
“This concept goes beyond the minimum wage, which is usually lower and may not be sufficient for a decent standard of living. When calculating a living wage, factors such as the cost of living and other expenses specific to the geographic area play a role,” said Irja Rae, managing partner at Figure Baltic Advisory.
In Estonia, as in other Baltic countries, the living wage is lower outside the capital, as housing costs, along with other activities and services, tend to be more expensive in the capital. The living wage outside of Tallinn and Harju County is the lowest among the Baltic States, standing at EUR 1,270 gross. In Lithuania, this figure is again the highest at EUR 1,899 gross, while in regions outside Riga and its surroundings in Latvia, it is EUR 1,384 gross.
“According to our study, about a quarter of Estonians still earn below the living wage. The number of such workers is gradually decreasing, and we are already seeing employers in Estonia and elsewhere in the Baltic States who have set the living wage as the minimum salary in their organization. However, there are still too few organizations striving to bring wages closer to a decent level despite rising costs,” said Rae. “Employers actually stand to benefit from this: a socially responsible wage policy helps build employee trust in their employers and increases motivation.”
Although the cost of living is higher in capital cities, wage policies among employers are often uniform, regardless of where employees live. This means that few employers differentiate wage levels based on whether employees live outside the capital. (ERR)